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1

Latest Research

- Cummins India - growth outlook maintained; Buy

- Infosys - changing mindset; Hold

- Mphasis - no respite in the medium term; Reduce

- EdelFlash: Nestle-High capex & second R&D centre reflects aggressive India plans

- Wipro - course correction to address higher growth mandate; Hold

- Cement Channel Check – prices seem to have peaked in North, Central and East

- Fertilisers - subsidy increased significantly for non-urea fertilisers under NBS scheme

- EdelFlash: Economy - powe rful quake hits Japan

- IIP - IIP remains weak, led by capital goods

- Corporate Action Tracker

- Bond Vector - Range bound trade; 10 year benchmark bond closes the week at 7.95%

- WSS - Deposit growth sees momentum post in the increase in the rates by banks; non food off take remains robust

Regular Features

- Sales Trader’s Commentary

- Insider Trades & Bulk Deals

- Technical Updates

- Eye Catchers

- Technical Updates

- Eye Catchers

Contents

March 14, 2011 , 2010

Daily India Equity Research

First Call

Open Interest (INR mn)

Volume 11-Mar-11 10-Mar-11 % Change

Futures 494,197 495,051 (0.2)

Call 390,585 381,616 2.4

Put 468,592 461,520 1.5

Total 1,353,374 1,338,188 1.1

Put Cal l Rat ios

Volume 11-Mar-11 10-Mar-11 % Change

PCR 1.10 1.02 7.4

WPCR 1.26 1.04 21.3

OI PCR 1.19 1.20 (0.8)

Total OI/ Volume 1.13 1.56 (27.6)

Nifty IVs at 21 - 26% levels.

FII Activity* (INR Mn) (10-Mar)

India Change in %

11-Mar-11 1-d 1-mo 3-mo

Nifty 5,445 (0.9) (0) (8.4)

Sensex 18,174 (0.8) (0.2) (8.2)

CNX 500 4,344 (0.5) (0.5) (9.7)

Global Indices

11-Mar-11 1-d 1-mo 3-mo

DJIA 12,044 0.5 (1.8) 4.9

NASDAQ 2,716 0.5 (3.6) 3.3

Hang Seng 23,163 (0.4) 0.2 (1.1)

Nikkei 225 9,790 (4.5) (8.7) (5.1)

Net Inv ( INR Bn)

9-Mar-11 Buy Sell Ne t

FII Cash 16.5 16.9 (0.4)

FII F&O 108.1 102.7 5.4

MF Cash 2.6 3.1 (0.5)

Value Traded - India ( INR Bn)Change in %

11-Mar-11 1-d 1-mo 3-mo

BSE Cash 40.1 33.9 16.4 (7.5)

NSE Cash 111.6 16.9 (19.0) (35.1)

NSE F&O 1,195.2 (30.5)

Forex/Money Market Change in %

11-Mar-11 1-d 1-mo 3-mo

INR/USD 45.2 (0.1) 1.0 (0.2)

USD/EUR 1.4 0.2 3.3 4.1

USD/YEN 0.0 0.4 (1.4) (1.8)

10 Yr G-Sec 8.0 0.4 (2.1) (1.9)

Commodit ies (USD/Mt ton) Change in %

11-Mar-11 1-d 1-mo 3-mo

Copper 9,172.0 (0.0) (8.1) 1.5

Aluminium 2,512.0 (1.6) 1.5 9.6

*Gold 1,423.1 0.4 4.5 1.9

*Silver 35.9 (0.1) 17.1 21.7

**NYMEX 101 (1.5) 18.2 15.2

*USD/Troy Ounce **USD/bbl

Agri Commodit ies ( INR/QT)Change in %

11-Mar-11 1-d 1-mo 3-mo

Sugar 2,948.4 (0.2) (0.2) (2.1)

Cotton^ 6,296.5 1.3 4.0 51.4

^INR/Maund ^^INR/KG

Sectoral Movements % Change

Ticker 11-Mar-11 1 D 1 M 3 M 1 Y

Banking 12,193 (1.0) (0.4) (7.2) 17.9

IT 6,722 (0.3) (2.1) (3.1) 12.8

Pharmaceuticals 5,814 (0.3) (3.6) (12.4) 14.9 Oil 9,719 0.8 4.2 (8.8) (1.1)

Power 2,554 (1.5) (3.1) (13.4) (16.3)

Auto 8,768 (0.9) (0.5) (12.0) 15.8

Metals 15,368 (1.9) (2.8) (7.4) (11.0)

Real Estate 2,104 (0.8) (1.8) (26.1) (37.9)

FMCG 3,492 0.0 6.1 (2.1) 24.9

Capital Goods 12,559 (1.4) (5.6) (18.7) (8.9)

Edelweiss Securities Limited

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STOCKS IN NEWS

Taxman says GTL admits evasion on 500 cr (DNA)

GAIL to raise $225 million through ECBs (DNA)

Reliance Infra hopes to bag 10% of highway projects (ET)

Bharti Won’t Buy Govt’s 30% Stake in Hexacom (ET)

Amara Raja a good bet on rising OEM play (DNA)

Robert Vadra ties up with DLF, makes low-key entry into Real estate business (ET)

3

Edelweiss Securities Limited 3

SALES TRADERS COMMENTARY

On Friday, the equity benchmark closed lower, extending losses for the second straight day. Markets settled on a disappointing note due to the Japan earthquake. Profit booking was seen in Metals, IT, Power, Capital Goods and Financial stocks.

The Sensex closed at 18174, down 153 points, while the Nifty slipped 49 points to 5445.

Major gainers were Oil & Natural Gas Corporation (2.14%), Reliance Industries (0.73%), Tata Power Company (0.55%), Hindustan Unilever (0.42%), and I T C (0.15%).

Major losers were Bharat Heavy Electricals (3.64%), Reliance Communications (3.46%), Reliance Energy (3.19%), Sterlite Industries (India) (3.06%), Jaiprakash Associates (2.90%), and Tata Consultancy Services (2.89%).

The Oil & Gas index was up 0.81%. Major gainers were Oil & Natural Gas Corporation (2.14%), Hindustan Petroleum Corporation (1.66%), Oil India (1.62%), Petronet LNG (1.03%) and Bharat Petroleum Corporation (0.31%).

The Metal index was down 1.91%. Major los ers were JSW Steel (3.94%), Hindustan Zinc (2.55%), Hindalco Industries (1.65%), Jindal Steel & Power (1.3%) and Jindal Saw (1.08%).

The TECk index was down 1.61%. Major losers were Mphasis (4.77%), Reliance MediaWorks (4.66%), Dish TV India (3.31%), Bharti Airtel (2.08%) and Idea Cellular (1.94%).

The IT index dipped 1.49%. Major losers were Mphasis (4.77%), Oracle Financial Services Software (2.05%), Infosys Technologies (1.07%), H C L Technologies (0.5%) and Core Projects and Technologies (0.06%).

Major losers in the mid-cap space were A B G Shipyard (3.08%), Aban Offshore (3.08%), A2Z Maintenance & Engineering Services (2.62%), Alstom Projects India (2.57%) and A I A Engineering (0.9%).

