100406 4QFY10 Earnings Preview IDFC-SSKI

8/9/2019 100406 4QFY10 Earnings Preview IDFC-SSKI

1/52

1April 2010

Earnings Preview (Jan-Mar 2010)

IDFC - SSKI Research91-22-6622 2500

April 2010


2/52


3/52

3April 2010

Sensex earnings growth broad-basedMetals companies to drive overall Sensex earnings growth on a low baseAutomobiles earnings growth continues to be strong (over 1.1x) on high volumes in passenger car segment and CVsPower equipment (up ~47%), power utilities (up ~32%) and cement (up ~34%) likely to report strong earnings growthFinancials earnings growth likely to revive to 19% yoy; 18% yoy for consumer goodsTelecom earnings to stay depressed; likely to decline by 34% yoy

(34.2)13,4028,813(9.6)22,40720,254(4.0)55,84553,618Telecoms

Profit After TaxPre-provisioning profitNII(Rs m)

111.96,01212,741112.910,50022,35346.0116,892170,640Automobiles34.05,1126,84831.18,66011,35310.832,95536,513Cement(2.4)12,40112,10212.816,93519,09822.5105,686129,467Construction18.28,1749,66121.312,07014,63913.347,43453,755Consumer goods

NA(27,494)18,694405.414,67774,1744.9298,525313,074Metals50.74,4146,65035.811,81916,05615.627,66731,984Oil & Gas

52.319,37029,49588.726,50050,016108.1141,810295,082Petrochemicals(15.1)1,7371,474(5.6)1,6551,563(2.3)4,5384,434Pharmaceuticals

47.44,5436,69652.55,5988,53420.536,81444,376Power Equipment31.87,0519,29031.19,18812,0496.851,98055,517Power Utilities

3.819,65620,4037.224,51626,2744.882,46886,407IT services

536.43982,531275.73871,45233.62,8063,750Real Estate

18.631,42537,27413.967,22276,58323.667,02382,863FinancialNA1,40161,687145.961,657151,59935.1500,958676,652Commodities

15.4104,799120,98519.0170,478202,79919.8571,484684,827Non-commodities

% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10ESector

72.0106,199182,67252.7232,135354,39927.01,072,4421,361,479Sensex

EBITDA Profit After TaxNet Sales(Rs m FF adjusted)

Sensex earnings growt h t o remain st rong; aided by base ef f ect


4/524April 2010

Highest qoq PAT growth for Sensex since Q2FY09

At 24%, Sensex qoq profit growth is strongest inthe past nine quarters

Sensex earnings growth (ex-commodities) likely to

be 15% yoyWe expect Sensex earnings to expand by ~72%yoyin Q4FY10 on a low base of Q4FY09

Rolling quarter Sensex earnings growth

0

50,000

100,000

150,000

200,000

Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10E Q4FY10E-30.0%

-15.0%

0.0%

15.0%

30.0%

Sensex quarterly PAT (Rs bn - LHS) % qoq grow th (RHS)

Sensex earnings growt h aided by base ef f ect & met als companies t urning prof i t able

16.5

26.1 28.1 24.7 22.528.1 28.7 31.2 27.6 29.3 24.4

12.315.9

40.333.5

49.3

34.228.6

24.1 21.3 22.415.6

10.8

(0.9)

(10.8)(16.1)

(20.1)

13.8

72.0

-25.0

0.0

25.0

50.0

75.0

M a r -

0 3

J u n - 0

3

S e p - 0

3

D e c - 0

3

M a r -

0 4

J u n - 0

4

S e p - 0

4

D e c - 0

4

M a r -

0 5

J u n - 0

5

S e p - 0

5

D e c - 0

5

M a r -

0 6

J u n - 0

6

S e p - 0

6

D e c - 0

6

M a r -

0 7

J u n - 0

7

S e p - 0

7

D e c - 0

7

M a r -

0 8

J u n

0 8

S e p - 0

8

D e c - 0

8

M a r -

0 9

J u n - 0

9

S e p - 0

9

D e c - 0

9

M a r -

1 0

Sensex PAT grow th (%)

Sensex earnings (ex-metals) likely to grow by

23% yoy


5/525April 2010

IDFC-SSKI Universe earnings set to grow ~18% yoy

23.372989818.11,7882,11120.814,33217,311Tyre

11.547,14452,5537.166,79471,5296.5259,046275,838IT services

39.516,92123,60239.123,31932,43817.4167,418196,538Power Equipment

58.32,2793,60738.35,1177,078(12.7)50,61544,169Pipes

NA(6,608)18,73828.819,31324,87010.1102,160112,469Pharmaceuticals

52.338,74058,98988.753,000100,032108.1283,620590,163Petrochemicals

(40.1)4,6562,7905.511,65412,29712.5101,868114,588Others

47.58841,30422.42,4633,01419.713,86516,592Alcoholic Beverages

416.04452,29785.03,2806,06841.726,75537,908Auto Components220.112,57740,257118.922,79949,91751.1245,966371,706Automobiles

25.714,33018,01827.323,85130,37411.886,49896,689Cement

0.218,32718,35714.028,70732,73017.4199,734234,441Construction

18.617,92921,26921.925,54131,12615.6112,773130,334Consumer goods

11.068776344.41,2961,87129.45,2056,735Education

181.94,94613,943187.63,77710,86250.118,65528,009Real Estate

Profit After TaxPre-provisioning profitNII(Rs m)

(68.6)785246(50.3)579288(32.2)1,085735Exchanges

8.82,4052,6168.43,6373,9414.830,07731,512Engineering10.82,4032,66215.03,2683,75812.315,32917,215Logistics

97.31,8423,635104.94,8799,99526.617,79322,520Infra Developers

NA(25)2,958165.12,7947,40923.823,27228,820Media

NA(6,491)84,891181.471,201200,32513.2662,074749,183Metals

(59.7)189,00876,126(24.1)265,656201,58012.71,329,2991,498,067Oil & Gas

28.727,92135,93223.144,07254,2658.5210,340228,126Power Utilities

641.71931,43358.92,3043,66024.129,54736,679Retail

(34.3)40,84226,843(8.3)72,14866,134(1.4)188,981186,266Telecoms

14.3116,869133,53315.2225,235259,47929.0226,809292,538Financials

1.0235,586238,02528.7413,709532,31124.22,361,4912,934,102Commodities

30.6314,153410,23720.9574,764694,83917.92,061,6232,431,049Non-commodities

% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10ESector

17.9549,739648,26224.1988,4731,227,15121.34,423,1145,365,151SSKI Universe

EBITDA Profit After Tax# Net Sales(Rs m)


6/526April 2010

Strong qoq PAT growth for IDFC-SSKI UniverseRolling quarter IDFC-SSKI Universe earnings growth

IDFC-SSKI Universe earnings qoq (ex-Oil & Gas)

14% qoq earningsgrowth for IDFC-SSKI

Universe (ex-Oil&Gas)