Major losers among small caps were Provogue (India) (3.04%), Action Construction Equipment (3.02%), A K Capital Services (2.89%), Aarti Industries (1.87%) and Abhishek Industries (1.32%).

Globally, Asian indices ended nagative, while Europe indices were trading lower.

SALES TRADERS COMMENTARY

Edelweiss Research is also available on www.edelresearch.com, Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset. Edelweiss Securities Limited

•

We recently met the management of Cummins India (CIL). Following are the key

takeaways from our interaction:

Mega site capex on track

The company expects the low KVA generators (<200 KVA) plant to be

commissioned in the next 18 months with an annual capacity of 40,000

generators; current capacity stands at 14,000. Almost 100% of the incremental

generators capacity will cater to the company’s export revenues. The high HP

engines reconditioning and rebuild facility has begun operations with current

dispatch of around two engines per day.

Power generation market shifting from primary to standby market While the company has been garnering more than 90% of revenue from the

primary market (>500 hrs/annum) and the balance 10% from the standby

market, management expects a strong shift towards the latter going ahead,

which will lead to a shift in the revenue mix as well.

Industrial business group (IBG) to post healthy growth Management expects a growth of 15% CAGR over the next 3-4 years in the

industrial business (currently 25% of the total revenues) led by strong traction in

mining, construction etc. Mining & construction accounts for major portion of

industrial revenues of the company.

Outlook and valuations: Positive; maintain ‘BUY’ Sustainable product leadership advantage gives CIL huge pricing power which

coupled with multiple growth avenues like gas engines, improved outsourcing,

and stricter emission norms augur well for its long-term growth potential. We

perceive the mega-site expansion as a pro active step towards strengthening the

India product portfolio to meet both domestic as well as increased export

demand. The stock currently trades at a P/E of 22x & 17x for FY11E & FY 12E

respectively. We reiterate our positive outlook on the company and maintain our

‘BUY/Sector Outperformer’ recommendation/rating on the stock.

India Equity Research | Engineering and Capital Goods Visit Note

CUMMINS INDIA

Growth outlook maintained

March 10, 2011

Reuters: CUMM.BO Bloomberg: KKC IN

EDELWEISS 4D RATINGS

Absolute Rating BUY

Rating Relative to Sector Outperformer

Risk Rating Relative to Sector Low

Sector Relative to Market Underweight

Note: Please refer last page of the report for rating explanation

MARKET DATA

CMP : INR 680

52-week range (INR) : 810 / 463

Share in issue (mn) : 198.0

M cap (INR bn/USD mn) : 135 /2,982

Avg. Daily Vol. BSE/NSE (‘000): 224.0

SHARE HOLDING PATTERN (%)

Promoters* : 51.0

MFs, FIs & Banks : 20.6

FIIs : 12.1

Others : 16.3

* Promoters pledged shares (% of share in issue) : NIL

PRICE PERFORMANCE (%)

Stock Nifty EW Capital

Goods Index

1 month 10.2 5.1 2.5

3 months (9.7) (6.2) (7.7)

12 months 46.8 7.4 (9.0)

Amit Mahawar

+91 22 4040 7451

[email protected]

Rahul Gajare

+91 22 4063 5561

[email protected]

Financials

Year to March FY09 FY10 FY11E FY12E

Revenue (INR mn) 33,043 28,449 42,474 56,291

Rev. growth (%) 41.8 (13.9) 49.3 32.5

EBIDTA (INR mn) 4,772 5,274 8,188 10,896

Net profit (INR mn) 4,337 4,439 6,039 7,818

Shares outstanding (mn) 198 198 198 198

EPS (INR) 20.9 22.4 30.5 39.5

EPS growth (%) 47.7 7.1 36.0 29.5

P/E (x) 32.5 30.3 22.3 17.2

EV/ EBITDA (x) 27.4 24.0 15.3 11.5

ROAE (%) 33.2 30.0 35.2 38.1


•

Gearing towards changing business model… We met V Balakrishnan, CFO of Infosys Technologies’ (Infosys). We sensed a

realisation within the company that it needs to proactively offer solutions to stay

relevant to its clients. It is, therefore, now focused on creating/acquiring IPs and

solutions. Also, it is building/strengthening capabilities to offer cloud computing

solutions to clients. It has 2,500 people across various verticals working on

creating IPs and solutions. While it is averse to compromising its philosophy of

operating at higher pricing and margins, it is gearing towards the next growth

phase; in the process, it is willing to let go resources that lack adaptability to the

changed mindset. We believe Infosys is more inclined than ever to pursue

acquisitions for owning more IPs/platforms to drive non-linearity in revenues.

…will ensure soft landing Infosys recognises the need to change and is talking tough to its employees.

However, as it invests in building IPs or acquiring companies with IPs, platforms

or solutions, it remains confident of ensuring a soft landing i.e. controlling the

impact of all new initiatives on its existing business structure.

Confident of defending margins in medium term Infosys, we believe, defends margins by controlling costs when revenue growth

slows down and by increasing pricing when revenue growth improves. In the

current phase of recovery, we believe, Infosys will find it tough to get substantial

pricing increases (more than 5%) and, hence, there is a negative margin bias.

However, the company remains confident of maintaining margins as it expects to

utilise levers like pricing, utilisation and widening employee pyramid. Infosys

expects to hike India salaries by 10-13% in FY12, lower than 15.5% in FY11.

Outlook and valuations: In Transformation mode; maintain ‘HOLD’ Infosys stock is down 10% YTD, same as the Sensex, but has underperformed

both TCS and Wipro. We expect Infosys to face margin pressure, in line with our

view that obtaining significant price hikes in the current environment will be

challenging. Hence, at 21x FY12E earnings (same as TCS), we continue to prefer

TCS for its superior revenue growth and better margin prospects. We maintain

‘HOLD/Sector Performer’ recommendation/rating on the stock.

India Equity Research | IT Visit Note

INFOSYS TECHNOLOGIES

Changing mindset

March 10, 2011

Reuters: INFY.BO Bloomberg: INFO IN


Absolute Rating HOLD

Rating Relative to Sector Performer


Sector Relative to Market Equalweight


MARKET DATA

CMP : INR 3,090

52-week range (INR) : 3,499 / 2,485


M cap (INR bn/USD mn) : 1,774 /39,297

Avg. Daily Vol. BSE/NSE (‘000): 1,085.2 SHARE HOLDING PATTERN (%)

Promoters* : 16.0


FIIs : 36.6

Others : 39.0



Stock Nifty EW Technology

Index

1 month (1.1) 5.3 1.9

3 months (1.8) (4.1) 2.7

12 months 17.6 8.4 26.2

Ganesh Duvvuri

+91 22 4040 7586

[email protected]

Kunal Sangoi

+91 22 6623 3370

[email protected]

Financials


Revenues (INR mn) 216,930 227,420 277,350 341,897

Rev. growth (%) 30.0 4.8 22.0 23.3

EBITDA (INR mn) 71,950 78,610 91,915 108,695

Net profit (INR mn) 59,880 62,180 69,419 84,144


Diluted EPS (INR) 104.4 108.9 121.5 147.3

EPS growth (%) 28.5 4.3 11.6 21.2

Diluted P/E (x) 29.6 28.4 25.4 21.0

EV/EBITDA (x) 23.2 20.6 17.3 14.2

ROAE (%) 37.4 30.1 27.4 27.8


Mphasis’ recently declared results for quarter ending January 2011, came in

as a shocker with actual results differing significantly against expectations,

despite anticipated concerns. We met with Mr. Ganesh Murthy, CFO, Mphasis

to understand business outlook going forward from direct and HP channel.

We summarize the takeaways below:

Expect moderate growth through HP channel (1-2% Q-o-Q) Driven by decline in HP’s services revenues, management has indicated sluggish

revenue growth (meager 1-2%) from the HP channel for the next few quarters.

Factors such as volatility in HP’s services revenues, short-term signings or

project based revenues lower than expected and migration work losing traction

are resulting in overall bleak growth outlook from the HP channel.

Revenues from direct channel to grow faster than HP channel With a view of increasing direct channel’s contribution (currently 32% of

revenues), Mphasis is hiring talent to develop industry specific solutions in the

banking and capital markets (BCM) and insurance verticals. Also, two-third of its

sales force is dedicated to direct channel. Management expects these initiatives

to be fruitful and believes it to grow 3-5% Q-o-Q for the next three quarters.

Operating margins to drift down further Management expects EBIT margins in the range of 16-18% for the next three

quarters. We believe persisting price pressure and wage hikes (~10% offshore

and 2-3% onsite) effective May 2011 - are key reasons for margin detractors.

Acquisition to reduce HP dependence and add new logos Mphasis is actively looking for an acquisition to utilise part of its accumulated

USD 380 mn cash pile. However, we will be cautious on the same, given its

primary rationale is to add new logos and revenues to reduce dependence on HP.

Outlook and valuations: No respite; maintain ‘REDUCE’ Mphasis’ business continues to have structural issues, with HP determining the

growth trajectory. Muted revenue growth and margin decline trend is expected

to continue. We, thus, maintain our ‘REDUCE/ Sector Underperformer’

recommendation/rating on the stock. At CMP of INR 461, the stock is trading at

P/E of 11.9x and 11.5x our FY12E and FY13E estimates, respectively.


MPHASIS

No respite in the medium term

March 10, 2011

Reuters: MBFL.BO Bloomberg: MPHL IN


Absolute Rating REDUCE

Rating Relative to Sector Underperformer

Risk Rating Relative to Sector Medium



MARKET DATA

CMP : INR 461

52-week range (INR) : 712 / 355


M cap (INR bn/USD mn) : 97 /2,145

Avg. Daily Vol. BSE/NSE (‘000) : 663.2


Promoters* : 60.5


FIIs : 18.0

Others : 13.5

* Promoters pledged shares (% of share in issue)

: NIL



Index

1 month (26.9) 5.3 1.9

3 months (21.3) (4.1) 2.7

12 months (28.4) 8.4 26.2

Kunal Sangoi

+91 22 6623 3370

[email protected]

Ganesh Duvvuri

+91 22 4040 7586

[email protected]

Financials

Year to October FY10 FY11 FY12E FY13E

Revenues (INR mn) 42,639 50,365 52,321 59,164

Revenue growth (%) 30.5 18.1 3.9 13.1

EBITDA (INR mn) 11,275 12,648 10,402 11,955

Net profit (INR mn) 9,087 10,907 8,154 8,487


Diluted EPS (INR) 43.1 51.8 38.7 40.2

EPS growth (%) 79.3 20.0 (25.3) 4.1

Diluted P/E (x) 10.7 8.9 11.9 11.5

EV/EBITDA (x) 7.7 6.4 7.1 6.0

ROAE (%) 48.1 38.6 22.3 19.4


•

Mr. Antonio Helio Waszyk, Chairman and MD, Nestle India (Nestle), has said that

growth in India is on track and the company can sell more, but for capacity

constraints. Nestle has chalked out ~ INR 18 bn investment plan over the next two-

three years and also on the anvil is second Research and Development (R&D) centre.

Capacity expansion details

Karnataka: Investment of INR 3.60 bn for noodles to expand capacity by ~20%.

Goa: Investment of INR 5 bn for expansion in confectionery until Q2CY12.

Himachal Pradesh: This unit (ninth manufacturing facility) will manufacture

chocolates and noodles. INR 4-5 bn will be invested in the facility until Q2CY12.

Haryana: Investment of INR 6 bn for the green field facility by CY11 end.

Punjab: Investment of INR 2 bn by end CY11 for manufacturing chocolates.

One more R&D facility: Nestle is constructing a new (R&D) unit in Karnataka at an

investment of USD 50 mn. Apart from this, the company is spending INR 2 bn on a

R&D centre at Manesar which will employ 100 people. India is one of the few

emerging countries where Nestle has a R&D centre.

New products: Four new products planned under coffee segment in winter 2011

and new products in popular foods category also planned.

Raw material inflation: Nestle is planning to introduce a new manufacturing

technology to increase yield of coffee berry. It will introduce a range of value-added

products and command high pricing power. EBIDTA margin jumped 286bps Y-o-Y to

19.7% in Q4CY10 as predicted by us in our Q3CY10 result update, Nestle: Sales

rebound; margins likely to follow suit, dated November 1, 2010.

Our view: We are enthused by Nestlé’s plan for higher capex to meet the growing

demand for its products and launch new products. We believe Nestle is the best play

on packaged foods from a longer term perspective. Nestle has posted buoyant sales

growth consistently in spite of high food inflation and we believe this momentum will

continue in the coming quarters with increased focus on new product launches.

Although coffee prices have spiked up recently, Nestle has demonstrated high pricing

power, which will continue. We maintain ‘HOLD/Sector Underperformer’.

India Equity Research | FMCG Flash Note

NESTLE

High capex & second R&D centre reflects aggressive India plans

March 11, 2011

Reuters: NEST.BO Bloomberg: NEST IN






MARKET DATA

CMP : INR 3,935

52-week range (INR) : 4,199 / 2,570


M cap (INR bn/USD mn) : 379/ 8,410

Avg. Daily Vol. BSE/NSE (‘000): 41.1


Promoters* : 62.8

MFs, FIs & Banks : 8,3

FIIs : 10.7

Others : 18.2

* Promoters pledged shares (% of share in issue) : Nil


Stock Nifty EW FMCG

Index

1 month 23.9 5.3 8.8

3 months 6.6 (4.1) (0.7)

12 months 46.2 8.4 29.2

Abneesh Roy

+91 22 6620 3141

[email protected]

Nitin Mathur

+91 22 6620 3073

[email protected]

Harsh Mehta

+91 22 4063 5543

[email protected]

FLASHFLASHFLASHFLASH

Financials

Year to December CY08 CY09 CY10 CY11E CY12E

Revenues (INR mn) 43,242 51,294 62,548 75,778 90,405

Rev. growth (%) 23.4 18.6 21.9 21.2 19.3

EBITDA (INR mn) 8,638 10,345 12,497 15,208 18,773

Net profit (INR mn) 5,646 7,196 8,554 9,872 12,208

Shares outstanding (mn) 96 96 96 96 96

Diluted EPS (INR) 58.6 74.6 88.7 102.4 126.6

EPS growth (%) 30.9 27.5 18.9 15.4 23.7

Diluted P/E (x) 67.4 52.9 44.5 38.6 31.2

EV/EBITDA (x) 43.9 36.7 30.3 24.8 19.9

ROAE (%) 126.6 136.5 119.1 93.8 81.7


•

Wipro along with Q3FY11 results in January 2011, had also announced the

resignation of its joint CEOs and appointment of Mr. T K Kurien as the new

CEO. The latter announcement had overshadowed the quarterly financial

performance and raised doubts about the restructuring in top management.