Ear nings growt h for IDFC-SSKI Universe led by non-commodit ies (31% yoy growt h)

0

150,000

300,000

450,000

600,000

Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10E-7.5%

0.0%

7.5%

15.0%

22.5%

IDFC-SSKI Universe (ex-Oil&Gas) Quarterly PAT (LHS) % qoq grow th (RHS)(Rs m)

19.0

8.816.6

(3.6)

15.9

30.0

45.7

69.4

49.2

20.8

11.76.4 7.2

(4.3)(12.2)

22.926.9

18.6 17.917.215.8

-15

0

15

30

45

60

75

Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun 08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10

IDFC-SSKI prof it grow th (%)

Non-commoditiesearnings likely to grow

31% yoy


7/52

7April 2010

Firm economic growth driving topline

Sensex and IDFC-SSKI Universe set to grow 2 7 % yoy and 21 %,respectively

Sensex revenue growth at 27% yoy

Automobiles (46%), construction (23% yoy) and real estate(34%) topline growth to stay strongFinancials to see uptick in NII (24%)Petrochemicals to witness strong topline growthCement (~11%) and power utilities toplines(7%) to stay muted

IDFC-SSKI Universe revenues to grow by 21% yoy

Strong revenue expansion likely for automobiles (51%), infradevelopers (27%) and real estate (50%)Power equipment (17%), consumer goods (16% yoy) andfinancials (29%) see healthy revenue growthRetail and Media (24%) seeing revival in toplines

Sensex revenue growth at 27% yoy

Automobiles (46%), construction (23% yoy) and real estate(34%) topline growth to stay strongFinancials to see uptick in NII (24%)Petrochemicals to witness strong topline growthCement (~11%) and power utilities toplines(7%) to stay muted

IDFC-SSKI Universe revenues to grow by 21% yoy

Strong revenue expansion likely for automobiles (51%), infradevelopers (27%) and real estate (50%)Power equipment (17%), consumer goods (16% yoy) andfinancials (29%) see healthy revenue growthRetail and Media (24%) seeing revival in toplines

Reflected in topline momentum

St rong volume growt h and ret urn of pr icing power dr iving revenue expansion

Industrial production on a firm footing credit growth on an uptick

22,000

24,000

26,000

28,000

30,000

32,000

Apr-08 Jul-08 Sep-08 Dec-08 Mar-09 Jun-09 Aug-09 Nov-09 Feb-10-

6

12

18

24

30Credit (Rs bn) yoy grow th (%)

Expected to touch~20% for FY11

Monthly IIP grow th

(2.0)

3.0

8.0

13.0

18.0

A u g - 0

8

S e p - 0

8

O c t - 0 8

N o v - 0

8

D e c - 0

8

J a n - 0

9

F e b - 0

9

M a r - 0 9

A p r - 0 9

M a y - 0

9

J u n - 0

9

J u l - 0 9

A u g - 0

9

S e p - 0

9

O c t - 0 9

N o v - 0

9

D e c - 0

9

J a n - 1

0

(% yoy)

IIP growth has touched a 15-yrhigh in Jan-10; to drive strongsequential uptick in toplines

23.1

5.21.8

-2.3

22.6

27.0

13.9

1.4

15.5

21.3

-7.9

21.0

-9.0 -8.9

-15.0

-5.0

5.0

15.0

25.0

Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10E

Sensex IDFC-SSKI Universe(% yoy grow th)


8/52

8April 2010

IDFC-SSKI Universe EBITDA margin

22.3

20.7

19.4 19.5

22.9

16.0

18.0

20.0

22.0

24.0

Mar-09 Jun-09 Sep-09 Dec-09 Mar-10

EBITDA margins expanding on qoq basis

IDFC-SSKI marginsexpand 340bp qoq

IDFC-SSKI Universe EBITDA marginsSensex EBITDA margins

EBITDA margins to expand in most sectors

yoy change (% bp)

0 400 800 1,200 1,600

Auto Components

Automobiles

Cement

Consumer goods

Media

Metals

Pow er Equipment

Pow er Utilities

Retail

EBITDA margin (%)

21.6

29.1

22.93 23.19

26.05

14.0

18.0

22.0

26.0

30.0

Mar-09 Jun-09 Sep-09 Dec-09 Mar-10

Sensex EBITDA marginslikely to expand 280bp

qoq


9/52

9April 2010

IDFC-SSKI Winners & Losers

Winners

Petrochemicals and Oil&Gas: Improving GRMs and lower under recoveries (for upstream companies) todrive strong earnings growth

Automobiles: Strong volume growth (in passenger cars as well as CVs)

Power equipment : High visibility on order backlogs and operating margin expansionMetals: Revival in volumes aided by uptick in prices to drive strong earnings growth

Financials: Revival in credit growth to lead to margin expansion

Media: Improving ad spends in line with the economic recovery

Retail: Revenue growth for the sector picking up; expect healthy earnings growth

Winners

Petrochemicals and Oil&Gas: Improving GRMs and lower under recoveries (for upstream companies) todrive strong earnings growth

Automobiles: Strong volume growth (in passenger cars as well as CVs)

Power equipment : High visibility on order backlogs and operating margin expansion

Metals: Revival in volumes aided by uptick in prices to drive strong earnings growth

Financials: Revival in credit growth to lead to margin expansion

Media: Improving ad spends in line with the economic recovery

Retail: Revenue growth for the sector picking up; expect healthy earnings growth

LosersTelecoms: Huge competition driving down ARPUs

Construction: While order backlog remains strong; execution delays to impact near-term earnings

LosersTelecoms: Huge competition driving down ARPUs

Construction: While order backlog remains strong; execution delays to impact near-term earnings


10/52

10April 2010

Expect earnings momentum to remain strong

19.826.68.117.220.115.015.215.14.1Sensex

17.3(14.9)(19.7)18.2(1.4)(0.8)13.74.03.5Telecoms

19.310.69.419.610.811.218.612.35.2Software

15.927.9(48.3)20.127.2(45.0)21.922.7(31.0)Real Estate

13.622.714.621.723.029.614.619.54.3Power Utilities

18.429.339.918.730.648.921.422.222.1Power Equipment15.11.2(21.7)17.711.5(28.2)15.610.4(6.2)Pharmaceuticals

9.246.916.48.741.332.39.718.928.8Petrochemicals

6.226.9(6.3)6.27.58.76.59.73.2Oil & Gas

47.6347.3(70.5)23.240.7(16.0)15.216.0(22.0)Metals

25.722.115.318.317.412.816.817.08.9Financial

14.614.010.614.112.918.313.511.71.0Consumer goods

29.5(2.2)26.144.020.621.529.619.811.9Construction

0.2(8.3)29.04.5(5.6)45.97.64.912.9Cement

16.522.6379.415.520.793.316.813.326.1Automobiles

FY12EFY11EFY10EFY12EFY11EFY10EFY12EFY11EFY10E

PAT growthEBITDA growthSales growth(% yoy)