We met with Mr. Manish Dugar, CFO, Wipro Technologies, to understand the

key changes and reasons behind them. In a nutshell, according to the

management, the recent restructuring is aimed at improving customer

centricity, enabling swift decision making and single point accountability.

‘One Wipro’ positioning among key desirables from restructuring With customer feedback on Wipro coming across as a fragmented organisation,

the company recognizes that taking an integrated view and then mining into an

account to cross-sell and up-sell more services is the key. Thus, it is putting in

place single-point accountability for ‘One Wipro’ positioning.

Cutting layers of approval to simplify and quick turnaround Among recent changes, the geography head structure has been eliminated

(barring geo heads for emerging markets with a goal to make them large) and

global programme teams (GPT) have also been dismantled and absorbed in

various business units (BU). This is aimed to reduce overlaps and internal

friction, and lead to quick response to client needs.

Account management to improve with independent p/l responsibility

Now, BU heads carry independent p/l responsibility for their respective verticals

(earlier shared by geo head). Further, the client engagement manager (CEM)

who reports to the BU head is responsible for p/l of the assigned client. With

clear assigned resource pool, responsibility and concerted efforts, the

effectiveness of CEM will improve, aiding better account management/ mining.

Outlook and valuations: Chasing growth: maintain ‘HOLD’

Wipro has set high expectations by committing to deliver results of recent

restructuring in the next two-three quarters. We, however, believe it may take

longer for benefits to flow, as changing client perception and mindset change

(within company) are long drawn processes. Thus, despite Wipro’s valuation

discount of ~17% to Infosys we maintain ‘HOLD/Sector Underperformer’

recommendation/rating on the stock.


WIPRO

Course correction to address higher growth mandate

March 10, 2011

Reuters: WIPR.BO Bloomberg: WPRO IN







MARKET DATA

CMP : INR 455

52-week range (INR) : 500 / 328

Share in issue (mn) : 2,454.1

M cap (INR bn/USD mn) : 1,116 /24,721

Avg. Daily Vol. BSE/NSE (‘000) : 1,680.1


Promoters* : 79.3


FIIs : 5.4

Others : 11.7




Index

1 month 6.3 5.3 1.9

3 months 3.6 (4.1) 2.7

12 months 8.5 8.4 26.2

Kunal Sangoi

+91 22 6623 3370

[email protected]

Ganesh Duvvuri

+91 22 4040 7586

[email protected]

Financials


Revenues (INR mn) 256,891 271,957 311,918 370,320

Rev. growth (%) 30.1 5.9 14.7 18.7

EBITDA (INR mn) 51,948 60,059 67,644 84,811

Net profit (INR mn) 38,781 45,935 53,659 64,371

Shares outstanding (mn) 2,424 2,429 2,440 2,443

Diluted EPS (INR) 15.9 18.8 21.9 26.2

EPS growth (%) 20.2 17.7 16.7 19.8

Diluted P/E (x) 28.5 24.2 20.8 17.3

EV/EBITDA (x) 21.1 17.9 15.7 12.2

ROAE (%) 27.7 26.5 24.8 24.6

Cement prices seem to have peaked in northern, central and eastern regions,

post the hikes of ~INR 5-10/bag taken after the budget. Our channel checks

in these regions suggest demand resistance at higher levels even as

companies have announced further price hike of INR 10/bag from mid-March.

Prices may however remain flat or witness marginal declines in the coming

few weeks. While prices in West could rise further, select states in South may

witness further hikes. At current levels, prices are higher by ~INR 5-40/bag

in trade and non-trade segments across regions against last month. Feedback

from dealers suggests improved demand in South and West, but sluggishness

in North, Central and East compared with previous month.

All-India February 2011 despatches up 9.8% Y-o-Y All-India cement despatches, at 18.4 mn tonnes, grew 9.8% Y-o-Y on a low

base of February 2010, but were flat M-o-M. Aggregate despatches of seven

major players (comprising ~55% of overall industry despatches) jumped 11.2%

Y-o-Y for February 2011, but declined 1.3% M-o-M.

Region-wise summary

We surveyed 29 cities across India to get a region-wise trend of demand and

prices in both trade and non-trade categories. Key highlights are as below:

North: Prices seem to have reached a peak Including the hike of ~INR 5-10/bag post budget, current prices are higher by

~INR 10-40/bag in both, trade and non-trade segments against previous

month. Price hike of another INR 10/bag across regions is announced from mid-

March, but the feedback suggests it is unlikely to go through, since demand is

likely to weaken in the third week due to non-availability of labour due to Holi

and resistance in trade market at high prices. Though in small quantities,

companies have resumed supplies in the non-trade category in NCR region at

prices lower by INR 10-15/ bag compared with the trade segment. Demand in

Punjab remains muted despite government lifting the ban on sand mining.

East: Further price hike in March unlikely Demand in March is flat compared with last month. Including the hike of ~INR

10/bag post budget, current prices are higher by ~INR 10-40/bag. Though price

hike of INR 10/bag has already been announced, it is unlikely to go through

across region. Supplies in the non-trade segment remained low.

South: Demand improves over last month Dealers convey improved demand against February 2011 and expect it to gain

pace. Demand in Bangalore has taken a knock in the past few days as

government has banned aggregate crushers from operating within 60 km

vicinity of the city. Favourable outcome is expected in the coming days.

Including the hike of ~INR 5-10/bag post budget, current prices are higher by

~INR 5-30/bag in the region. Prices are likely to increase further in Andhra

Pradesh and Tamil Nadu.


Navin Sahadeo

+91-22-6623 3473

[email protected]

Prasad Baji

+91 22 4040 7415

[email protected]

Sanjiv Chandwani

+91 22 4063 5541

[email protected]

India Equity Research | Cement Monthly Update

CEMENT

xxx Prices seem to have peaked in North, Central and East

March 11, 2011

Substantial hike in subsidy for NBS fertilisers for FY12 • Government of India (GoI) has increased the subsidy for various non-urea

fertilisers under the Nutrient Based Subsidy (NBS) scheme for FY12 by ~10-

15% from FY11 and by ~30-45% from its earlier announcement made for

FY12 in November 2010.

• This has been done on account of higher raw material prices for fertilizers,

fueled by strong demand from geographies like US and Brazil and also to

some extent on account of the unrest in some of the African countries that

provide significant quantities of fertiliser raw materials.