Present Sensex val uat ions (at 16x FY11E, excluding non-consol subs) ar e at t r act ive;

maint ain our bull ish st ance wit h a t arget of 20,000 on t he Sensex (by end-CY10)


11/52

April 2010

Sector-wise earnings preview (Q4FY10)

11


12/52

April 2010

Jain Irrigation Systems (JISL)

JISL revenue growth expected at 36% with MIS business continuing to grow at over 45%.Growth in the MIS business is expected to recover sharply after two quarters of subdued growth

While mix is turning favourable with MIS business growing faster as also onion dehydration business picking up, we expectan EBITDA margin expansion of 48bp during the quarter.Also, while PBT growth is expected at 51%, quarterly tax payments in FY10 (unlike till FY09 when tax for the year waspaid in Q4) would result in a 198% growth in net profits.Reiterate Outperformer

Ruchi Soya Industries

With edible oil prices higher by ~15%yoy (low base effect), we expect revenues to increase by 10% in Q4FY10Firm soya seed prices have resulted in poor spreads and thereby the crushing capacity utilization remains low at ~30%.Margins are expected to be at 1.8% (0.9% in Q4FY09)RSIL is increasing its focus on palm plantation business potential to explore 89,000 hectares of plantation in India.Incrementally, they have also signed an MOU with the Ethiopian government for 123,550 acres for soyabean cultivation

RSIL has recently signed a LLP with IOCL to produce biofuels. The total project cost estimated to be Rs4.36bn which willbe partly funded by the UP government under the NREGS scheme. The equity portion of Rs1.26bn will be equally fundedby Ruchi Soya and IOCLWe maintain our Neutral stance on the stock

Q4FY10 earnings preview

Agri-related

12


13/52

April 2010


Agri-related

% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10E

1,242.219262132.132274710.037,70541,476Ruchi Soya198.03391,01138.91,5702,18036.06,9859,500Jain Irrigation Systems

Profit After TaxEBITDANet Sales(Rs m)

13


14/52

April 2010

United Phosphorus

UPL to report healthy earnings growth of 29% yoy aided by sharply lower interest costs. UPL had reported ~Rs300mn forex losseslast year which are likely to be reversed partially this year as the rupee has appreciated. Expect EBITDA margins to stay flat with~10% growth

Advanta

Advanta earnings are likely to be flat due to marginally lower profitability. This is seasonally Advantas weakest quarter


14

Agri-inputs


28.91,4801,90711.82,9303,27510.613,91715,392United Phosphorus

(4.6)(37)(35)7.414415518.01,3801,628Advanta



15/52

April 2010


Alcoholic Beverages

We expect United Spirits to garner a strong growth of 22% in revenues, on the back of 13% volume growth.

Further, with molasses price benign, United Spirits is expected to witness superior EBITDA margin expansion of 109bp in thecurrent quarter.

We believe re-financing of dollar denominated debt by rupee debt would keep interest costs firm. Thus net profit growth of36% is expected during the quarter.

United Breweries is expected to witness a 15% revenue growth during the quarter with underlying volume growth at ~10%.

With respect to margins, we expect a contraction of 101bp primarily driven by IPL spends during the quarter. However, high

interests costs in Q4FY09 due to forex translation losses will result in a 44% growth net profits (low base effect) during thequarter.

We maintain outperformer call on United Spirits, while maintaining our Neutral call on United Breweries.

15


49.355582929.71,6022,07822.09,22911,260United Spirits

44.43294758.786193615.04,6365,331United Breweries



16/52

April 2010

Automobile companies under our coverage space are expected to post 51%yoy topline growth led by sustained volumemomentum across product segments on account of the pre-buying ahead of the anticipated excise duty hike in the budget

Significant operating leverage would partially offset the impact of rising input cost pressures; margins likely to decline qoq for allthe auto majors

Despite margin pressure, absolute EBIDTA for auto companies within our coverage space is expected to increase 6%qoq onaccount of the significant ramp up in volumes

Apart from the robust volume growth (32%qoq), Tata Motors PAT would further be buoyed by the profit from stake sale (20%) ofTelcon to Hitachi during the quarter

Automobile companies within our coverage universe are likely to post a robust 220%yoy PAT growth (up 49%qoq) in Q4FY10


Automobiles

16

Significant increase in raw material prices (especially tyre) likely to impact marginsAshok Leyland / Tata Motors

Margins likely to be maintained qoq led by significant operating leverageTwo wheeler majors

Appreciating INR against the Euro to impact export realisations, margins likely to be under pressure

qoqMaruti Suzuki

Mahindra & Mahindra

Company Key monitorables

Sustained ramp up in both tractor and UV volumes, however, rising input cost pressures likely toimpact margins qoq


17/52

April 2010


Automobiles

415.97840365.535959430.94,8166,302Escorts


18.613616174.245679435.09,10412,287TVS Motor Company

208.71,5234,700151.32,8597,18477.617,87531,746Bajaj Auto

1,371.21,14916,908*236.64,14513,95475.068,056119,118Tata Motors

40.64,0225,65327.65,4917,00519.334,22540,831Hero Honda Motors

55.02,7954,33272.44,0286,94538.736,36550,437Mahindra & Mahindra

268.84431,632199.79682,902139.212,18129,133Ashok Leyland

166.02,4316,467134.64,49310,53929.263,34481,851Maruti Suzuki


17

*Includes profit from stake sale of Telcon to Hitachi worth Rs11.2bn


18/52

April 2010

Strong OE volume growth and pick up in exports to drive topline growthWe expect ancillary companies within our coverage space to post 34%yoy topline growth in Q4FY10The ramp up in domestic CV volumes is likely to boost revenues of companies like Amtek Auto, Bharat Forge and SundramFastenersThe strike at Boschs Naganathapura and Bangalore facilities likely to impact earnings in Q1CY10Rising input cost pressures likely to impact margins across the coverage space during the quarterFor tyre companies, price hikes and better volume offtake likely to partially mitigate significant increase in raw material costs(especially rubber)Expect 172%yoy PAT growth for our coverage space over a low base in Q4FY10


Auto Ancillaries

18

Improved offtake from its key clients including Maruti, Hyundai to boost topline growthSona Koyo

Sharp increase in rubber prices likely to impact margins qoqTyre companies

Strike at its two plants likely to impact earnings in Q1CY10Bosch

Amtek Auto / Bharat Forge

Company / Industry Key monitorables

Sustained domestic CV offtake and an improved performance from overseas subsidiaries likely to boosttopline


19/52

April 2010


Auto Ancillaries

24.446257525.21,1271,41025.511,10613,932Apollo Tyres818.519171154.916742560.32,2583,620Sundaram Fasteners

21.42673235.96627014.73,2263,379Balkrishna Industries


NM(80)553231.04271,41399.32,9165,811Bharat Forge68.349383046.31,0231,49835.410,06013,619BOSCH

NM(129)38155.09724819.32,1772,597Rico Auto Industries

244.218964953.91,4632,25132.17,4099,789Amtek Auto

NM(46)55127.510223327.81,9362,474Sona Koyo Steering Systems


19


20/52

April 2010

Revenues of cement companies expected to grow by 12% in Q4FY10, led by growth in both volumes and realizations

EBITDA of our cement universe likely to increase by 27.3% yoy, led mainly by the growth in revenues and cost savings

Ambuja to see significant savings in raw material costs, on the back of lower clinker purchases

Pre-exceptional earnings for cement companies under our coverage to grow by 25.7%We reiterate our Underweight stance on the sector due to oversupply concerns in the domestic market

Certain large capacities have already been commissioned, while visibility on other large projects is high

Retain Grasim as Outperformer on the back of the cushion to earnings from non-cement businesses


Cement

20


29.83,3414,33832.95,2476,97512.718,47620,814Ambuja Cement*55.43,8475,97847.26,80010,00814.428,87033,019Grasim Industries

9.93,0953,40220.05,3316,39615.618,60121,495UltraTech Cem

6.24,0484,3008.06,4746,99513.720,55123,361ACC*


Capacity additions

Key Sector monitorables

* Q1CY10 estimates

Q4FY10 i i


21/52

April 2010

Construction companies to report revenue growth of 17.4% yoy for the quarter driven by strong order backlogs

Jaiprakash expected to report 43% yoy growth in revenues led by higher cement and construction revenues

Gammon India and Madhucon expected to report yoy fall in revenues due to high base effect

Revenues from projects in AP expected to remain subdued

Operating margins to marginally fall by 41bps

Margins of construction companies expected to improve led by changing revenue mix (higher share of power, roads orders)

Expect margins for L&T, JPA to fall on yoy basis due to base effect of higher than average margins in Q4FY09

Earnings (pre-exceptional) flat on yoy basis during the quarter

L&T and Gammon expected to report fall in earnings due to higher base effect of Q4FY09

We maintain our overweight stance on the sector with our top picks being Jaiprakash, IVRCL, NCC


Construction

21

Q4FY10 i i


22/52

April 2010

(7.0)11,42410,6248.214,50915,69520.0104,690125,602Larsen & Toubro

47.238256264.78381,38025.110,98113,742Nagarjuna Construction70.229850735.21,1081,49810.313,86115,282Simplex Infrastructures


26.8362459(1.6)1,5061,48316.19,79711,372HCC13.778989641.21,3131,85322.916,17619,886IVRCL Infrastructures19.83,8534,61828.27,0509,04043.320,84629,863Jaiprakash Associates

(57.5)1,166496(35.0)2,1171,376(21.1)19,01714,997Gammon India

257.15419451.5268405(15.3)4,3673,697Madhucon Project


Order bookingSimplex Infrastructures

Order executionLarsen & Toubro

Order booking and executionMadhucon Projects

Order booking and executionNagarjuna Construction

Order execution of AP projectsIVRCL Infrastructures

Order execution of AP projects; interest costsHCC

Jaiprakash Associates


Construction revenue booking, cement realisations


Construction

22

Q4FY10 i i


23/52

April 2010

Educomp Solutions changed the model of its Smart Class business Q2FY10 onwards. The company has transferred 818 existingschool contracts to EDUSMART; we expect to see the remaining contracts (order book at Rs10bn) transferred over the next fewquarters.

Everonn Education is expected to report a consolidated revenue growth of 118% at Rs780m, driven by strong growth in VITELS.

NIIT is expected to report a 2.7% growth in revenues at Rs3bn, EBITDA growth of 10% at Rs402m. Margin expansion in the CLSbusiness remains a key moniterbale.


Education


113.34699139.4104250118.0358780Everonn Systems(4.9)969110.33644022.73,0083,091NIIT

5.254557347.48271,21955.71,8392,864Educomp Solution*


23

*Q4FY10 numbers are consolidated, Q4FY09 numbers are standalone


24/52



25/52

April 2010

Improving macro-economic environment and thereby buoyancy in ad spends is expected to drive a 24% revenue growth for theIndian media sector. Telecom, FMCG and auto continue to remain the key spenders in Media.

Operating leverage coming into play EBITDA growth of 165%

Broadcasting: Growth in revenues expected at 26% and EBITDA growth of 119%; could have been higher but for IPL3 competition

In the GEC space, recent weeks have seen volatility in viewership among the top 3 channels - Colors, Star and Zee TV

DTH industry adds 2.5m subscribers during the quarter with Airtel Digital accounting for almost 25% of these

Zee Group has re-structured its business into three separate verticals entertainment, news and education. All the broadcastingventures have been brought into Zee Entertainment, while Zee News will operate pure news based channels and a new entity Zee Learn will be listed for the education venture.

Fund raising through primary market: DB Corp rasied Rs3.8bn and Hathway raised Rs4.8bn during the quarter

Multiplex: PVR called off the deal to acquire DT Cinemas, the multiplex business of DLF. Inox has acquired promoter stake inFame India

WWIL has announced its exit from HITS


Entertainment & Media

25



26/52

April 2010


Entertainment & Media

26

(90.4)888(88.1)20725(49.5)1,384699Zee News*

28.71,1411,46818.72,2582,68025.02,7603,450Sun TV Network

35.581110201.15215525.8537675T.V. Today Network(99.2)(1,153)(9)(119.7)(1,273)25117.61,3611,600Television Eighteen

(3.6)106103(193.4)(193)180(6.1)1,8211,710Utv Software Comm.(32.5)(311)(210)(537.1)11(50)5.5711750Wire And Wireless India

27.59651,23043.01,2021,71821.75,1376,253Zee Entertainment*


(310.0)(11)23128.86114063.8580950PVR

(9.5)(787)(712)482.34124077.11,6442,911Dish TV India

87.921841076.639068913.32,0132,280Jagran Prakashan

(110.1)(290)29(258.5)(120)19015.09901,139Entertainment Network90.9234446102.643888814.43,3753,861HT Media

(105.8)(143)8(102.8)(174)5(20.6)494392Balaji Telefilms

(77.6)(163)(36)(251.4)(107)162332.24652,012IBN18 Broadcast


*Zee News numbers excludes numbers for regional GEC, now a part of Zee Entertainment numbers



27/52

April 2010


Exchanges

Financial Technologies (FTIL)

FTILs quarterly financials are not strictly comparable as the business model has lumpiness due to booking of exchange solutionsduring different quarters of the year

FTIL is expected to garner revenues of Rs735m during the quarter which will imply a 32% decrease yoy on the back of higherexchange solution booking in Q4FY09Similarly, as exchange solutions entail higher margins, Q4FY10 EBITDA margins are expected to be at 39.2% margins as against53% in Q4FY09.

We expect net profits to stand at Rs247m during the quarter resulting in a 69% yoy decrease.

The divestment process of MCX-SX, which would mark FTILs entry into the equity market, remains to be the key monitorablefor the stock.Reiterate Outperformer with an SoTP based price target of Rs2000.