NBS enabling fertiliser companies to innovate with enhanced flexibility • We have seen NBS being successful in encouraging companies to innovate

and manufacture new grades of fertilisers for which they can approach the

Department of Fertilizers and get those included under the subsidy net.

• In this context, fertilisers under the subsidy net have been increased to 22

from the earlier 19.

• This enables companies to have flexibility in terms of manufacturing new

varieties of fertilisers depending upon soil requirement, to maximize the

benefits to farmers as well to enhance the companies’ profitability.

New subsidy to help complex fertiliser companies to maintain margins • We expect that complex fertiliser companies like Coromandel International

(Coromandel), Zuari Industries (Zuari) and GSFC will be able to maintain

their margins in FY12 at par with those in FY11 on account of the higher

subsidy announcement.

• However, while government has considered USD 580/MT for DAP to calculate

the subsidy, the price of DAP has moved up further to USD 620/MT and if raw

material prices do not come down in the next few months, we expect to see

some farm gate price hikes. Nevertheless, we have considered farm gate

prices, subsidy and raw material prices at current levels in our estimates,

Outlook and valuations: Upward revision in revenue and EPS For major non-urea manufacturers in India like Coromandel, GSFC, and Zuari, the

revenue contribution from manufactured NBS fertilisers in FY10 has been ~79%,

68% and 44%, respectively. Post the change in our fertiliser realisations on

account of the farm gate price hikes taken by fertiliser companies, coupled with

higher subsidy for FY12 and after considering higher raw material prices, we have

revised up our EPS estimates for Coromandel and Zuari significantly. We have

increased our EPS estimates for Coromandel by 27.4% to INR 28.0/share in

FY12E and by 24.1% to INR 33.5/share in FY13E; and for Zuari by 15.4% to INR

118.3/share in FY12E and by 4.9% to INR 133.1/share in FY13E. As Chambal is

predominantly into manufacturing of urea, we do not expect the latest

development to have any significant impact on its financials. Based on DCF

valuation, we arrive at a fair value of INR 395 for Coromandel (earlier INR 377)

and INR 901 for Zuari (earlier 892). We maintain ‘BUY’ on Coromandel (CMP: INR

287) and Zuari (CMP: INR 596), and ‘HOLD’ on Chambal (CMP: INR 70).

March 11, 2011


Manoj Bahety, CFA

+91-22-6623 3362

[email protected]

Varun Guntupalli

+91-22-6623 3481

[email protected]

India Equity Research | Miscellaneous Sector Update

FERTILISERS

Subsidy increased significantly for non-urea fertilisers under NBS scheme

A powerful earthquake (intensity 8.9 on Richter scale) hit northern Japan and

triggered a massive Tsunami along the coastline areas. The quake occurred

230 miles North-East of Tokyo.

Japan’s equity markets were about to close when the tremors hit, but

Japanese Yen (JPY) fell sharply in a knee-jerk reaction. However, the

currency recovered equally sharply thereafter, possibly, in expectation that

money would be repatriated back to Japan given its safe-haven status.

Notably, JPY exhibited a similar behaviour after Kobe earthquake in early

1995, appreciating in the days following the earthquake. Therefore, if money

flows back to Japan, it might have implications for EM assets in the very

short-term.

In any case, we do not see this event to have a substantial long-term impact on

markets. We believe that medium-to-long-term performance of the Indian markets will

continue to be shaped by macro-economic concerns. However, the quake in Japan

could have some effect on a few sectors/companies as highlighted below:

Impact on sectors

1) Oil & Gas: Positive impact on refining margins and LNG prices: Japan is heavily

reliant on nuclear energy. Nuclear power plants in two locations have been shut,

following the quake. While the Japanese government has stated that the plants

are safe, they may take some time to resume production. Until all reactors start,

demand for diesel and LNG will have a positive impact as they will be used to

meet the power requirements. Further, Cosmo Oil’s 0.228 mbpd Chiba refinery

has caught fire. Depending on the magnitude of the fire, the refinery might take

6-12 months to resume production. Both these factors could raise refinery

margins. We see lower risk of cut in Japanese crude demand estimates, as we had

earlier already estimated -0.17 mbpd (-3.9%) fall in crude demand from Japan.

2) Pharma: Overall limited impact - Lupin has the largest revenue exposure in Japan

among Indian pharma companies, but the impact is expected to be limited as its

production facility is in southern Japan.

3) Autos: Overall limited impact - Any disruption in port or production facilities of

vendors could affect Maruti’s production (imports one-third of its raw materials).

However, the company has, so far, not received any negative news to this effect.

4) Hotels/Hospitality: Immediate impact on outbound travel of Japan - Cox and

Kings generates ~8% of its total revenue from Japan. As Japan is an outbound

center, revenues could get negatively impacted.

March 11, 2011

Edelweiss Research is also available on www.edelresearch.com, Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factsheet. Edelweiss Securities Limited

Kapil Gupta

+91-22-4063 5406

[email protected]

Dipojjal Saha

+91-22-6623 3377

[email protected]

India Equity Research | Strategy Flash Note

ECONOMY

Powerful quake hits Japan FLASHFLASHFLASHFLASH

The Index of Industrial Production (IIP) grew at 3.7% in January against

upwardly revised 2.5% in December. In recent months, IIP has grown at

0-5% against 15-18% seen at the start of the fiscal. This is mainly on

account of the base effect and investment-led moderation in industrial

activity. Capital goods production, which reflects investment activity, has

been declining both on Y-o-Y and seasonally adjusted sequential basis. This

decline in investment activity is also reflected in weakness in non-oil imports

and capital formation trend in GDP data.

Among the other components of IIP, what is notable is the reversal in the

weakening trend observed in consumer non-durables since the beginning of

FY11. Over the past two months, the non-durables category has seen strong

sequential growth momentum. Meanwhile, consumer durables grew strongly

Y-o-Y, although sequential momentum slowed significantly. The basic and

intermediate goods category continued to grow moderately. Overall, we

believe that this soft patch in industrial activity will continue in the coming

months, with March seeing significant high base effect. While pick-up in

exports augurs well for industrial activity, tightness in liquidity, rising

interest rates and wage pressures pose a challenge.

IIP growth at 3.7% IIP growth came in at 3.7% Y-o-Y for January, slightly higher than consensus

estimate of ~3%, mainly due to upward revision in December data (from 1.6%

Y-o-Y to 2.5% Y-o-Y). Higher-than-expected monthly data notwithstanding,

broader moderation in industrial activity continued. On 3MMA, Y-o-Y growth has

slowed down to ~3% in January from ~11.5% in July, 2011. Also, seasonally

adjusted sequential momentum of IIP has slowed down to ~0.2% from ~1.5%

seen last month. Among the six core industries, the trend remains somewhat

mixed with crude oil and electricity production showing strong growth, while

cement and coal production showed persistent weakness.

Sector-wise, manufacturing continued to grow at a sluggish pace of 3.3% Y-o-Y,

although better than 2% growth registered in December. Within manufacturing,

significant weakness was observed in transport and machinery equipment

categories. Overall, we believe that the soft patch in industrial activity will

continue in the coming months, with March facing high base effect.