(68.6)785246(50.3)579288(32.2)1,085735Financial Technologies


Adjusted Profit after taxEBITDANet Sales(Rs m)

Divestment process of MCX-SXFinancial Technologies


27



28/52

April 2010


FMCG

FMCG Sector expected to witness 15.6% growth in Q4FY10, higher than 14.2% in Q3FY10

While the growth is expected to be driven by 20% growth in Dabur and 65% in GCPL (including Sara Lee portfolio), HUL isexpected to grow by 6.9% on a lower base.

With commodity prices firming up on a sequential basis, expect lower expansion in gross margin as against Q3FY10. FMCGsector is expected to continue to re-direct the savings towards higher ASP spends 36% growth

Competitive intensity within the FMCG space has increased between HUL and P&G aggressive price cuts taken in detergents

ITC Excise increase of 13-14% during Union Budget. Inline with the hike, ITC has taken ~7% price hike across its portfolio.

GCPL Acquired Tura, a Nigeria based skin care company with revenues at ~$50m. The acquisition is inline with GCPLsaggressive stance towards inorganic growth.

31st March 2010 marks the end of the sunset clause for investments in Uttarakhand and HP.

Downgraded Dabur during the quarter from Outperformer to Neutral valuation concerns

28


10.51,9732,1818.63,0973,36521.412,65915,369Nestle India

30.71,0431,36235.51,3421,81820.07,3638,836Dabur India

33.244459140.17331,02711.85,6126,274Marico Industries

58.858793274.06611,15065.03,4275,655Godrej Consumer2.75,0215,1567.85,9636,4266.939,88342,628Hindustan Unilever

20.677192933.77611,01714.84,5555,227Colgate-Palmolive

25.18,09110,11825.712,98416,32418.039,27546,345ITC




29/52

April 2010

Uptick in credit continues: Bank credit off-take picks up with an increase of 16% yoy (per RBI data dated 12 th March 2010) onback of improving economic activity.

Rising net interest income: NII growth for our banking universe is expected to increase by ~30% yoy and ~8% qoq benefitingfrom expansion in margins and improving loan volumes. While PSU banks NII growth is seen increasing at ~30% yoy on a low base,private banks and NBFCs are also likely to see a strong ~25% yoy rise, respectively.

Last leg of deposit re-pricing: While the margins benefitted significantly in Q3 owing to deposit re-pricing at lower rates, last leg of deposit re-pricing is likely to aid NIMs in Q4FY10 as well

.driving a sequential expansion in NIMs: We expect benefits of lower costs deposits to drive a ~10-15bp expansion in NIMs for our coverageuniverse on a sequential basis.

Some improvement in CASA: CASA ratio is expected to witness a slight uptrend owing to increased focus by banks, low systemicdeposit rates as well as year end current account floats

Other income to pick-up: Overall non-interest income will sequentially improve by 10.8% though decline by 9.5% on yoy basis,owing to outsized treasury gains booked in Q4FY09

Improvement in credit off-take and favorable market condition would provide the necessary impetus to the fee income.

While treasury gains are likely to be subdued, decline in yields from the peak of 8% is likely to restrict the MTM depreciation for the quarter.

Asset quality deterioration to be similar as Q3FY10: With improving economic scenario and comfortable liquidity, we expectslippages to be similar to the levels of Q3. We believe that pace of NPA accretion has likely peaked and will recede significantlypost Q1FY11

Provisions to remain high: Provisions are expected to increase in Q4FY10, though sequentially decline for private banks andNBFCs, led by easing asset quality concerns. Relatively, PSU banks can face some pressure though we believe it to be only a short

term issue as net impaired loans have peaked in the system.


Financials

29



30/52

April 2010


Financials

30

19.24,6515,5438.79,1159,90726.69,26411,728Union Bank of India

57.88011,26551.51,5392,33248.41,5522,304Yes Bank

0.527,42327,56813.652,77159,95740.048,41967,769State Bank of India

45.53,9045,67920.36,3347,61923.16,3707,838Power Finance Corporation24.58,65610,78028.515,88220,41129.719,06524,736Punjab National Bank25.73,8804,87924.45,7127,10540.54,8196,770REC58.91,5392,44551.93,1704,81534.44,5226,077Shri Ram Transport37.432745043.97311,05216.11,3761,598Shriram City Union Finance

30.36,3098,21912.615,70517,67727.918,52023,694HDFC Bank41.47,43810,51611.921,55524,1274.821,38822,418ICICI Bank(4.1)3,1373,00836.94,8396,62476.94,3747,738IDBI20.33,9414,73912.16,3577,12835.56,6769,044Indian Bank88.550595231.91,5131,99682.41,4432,631Indusind Bank37.249167434.91,2211,64641.31,6242,295ING Vysya Bank77.81,5762,80177.72,2103,92621.92,1152,578LIC Housing Finance*

9.61,0801,18411.72,0632,30413.92,6222,987Mahindra & Mahindra Fin.


17.87,3348,64221.110,39612,59321.710,03312,215HDFC

27.65,8157,41731.811,38515,00739.210,32614,370Axis Bank

11.42,6052,902(10.3)6,7476,05053.94,2836,591Corporation Bank

11.27,5278,36917.713,04515,35721.314,70817,839Bank of Baroda

(39.2)8,1044,929(16.3)14,08111,79212.314,33416,103Bank of India

(3.6)2,6402,5459.86,1416,74325.85,9247,453Allahabad Bank

13.47,1888,1534.812,72613,33219.013,05315,530Canara Bank

Profit After TaxOperating profitNII(Rs m)

* Inclusive of profit on stake sale in LIC MF; PAT of Rs1.78bn excluding this gain



31/52

April 2010


Financials

31

Margins, asset growth, net treasury income, asset qualityUnion Bank of India

Disbursements, marginsRural Electrification CorpDisbursements, expenses, asset quality, loan mixShriram City Union Finance

Credit growth, CASA levels, margins, fee incomeYes Bank

NIMs, credit off-take, treasury gains, slippages, NPA provisions to shore up coverage ratioState Bank of IndiaDisbursements, NPA levels, marginsShriram Transport

Margins, asset growth, NII growth, NPA provisionsPunjab National Bank Disbursements, marginsPower Finance Corporation

Disbursements, marginsLIC Housing FinanceRecoveries, provision expenses, disbursement growth, securitizationM&M FinanceNIMs, fee income growth, provisionsING Vysya BankMargins, fee income, provisions to shore up coverage ratioIndusInd BankBusiness growth, NPA provisions, restructured assetsIndian Bank Loan growth, margins, traction in fee incomeIDBI

NIMs, NPA slippages, CASA, operating expensesICICI BankAsset growth, NIMs, CASA, fee income growth, NPA provisionsHDFC BankDisbursements, spreads, NPA levelsHDFCLoan growth, NIMs, CASACorporation BankNIMs, treasury gains, credit off-takeCanara Bank NPA slippages, loan growth, NIMs, CASABank of India

Fee income growth, NPA provisionsAxis Bank (Ex-UTI Bank)Treasury gains, MTM losses, NIMs, NPA provisionsAllahabad Bank

Bank of Baroda


Credit growth, fee income, margins



32/52

April 2010

Revenue growth for the sector is picking up with improved consumer sentiments up from 21% to 24%

Pantaloon Retail to report 26% growth on the back of 9-10% same store sales growth and ~0.4m sq. ft. of retail space expansionduring the quarter

With gold prices remaining stable and early wedding season, Titan is expected to sustain double digit volume growth in watchesand high single digit growth in jewelry opertaions

Shoppers Stop same store sales growth has picked up to high single digit during the quarter

Provogue has handed over the Aurangabad property for fit outs to the anchor tenants


India Organized Retail

32


8.5839050.510015135.07911,068Provogue India(118.1)(317)58436.44222618.03,5214,155Shoppers' Stop

686.084657148.04311,06822.28,81410,766Titan Industries

76.634460726.31,7302,18526.016,42120,690Pantaloon Retail


*Pantaloon financials for Q3FY10



33/52

April 2010

Infrastructure developers likely to report a 30% yoy rise in revenues

Growth in revenues led by GVK (higher power division revenues due to gas availability for Gautami and Jegurupadu-I and II)

Fall in GMR revenues on yoy basis, as Tanir-bavi barge mounted plant is out of operation (being shifted to AP from Karnataka)

Strong growth expected for airport divisions of both GMR and GVK on back of sharp rise in passenger volumes in 4QFY10 on yoy basis

EBITDA likely to increase by 126%, also led by commissioning of gas-based power plants as well as new road assets

Earnings growth (pre-exceptional) likely to increase by 102% yoy during the quarter


Infrastructure developers

73.31,1732,03468.21,6562,78538.42,8453,939Mundra Port


348.1137612414.13611,854260.21,6706,013GVK Power85.853298987.22,8625,357(5.3)13,27812,568GMR Infrastructure


33



34/52

April 2010

With focus on next years guidance and outlook commentary, Q4FY10 results are likely to be more of a non-event for the ITservices sector. We expect Infosys to conservatively guide to 10-12% USD revenue growth and 5-7% INR EPS growth in FY11 as itbuilds in caution for possibility of a double-dip recession in developed markets, stronger INR, some margin decline and highertaxes.

We expect our coverage universe to report 3-5% sequential growth in USD revenues for Q4FY10. This would be driven by 4-7% qoqvolume growth but ~2% qoq decline in pricing realizations (primarily on cross currency headwinds).We expect a 6.5% yoy growth in revenues (in INR terms) with a PAT growth of 11.5% yoy for our coverage universeThis revenue growth would be slower qoq (compared to last quarter) as annual IT budgets were still in the process of gettingfinalized during the quarter (especially in 1st half of January).The commentary on IT services market place, we believe, is the key monitorable. We expect most of the companies to makeoptimistic statements about IT services market place and demand for offshore IT services.

Q g p

IT Services

34

10.42,2452,4792.72,8182,89413.210,48511,873Mphasis72.3188324(25.3)865647(2.8)3,3813,286MindTree

5.5193204(34.4)618405(7.6)2,0981,939KPIT Cummins

6.4173184(14.2)392336(14.4)2,6432,262Hexaware9.510,01210,9667.914,01915,1338.165,27570,555Wipro


(5.3)16,13015,2703.118,91019,4902.556,35057,751Infosys Technologies

52.37611,1593.91,4321,488(0.2)7,9697,957Patni Computer32.613,14317,43418.518,79622,2717.971,71877,358Tata Consultancy

52.61,9953,0453.26,1036,3007.928,61530,882HCL Technologies

(35.4)2,3051,488(9.7)2,8422,56513.910,51311,976Tech Mahindra




35/52

April 2010

Logistics companies to report revenue growth of 11% yoy for the quarter

Volumes across all companies are likely to increase on yoy and qoq basis driven by improvement of international trade and low base effect

Concors revenues to be impacted due to lower realisations in the quarter

Operating margins to improve during the quarter

Higher volumes and lower empty running to drive higher margins for Concor, Arshiya and GDL

Allcargo margins to be impacted due to lower margins in ECU line business

Consequently, earnings (pre-exceptional) to grow by 11% yoy during the quarter

We maintain our Overweight stance on the sector

Q g p

Logistics

35


23.612014965.914824648.39401,395Arshiya International3.21,8821,94213.22,2532,5496.38,4128,939Container Corporation

89.612523614.430935415.71,1701,354Gateway Distripark

21.42763359.255760815.04,8065,527Allcargo


* Allcargo yearend December Q1CY10E

Volume growth and rail business profitabilityArshiya International & Gateway Distriparks

Volume growth and marginsContainer Corporation

ECU line marginsAllcargo




36/52

April 2010

Higher steel prices to more than offset the increase in raw material prices. Steel companies across our coverage are likely toreport higher realizations

Reduced availability of linkage coal will result in an increase in fuel costs for most of the non-ferrous companies

SAIL to benefit from high volume growth. Improvement in product mix will help improve realizations

Higher non-ferrous metal prices (up 10-85%yoy) will result in improved realization despite a flat sales volume growth. Operatingmargins to remain stable, though appreciating rupee ( 4.4%%yoy) to partially negate the impact.

Q g p

Metals

36

Upside in volumes; Higher realizationsBhushan Steel

Employee costs, impact of coking coal contracts; Significant upside in volumesSAIL

Base metal premium, TC-RC margins in copper businessSterlite Industries

Impact of roll over of coking coal volumes on raw material costs, cost savings at european operationsTata Steel

Shortage of linkage coal to shoot power & fuel expsNalco

PLF at merchant power operations, Spot power tariff which are on a declining trend q-o-qJindal Steel & Power (Consol)

Improvement in product mix; Higher realizationsJSW Steel (Consol.)

Base metal premium, by-product realization, Concentrate salesHindustan Zinc

HindalcoCompany Key monitorables

Product mix in Aluminum business, TC-RC margins in Copper business, Increase in fuel costs



37/52

April 2010

g p

Metals

37

(123.5)(45,013)10,56814,036.033146,790(11.4)264,311234,117Tata Iron & Steel Co.