Consumer non-durables reverses its weakening trajectory

The consumer goods segment grew strongly at 11.3% Y-o-Y in January against

3.7% in December, reflecting base effect. Sequentially, growth momentum eased.

Importantly, consumer non-durables, which had been weak for quite some time,

reversed the weakening trajectory, growing ~4% in sequential terms in the last

two months. Since this component has significant weight of ~23% in IIP,

momentum in this category needs to be closely watched.

Meanwhile, consumer durables grew ~23% Y-o-Y, although sequential growth

momentum eased significantly to ~3% against ~15% last month.

March 11, 2011


Kapil Gupta

+91-22-4063 5406

[email protected]

Toshi Jain

+91-22-6623 3322

[email protected]

India Equity Research | Economy Indicator Release

IIP

IIP remains weak, led by capital goods

ECAT

Open Offer

Bloomberg Code Company Start date End Date

Offer Price

(INR)

Current Market Price

(INR)

IGM IN Equity Igarashi Motors India 18-Feb-11 9-Mar-11 76.30 66.00

SIEM IN Equity Siemens 25-Mar-11 13-Apr-11 930.00 857.10

PATNI IN Equity Patni Computers NA NA 503.50 452.45

NDEN IN Equity Ispat NA NA 20.54 21.95

MDRA IN Equity Mudra Lifestyle NA NA 60.00 56.30

CAIR IN Equity Cairn India NA NA 355.00 342.20 NA : The opening and closing date are yet to be announcedNote: The above data is not exhaustive Delisting

Bloomberg Company

Floor Price

Exit Price

CurrentMarket

Code Start date End Date (INR) Price (INR)

NIRMA IN Equity Nirma Ltd 17-Jan-11 20-Jan-11 218 260 256.00

SBPO IN Equity Sparsh BPO 31-Jan-11 4-Feb-11 68.6 110 107.00

BINC IN Equity Binani Cements 7-Feb-11 11-Feb-11 82 90 87.10

ATCP IN Equity Atlas Copco 7-Mar-11 11-Mar-11 1426 2250 2206.70

CIS IN Equity Carol Info Services NA NA 106 NA 140.00

Source: BSE, NSE

NA: The opening, closing date, floor price and Exit price are yet to be announced.Note: The above data is not exhaustive

RBB

Rights

Bloomberg Code Company Ex-DateSubscription Price Ratio

SBBJ IN Equity State Bank of Bikaner & Jaip 16-Mar-11 390.000 5: 2CBOI IN Equity Central Bank Of India 17-Mar-11 103.000 5: 3Source: Bloomberg Demerger

Bloomberg Code Parent Company Spun-Off Company Ex_Date

ShareExchange

RatioBIOG IN Equity Bio-Green Industries Ltd Bio Green Papers Ltd 10-Mar-11 1: 1Source: Bloomberg Buyback

Bloomberg Code Company Start date End Date

Offer Price

(INR)

CurrentMarket Price

(INR)

PIHC IN Equity Parimal Healthcare 3-Mar-11 24-Mar-11 600 464.55

MANL IN Equity Manaksia 24-May-10 27-Apr-11 200 84

Source: BSE

Note: The above data is not exhaustive

CORPORATE ACTION TRACKER

India Alternative Research

March 11, 2011

Yogesh Radke

+91-22-6620 3199

[email protected]

Sriram Velayudhan

+91-22-6620 3100

[email protected]

ECAT

Bonus & Splits

Bloomberg Code Company Action Type Ex-Date Ratio

NACL IN Equity National Aluminium Co Ltd Bonus 15-Mar-11 1:1

SCF IN Equity Shreenath Commercial & Financial Bonus 16-Mar-11 1:1DRRD IN Equity Dr Reddy's Laboratories Ltd Bonus 17-Mar-11 1:6

EXIL IN Equity Exelon Infrastructure Ltd Stock Split 24-Mar-11 1:2

Source: BloombergNA : The Ex-Date and ratio is not yet announcedNOTE : Scrip’s highlighted in maroon indicate Nifty & MSCI India components Acquisitions

Bloomberg Code Acquiring Company Target Company Ex-Date Acquired(%)

ELC CN Equity JSW Energy Ltd CIC Energy Corp/Bahamas 15-Mar-11 100.00

PATNI IN Equity iGate Corp Patni Computer Systems Ltd 23-Mar-11 20.00

DAEH IN Equity Dr Agarwals Health Care Ltd Dr Agarwal's Eye Hospital 25-Mar-11 20.00

INB IN Equity Vitesse Telecom Pvt Indian Bright Steel Co Ltd 28-Mar-11 20.00

3598613ZUH Equit Ultratech Cement Ltd ETA Star Cement Co 31-Mar-11 100.00

CFT IN Equity Taranya Project Pvt Ltd Confidence Trading Co Ltd 5-Apr-11 20.00

R IN Equity Multiple acquirers Rammaica India Ltd 6-Apr-11 20.00

SIEM IN Equity Siemens AG Siemens India Ltd 13-Apr-11 19.82

KTPL IN Equity Private Investor Kavveri Telecom Products Ltd 18-Apr-11 20.00

OAS IN Equity Private Investor Omega Ag-Seeds (Punjab) 18-Apr-11 32.00

SITL IN Equity Private Investor Starcom Information Techno 20-Apr-11 20.00

MDIV IN Equity Multiple acquirers Madhusudan Securities Ltd 23-Apr-11 45.98

5200043ZAU Equit Fortis Healthcare Ltd Dental Corp 30-Apr-11 30.00

Source: BloombergNOTE : Scrip’s highlighted in maroon indicate Nifty & MSCI India components Dividend (F&O Stocks)

Bloomberg Code Company Ex - Date

Dividend Per Share

(INR)ACC IN Equity ACC Ltd 29-Mar-11 7.50RBXY IN Equity Ranbaxy Laboratories Ltd 28-Apr-11 2.00Source: Bloomberg Dividend impact on current month Nifty Futures


Dividend Per Share

(INR)

Impact on Next Futures

(points)Weight in Nifty(%)

ACC IN Equity ACC Ltd 29-Mar-11 20.50 0.67 0.59 Total Impact 0.67 points

Dividend impact on current & next month Nifty Futures


Dividend Per Share

(INR)

Impact on Next Futures

(points)Weight in Nifty(%)

ACC IN Equity ACC Ltd 29-Mar-11 20.50 0.67 0.59

RBXY IN Equity Ranbaxy Laboratories Ltd BC Apr 30th - May 09 2.00 0.10 0.42

Total Impact 0.77 pointsSource: BloombergNOTE : Scrip’s highlighted in maroon indicate Nifty & MSCI India components

ECAT

Dividend (Non F&O Stocks)


Dividend Per Share

(INR)