% chg yoyQ4FY09EQ4FY10% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10E

86.35,98311,148167.67,69320,58462.843,36170,594Sterlite Industries (India)

209.48302,568466.25833,30131.210,88414,276National Aluminium Company

45.414,86621,61459.521,07733,62812.4120,578135,500SAIL

(22.3)1,16490550.42,7204,09264.611,20018,438Bhushan Steel

374.91,8898,971192.815,69145,94024.9134,279167,749Hindalco Industries114.85,51511,845142.75,81314,10984.012,62723,238Hindustan Zinc

22.19,01511,00616.414,93317,3763.528,61329,615Jindal Steel & Power

(946.8)(740)6,266514.62,36014,50553.736,22155,656JSW Steel




38/52

April 2010

Oil & Gas & Petrochemicals

38

Revenues are higher due to higher crude prices yoy, higher refining volumes from RILs new refinery and higher volumes for ournatural gas universe

GRMs at US$3.5-4/bbl for OMCs, US$7.5-8/bbl for RIL and US$5-5.5/bbl for Essar Oil, driven by better market conditions, demandrevival of gasoline and heating oil and better availability of cheaper crude

Volumes expected to remain robust for the OMCs, RIL and Essar, with domestic market continuing to grow robustly, andinternational demand also reviving sequentially

For OMCs, the key question remains the extent to which subsidy will be met by the Government/upstream. We build in only ~20%contribution by OMCs towards cooking fuel subsidy, with the balance being met by the Government. Any slip up on this front willmean a substantially lower earnings number than what we build in for FY10E.

However, a windfall similar to last year, where the entire subsidy gap was reimbursed in Q4FY09 could imply much higherearnings than estimates for the OMCs. Our estimates currently point to material decline in profitability for the OMCs

For the gas companies Transmission volumes will grow marginally on a MoM basis for GAIL and GSPL, while GGCL expected topost another strong quarter on the back of 3% growth in distribution volumes to ~3 mmscmd

Earnings growth strong for ONGC, RIL and gas companies



39/52

April 2010 39

43.536652553.656086037.63,0644,215Gujarat Gas Company108.7347724130.81,1292,606146.21,3203,250Gujarat State Petronet

50.722,06833,24935.859,09580,27915.6138,336159,920Oil & Natural Gas Corpn52.338,74058,98988.753,000100,032108.1283,620590,163Reliance Industries

(65.5)66,23322,879(34.5)89,58558,65617.0537,201628,669Indian Oil Corporation1.46,0746,16125.010,64513,3028.462,33967,583GAIL (India)


(65.7)6,6002,261(15.8)10,1308,53010.268,15075,116Essar Oil(94.1)51,0403,019(80.4)52,77910,367(3.0)253,637246,084HPCL

(79.9)36,2807,308(35.4)41,73426,98018.1265,253313,230BPCL


Under recovery share, production volumesONGC

Transmission volumes for GAIL/GSPL, Distribution volumes and gross spreads for GGCLGas T&D


OMCs GRMs, Inventory movement and under recovery levels (Our estimates suggest ~Rs430bn for FY10, at Indianbasket of crude at US$67-69/bbl for the full year

Essar Oil GRMs and volumes, we estimate GRMs at higher levels than Q3FY10, due to better economic environment

RIL GRMs, Petchem spreads and KG volumes

Oil & Gas & Petrochemicals



40/52

April 2010

With USD/INR appreciating by 140bps on qoq basis, expect operating margins to start coming under pressure for the sector

Sun Expect profitability to decline by 15%yoy on back of high base effect (due to Protonix sales) and continuing uncertainty atCaraco operations. Eloxatin sales during the quarter may provide upsides

Cipla Expect sales to grow by 7%yoy primarily on back of managements conscious decision to reduce sales contribution fromlow margin ARV tenders

Ranbaxy Expect sharp profit growth on the back of Valtrex sales and possible contribution from the encashment of Flomaxexclusivity during the quarter. Revenues expected to grow by 28% yoy to Rs19.9bn for the quarter.

DRL Expect decline in top line growth due to high base effect of Imitrex exclusivity in previous year. Improvement in basebusiness and Prilosec OTC sales to partially off set high base effect.

Lupin Expect strong performance due to steady growth across all geographies aided by contribution from Antara and Lotrel

Glenmark US revenues remain the key monitorable. Stabilization of sales in LatAm/SRMs (post re-stocking) to be watched our.

Ipca Expect strong operating performance in Q4FY10 led by strong topline growth and steady operating margins

Piramal Continuing softness in CRAMS business and critical care business to partially offset strong growth in domesticformulation business. Pickup in Minrad sales along with continued momentum in domestic formulations to be the key.

Dishman Expect earnings to be impacted by reduction in EM sales to Solvay as well as sluggish growth in Carbogen Amcis.Inventory write-offs at Carbogen Amcis to be key monitorable.

Pharmaceuticals

40



41/52

April 2010

Pharmaceuticals

41

Minrad sales and Domestic market momentum; CRAMS business outlookPiramal Healthcare

Margins; CR revenues; outlook on InsulinBiocon

EBITDA margins; Impact of INR appreciationCipla

EM offtake by Solvay; outlook on CRAMS businessDishman Pharmaceuticals

US business momentum; German salesDr Reddys Laboratories

Revenue growth; new product launchesGlaxosmithkline Pharma

US base business revenues; Outlook on MelogliptinGlenmark Pharma

Operating profit growthIPCA Laboratories

US business momentum; Regulated market salesLupin

US business outlook; Flomax contributionRanbaxy Laboratories

Update on CaracoSUN Pharma

Pick-up in sales; EBITDA MarginsAventis Pharma




42/52

April 2010

Pharmaceuticals

35.01,5742,12637.91,8902,60726.810,43413,233Lupin

21.71,1181,36117.81,7842,10212.58,5099,576Piramal Healthcare(132.1)(7,611)2,446(438.7)(823)2,78827.815,54819,866Ranbaxy Laboratories

(180.4)(1,207)970(525.6)(433)1,84334.04,9116,582Glenmark Pharma272.97929521.353865212.13,1753,558IPCA Laboratories

(15.1)4,3423,686(5.6)4,1383,907(2.3)11,34411,086SUN Pharma


13.11,2541,41814.01,6451,87614.04,5725,212Glaxosmithkline Pharma

4.34054231.56166258.12,5152,719Aventis Pharma

(118.8)(9,777)1,834(45.1)4,6842,570(13.5)19,85117,164Dr Reddys Laboratories

203.225075840.39001,26333.34,6636,214Biocon

26.82,5293,20814.83,5924,1237.413,66714,679Cipla(51.1)436213(34.3)782514(13.1)2,9712,581Dishman Pharmaceuticals


42



43/52

April 2010

Rising crude prices and increasing rig count, indicate higher exploration and development capex impairing future revenuevisibility of pipe companies. Global rig count continues to increase sequentially

Order book position of pipe companies continue to increase sequentially; growing earning visibility over a few quarters

Ebitda margins are expected to rise sequentially coupled with a flattish volume growth

Pipes

43

% chg yoyQ4FY09EQ4FY10% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10E

136.95181,22769.81,6062,727(14.4)18,31815,672Welspun Gujarat Stahl Rohren

8.6477015.51,0201,076(32.3)5,4953,720Maharashtra Seamless31.99781,29020.21,8672,24510.914,63716,236Jindal Saw

186.013638965.16241,030(29.8)12,1658,541PSL


*year ending December; Source: IDFC-SSKI Research



44/52

April 2010

Equipment companies to report growth in revenues of 13.8% yoy

Robust growth in BHEL (+17.2% yoy as per provisional results)

Operating margins to rise by +221bps

BHEL margins improve 300bps yoy, led by benefits of operating leverageEarnings growth (pre-exceptional) likely to be at 38% yoy during the quarter

We maintain Outperformer on Crompton, Neutral on BHEL and Underperformer on ABB

Power equipment

22.482100(4.0)2772660.12,0792,081EMCO


45.312,97918,85940.315,99522,44517.2105,182123,280Bharat Heavy Electricals4.71,9392,0293.83,2873,4113.824,60025,526Crompton Greaves

9.37848577.31,2711,3648.513,93115,116ABB


* Q1CY10 estimates

44



45/52

April 2010

Power transmission companies to witness strong execution, which is likely to drive strong growth in revenues

Operating margins are likely to improve strongly led by pick up in execution as also lower input prices

KEC margins to fall led by high base effect (high margin order executed in 4QFY09)

Interest expenses to fall on yoy basis led by release in working capital and lower interest ratesNet earnings (pre-exceptionals) for Jyoti likely to grow by 18% led by pick up in execution

While we expect KECs profits to fall by 2.5% (lower margins), reported profits are likely to be higher due to tax benefit onmerger with RPG cables

We maintain our overweight stance on the sector

Power transmission

(2.5)695678(1.1)1,4251,40917.511,34613,332KEC International18.221024924.849061220.44,6995,659Jyoti Structures

% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10E% chg yoyQ4FY09Q4FY10EProfit After TaxEBITDANet Sales(Rs m)

Order inflows, execution and marginsJyoti Structures, KEC International


45



46/52

April 2010

Utilities to witness 8% yoy growth in revenuesPass through of lower fuel costs to offset higher tariffs under new CERC norms for NTPC

EBITDA margins to rise by 283bps on a yoy basis

NTPC to see a sharp jump in margins, led by a higher RoE under the new tariff guidelines

Net earnings (pre-exceptionals) for companies to witness a 29% growth in Q4FY10

We maintain our overweight stance on the sector with our top pick being Reliance Infrastructure, Lanco

Power utilities

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(27.8)1,14482727.03,0153,828(12.9)20,53417,878Lanco Infratech

111.9143304694.423186143.311,77728,657PTC


405.42401,215614.44803,430600.15433,804Jaiprakash Hydro Power

24.01,5391,90835.22,9073,93021.614,71617,893Tata Power Company

(6.7)6662(54.9)57726011.71,0121,130KSK Energy Ventures

24.521,17126,3687.135,45537,981(7.3)130,327120,854NTPC

19.69401,12433.71,5202,03220.87,4108,953CESC

54.12,6774,1252,651.6952,61720.524,01928,955Reliance Infrastructure




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April 2010

Expect ~50% yoy growth in top line of our sector universe - Unitech leading the pack with highest growth

Low base effect to result in 182% PAT growth yoy for our sector universe (Q4FY09 being one of the worst quarters)

DLF has completed the merger of DAL with DLF Cyber City and listing now appears to be the next right step. Our estimates ofQ4FY10 includes asset/land sales of Rs.12.5bn (reported numbers could be lower as no announcement has come so far)

Unitech continue to consolidate on its ~25msf of launches by increasing sales volumes in the quarter. We expect ~15msf ofsales in FY10. Early conversion of warrants (50m) by promoters will boost cashflows by ~Rs1.9bn

We expect HDIL to sell ~1.7msf of TDRs in Q4FY10 at an average price of Rs2,500psf. Cash flows are expected to remainstrong given the excellent response received for residential and commercial projects in Virar

Real estate

(26.9)2,7362,000134.11,2662,964134.13,8539,019Unitech


193.76191,818116.69652,09011.53,5793,991HDIL

536.41,59110,125275.71,5465,80833.611,22314,999DLF


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Completion and delivery of ongoing projects, absorption rates in the new launches and scale up of Mumbai developmentsUnitech

Completion of MIAL Phase I and launch of Phase II, movement in demand and price of TDRs and progress on rental housing

project (Virar)HDIL

Proposed listing of DLF Cyber City on Singapore Stock exchange, progress on asset sales (wind power, land plots) andlaunches in value housing segmentDLF




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April 2010

Telecom

We estimate 7-12%qoq growth in average subscribers

Continued migration to lower tariff plans would likely lead to ~3 -6%qoq drop in wireless revenue/min (RPM). We estimatemigration to lower tariffs would be largely complete by 4QFY10 and the decline in RPM should moderate in FY11

ARPU drop of 6-8%qoq is estimated to be offset by robust subscriber additions leading to mostly flat wireless revenue. Idealikely to gain moderately from new market launches.

Wireless margins are expected to decline sequentially by 50-200bps. Idea impacted by new market launches (Kolkata, WB,J&K, Assam, North East) in 3QFY10

Reported PAT for RCOM and Bharti is expected to be cushioned by significant derivative gains resulting from 3.5%appreciation in Rupee during 4QFY10.

Recurring consolidated PAT is estimated to be mostly flat for Bharti and RCOM. Idea to report 8.7%qoq decline in net profitprimarily due to higher losses in new circles and full merger of Spice operations w.e.f. 12 th March 2010.


(34.8)2,5501,6631.78,1278,26612.429,42533,072IDEA Cellular(64.8)13,5374,769(22.5)24,00718,615(10.7)61,31154,749Reliance Communication

(17.5)24,75520,411(1.9)40,01439,2530.298,24598,445Bharti Airtel


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April 2010

Transportation

GE Shipping

On the back of a severe winter, we except to see a sequential improvement in numbers.

Standalone shipping revenues are expected to report a 20% growth qoq and a flattish growth yoy.

The quarter include gain of ~Rs50m on sale of vessels (MPSV).

The global economic recovery, and thereby improvement in freight rates beyond the winter months, remains a keymoniterable.

Jet Airways

With passenger traffic returning into the system and constrained supply, the macro-economic environment is turningfavorable for aviation.

Post a profitable quarter, we expect Jet to slip into losses due to the seasonality. We expect to see a net loss of Rs2.6bn inthe quarter.

Jet Airways has signed a new dry lease agreement for three of its B-777-300 aircraft with Thai Airways. This agreement isvalid for a period of three years with immediate effect. The impact has already been factored in our numbers. The leaseagreements with Thai Airways are in addition to the four other B777-300 aircraft currently on a dry lease with Turkish

Airlines.Jet reported consolidated gross debt at $3.1bn ($2.2bn is aircraft debt) last quarter. The current payment obligationsamount to ~$330m. While Jet has received the required approvals to raise $400m of funds, ability to raise funds is a keymoniterable.

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April 2010

Transportation

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236.9(786)(2,648)(21.3)2,3561,8549.627,74430,419Jet Airways


(59.3)2,5011,018(21.8)2,6502,073(0.1)5,6085,603Great Eastern Shipping*


*Numbers are standalone


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100406 4QFY10 Earnings Preview IDFC-SSKI

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