BOOT IN Equity Abbott India Ltd 19-Apr-11 17.00

ALFA IN Equity Alfa Laval India Ltd 11-Apr-11 30.00

AVEN IN Equity Aventis Pharma Ltd/India 31-Mar-11 28.00

BDE IN Equity Blue Dart Express Ltd 15-Apr-11 1.00

CLRC IN Equity Clariant Chemicals India Ltd 11-Apr-11 20.00

DICI IN Equity DIC India Ltd 15-Apr-11 1.00

EBECK IN Equity Elantas Beck India Ltd 8-Apr-11 4.50

FAG IN Equity FAG Bearings India Ltd 30-Mar-11 5.00

FI IN Equity Foods & Inns Ltd 17-Mar-11 1.80

FSC IN Equity Foseco India Ltd 23-Mar-11 7.00

GDRK IN Equity Goodricke Group Ltd 30-Mar-11 5.00

GGAS IN Equity Gujarat Gas Co Ltd 21-Mar-11 8.00

HMIT IN Equity Helios & Matheson Information Techonolog 17-Mar-11 1.50

HWA IN Equity Honeywell Automation India Ltd 31-Mar-11 10.00

IABS IN Equity INEOS ABS India Ltd 20-Apr-11 4.00

ITCE IN Equity ITD Cementation India Ltd 19-Apr-11 1.50

LKEF IN Equity Lakshmi Energy & Foods Ltd 21-Mar-11 0.20

MYLP IN Equity Mayur Leather Products Ltd 14-Mar-11 0.50

NEST IN Equity Nestle India Ltd 21-Apr-11 12.50

OA IN Equity Orient Abrasives Ltd 14-Mar-11 1.00

SISY IN Equity Saraswati Industrial Syndicate Ltd/The 15-Mar-11 1.00

SKF IN Equity SKF India Ltd 25-Apr-11 7.00

TEMIEID IN Equity Templeton India Equity Income Fund 14-Mar-11 0.70

TC IN Equity Thomas Cook India Ltd 26-Apr-11 0.38

VI IN Equity Vesuvius India Ltd 8-Apr-11 4.00

Source: Bloomberg

S 000

Range bound trade; 10 year benchmark bond closes the week at 7.95%

Government securities

Sovereign bonds ended steady today as most participants refrained from taking

any big positions before the release of the wholesale price inflation data scheduled

for Monday. Yields did not react significantly to the industrial growth data (3.70%

in Jan-11) since the inflation number for Feb-11 will provide further clarity on the

pace of the rate hike from the central bank. However the sentiment in the market

has been upbeat over the fortnight owing to the absence of fresh supply of bonds,

the auction of unutilized limits for FIIs and lower weekly food inflation data.

Non-SLR market

Short terms rates eased further due to the improvement in the liquidity. Three

month CDs were dealt at 9.70%-9.80% while the six months and beyond CDs

were dealt at 9.85%-9.95% level. Rates may rise in the coming fortnight since

demand from mutual funds will be relatively muted due to the outflow of money

from the liquid funds (for payment of advance taxes by corporate).

State Bank of Travancore & State Bank of Patiala placed INR 1bn each of one year

CD at 9.86% and 9.85% respectively. OBC & BOI placed INR 3bn & INR 5bn

respectively of three month CD at 9.70%. Corporation Bank placed INR 4bn of 24th

June maturity CD at 9.65%.

Money markets

Overnight rates ended flat since the demand for funds from banks remained muted

towards the end of the reporting cycle. In the coming fortnight, outflow of advance

taxes to the tune of INR 450-INR500bn is likely to put pressure on the overnight

rates. At the LAF facility, the central bank injected INR 621bn compared to INR

600bn on Thursday.

Yield Curve – India & US

Yield Curve – Domestic

0.62

2.02

3.35

7.66 7.92 7.95 8.40

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2 yr 5 yr 10 yr 30 yr

(%)

US INDIA

6.75

7.75

8.75

9.75

10.75

91-day 182-day 1-year 5-year 10-year

(%)

OIS G-secs Bank PSU Non-PSU

Edelweiss Fixed Income Research

+91-22-6620 3072

s

India Fixed Income Research Daily

BOND VECTOR

March 11, 2011

Edelweiss Fixed Income research is also available on Bloomberg EDEL <GO>, Thomson First Call, Reuters and Fact set Edelweiss Securities Limited

1


2

3.75

4.75

5.75

6.75

7.75

8.75

250

450

650

850

1050

1250

13-Sep-10 8-Oct-10 3-Nov-10Volumes Call Rates

In

Bn

Events & Updates Expected Actual Previous

7-Mar EC - Sentix Investor Confidence - MAR 17.2 17.1 16.7

8-Mar IN - India Manpower Survey - 2Q - - 49% 41%

US - Consumer Credit - JAN $3.500B $5.014B $6.099B

US - NFIB Small Business Optimism - FEB 95 94.5 94.1

US - IBD/TIPP Economic Optimism - MAR 51.6 43 50.9

9-Mar US - MBA Mortgage Applications - 4-Mar - - 15.50% -6.50%

US - Wholesale Inventories - JAN 0.90% 1.90% 1.00%

10-Mar IN - Food Articles WPI YoY - 26-Feb - - 9.52% 10.39%

IN - Fuel Power Light WPI YoY - 26-Feb - - 9.48% 12.56%

IN - Primary Articles WPI YoY - 26-Feb - - 13.96% 14.85%

US - Initial Jobless Claims - 5-Mar 375K 397k 368K

US - Continuing Claims - 26-Feb 3750K 3771k 3774K

US - Trade Balance - JAN -$41.5B `-$46.30B -$40.6B

US - Bloomberg Consumer Comfort - 6-Mar - - -44.5 -39.3

11-Mar US - Monthly Budget Statement - FEB -$225.7B `-$222.50B -$220.9B

IN - Industrial Production YoY - JAN 3.40% 3.70% 1.60%

US - Advance Retail Sales - FEB 1.00% - - 0.30%

US - Retail Sales Less Autos - FEB 0.70% - - 0.30%

US - Retail Sales Ex Auto & Gas - FEB 0.50% - - 0.20%

US - U. of Michigan Confidence - MAR 76.5 - - 77.5

US - JOLTs Job Openings - JAN - - - - 3063

US - Business Inventories - JAN 0.80% - - 0.80%

14-Mar IN - Monthly Wholesale Prices YoY% - FEB - - - - 8.23%

EC - Euro-Zone Ind. Prod. wda (YoY) - JAN - - - - 8.00%

EC - Euro-Zone Ind. Prod. sa (MoM) - JAN - - - - -0.10%

11-Mar 10-Mar Tenor AAA AA+ AACD Primary 70.00 65.00 1 yr 224 239 257

CD Secondary 5.00 8.00 5 yrs 112 149 172

CP Total 4.00 2.00 10 yrs 106 138 159

Total 79.00 75.00 *AA+ and AA spread as per Bloomberg pricing

*CD - Cert if icate of Deposits, *CP - Commercial Papers

Corporate bond spread (bps) Market activity in corporate debt (INR Bn)

Date Net Flow* Month till date

FII 8-Mar-11 4.88 - For fortnight ended 11-Mar

7-Mar-11 (2.68) 29.18 Actual CRR maintained *

Mutual Funds 8-Mar-11 27.28 - 8-Mar 95%

7-Mar-11 33.45 172.35 7-Mar 95%

*Flows in Debt segment (INR bn) * For Scheduled Commercial Banks

Source: SEBI website

Cash Reserve Ratio (6.00%)

Our observations: Tracking Investment and Credit

Cash and lending by the banking system, as observed in the Weekly Statistical

Supplement (WSS) for the fortnight-ended February 25, can be stated as below:

1. M3 growth drops to 16.50% during the fortnight compared to 16.90%

on the previous fortnight, due to the higher base effect. On an absolute basis

the M3 increased by INR 517bn over the fortnight, mainly on account of the

healthy increase in the time & demand deposits. Reserve money saw a rise of

INR 107bn over the fortnight (currency in circulation component increased by

INR 48bn) leading to a marginal improvement in the multiplier to 4.97x.

2. SLR investment increased by INR 148bn over the fortnight compared to

a decline of INR102bn in the previous fortnight. Banks have maintained an

excess SLR of ~3.50% (adjusted for repo borrowing) for the fortnight.

However with a GoI borrowing of INR 3.43trn in FY12 and a sluggish growth in

the deposits, banks will have to dig into their excess SLR reserves to cater the

off take demand. Investment to Deposit ratio improved marginally to 29.21x

but significantly lower than the average of 30.80x reflective of the pressure on

banks to fund credit growth through excess SLR investment.

3. Deposit growth floated around the 16.40% level compared to 17% in the

previous fortnight. Banks managed to mobilize INR 417bn of incremental

deposits for the fortnight as the lag effect (after a series of rate increase by

banks to make deposits more attractive) started to kick in. In order to achieve

the target deposit growth of 18% for FY11, banks have to mobilize another

INR2.10trn in the month of March-11 (YTD mobilization at INR 5.97trn). With

persistently high inflation, banks are unlikely to achieve the target set by RBI.

4. Non food off take continues to be buoyant clocking in 23% growth for the

fortnight. The overall credit disbursed by SCBs so far in FY11 stood at INR

38.10trn, 23.21% higher than the outstanding credit of INR 30.92trn

outstanding a year ago. On an absolute basis the credit off take increased by

INR 259bn compared to 493bn during the previous fortnight mainly on

account of the sharp rise in the cost of borrowing. Credit to deposit ratio for

the SCBs eased marginally to 74.95 compared to 75.06 in the previous

fortnight due to a slower credit off take growth in the fortnight. However at

the pace credit is growing, banks will have to garner additional deposits of at

least another INR 3.50trn so as to maintain its CD ratio under 75. Given that

SCBs have managed to achieve an average growth of 12% per annum in the

incremental deposits for the last four years, this will put upward pressure on

the interest rates.

Issuance of short term instruments remain strong during the fortnight as banks

borrowed heavily through CDs in order to roll over their maturing instruments as

well as meet the off take demand. Over the fortnight banks issued CDs amounting

to INR 267bn taking the outstanding CDs to INR 3.77trn.

Edelweiss Fixed Income Research

+91-22-6620-3072

sv

India Fixed Income Research

WEEKLY STATISTICAL SUPPLEMENT

Deposit growth sees momentum post in the increase in the rates by banks; non food off take remains robust

March 11, 2011

. Edelweiss Securities Limited

1

WSS


2

25.0

28.0

31.0

34.0

68.0

69.0

70.0

71.0

72.0

73.0

74.0

75.0

76.0

28-May-10 28-Jul-10 28-Sep-10 28-Nov-10 28-Jan-11

(%)

(%)

Credit deposit ratio (LHS) Investment deposit ratio (RHS)

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

260.00

265.00

270.00

275.00

280.00

285.00

290.00

295.00

300.00

305.00

25-Jun-10 25-Jul-10 25-Aug-10 25-Sep-10 25-Oct-10 25-Nov-10 25-Dec-10 25-Jan-11 25-Feb-11

US

D B

N

W-o-W Change Foreign Exchange Reserves

2,500

3,000

3,500

4,000

28-Jan-1119-Nov-1010-Sep-102-Jul-109-Apr-10

(IN

R b

n)

Total CD outstanding

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

4-Dec-09 29-Jan-10 9-Apr-10 28-May-10 30-Jul-10 8-Oct-10 26-Nov-10 28-Jan-11

Food credit (LHS) Non-Food credit (RHS)

0.00

5.00

10.00

15.00

20.00

25.00

30.00

8.00

13.00

18.00

23.00

28.00

28-May-10 28-Jul-10 28-Sep-10 28-Nov-10 28-Jan-11

(%)

Deposit growth rate (LHS) Credit growth rate (RHS)

650

750

850

950

1050

1150

1250

1350

1450

1550

31-Jan-1115-Nov-1031-Aug-1015-Jun-1031-Mar-10

(IN

R b

n)

Total CP outstanding

Deposit growth at 16.4%; lag effect kicks in Non food credit growth declines to 23%

Reserves cross $300Bn; inflow of $1.8Bn Credit Deposit ratio see a marginal decline

CP issuance rises in the January Banks scout for funds to roll over maturing CDs

Source: Weekly Statistical Supplement


4

Reporting Date Company Name Name of the Entity

Pledged Quantity

Pledged % of the total

captial

11-Mar-11 Stone India ISG Traders 1,003,000 13.20%

11-Mar-11 Religare Enterprises RHC Finance 941,000 0.68%

11-Mar-11 Nova Iron & Steel R K Gambhir & PAC Revoked 0.00%

11-Mar-11 Nagarjuna Construction Company

Alluri Ananta Venkata Ranga Raju

2,502,000 0.98%

11-Mar-11 Television Eighteen India

Network 18 Media & Investments

49,752,635 27.47%

11-Mar-11 Television Eighteen India

Network 18 Group Senior Professional Welfare Trust

12,200,000 6.74%

PLEDGED SHARES

5


Insider Trades Company Name Acquirer/Seller B/S Qty Traded

Tilaknagar Industries SmallCap World Fund Buy 461084

Ratnamani Metals & Tubes Prakash M. Sanghvi Buy 288125

Gateway Distriparks Prism International Buy 107352

ITC K. Vaidyanath Buy 100000

Tarapur Transformers Limited

Bilpower Buy 58439

Gujarat Apollo Industries Asit Patel Buy 40000

Indo Rama Synthetics (India)

O P Lohia Buy 28740

T T Rikhab Jain Buy 15921

ITC K.N. Grant Sell 40000

Vimal Oil and Foods Jayesh Patel Sell 15110

INSIDER TRADES & BULK DEALS


6

BULK DEALS Date Company Name Acquirer/Seller B/S Qty Traded Price

11-Mar-11 ACROPET TEC Arv Enterprises Buy 205066 104.15

11-Mar-11 ACROPET TEC Basmati Securities Buy 250000 99.2

11-Mar-11 ACROPET TEC Dirva Trade Impex Buy 571211 99.68

11-Mar-11 ACROPET TEC Groove Finance & Investment

Buy 100000 118

11-Mar-11 Bedmutha Industries Darshana Bhavnesh Doshi

Sell 145000 108.22

11-Mar-11 Bedmutha Industries Jenil Chandresh Mehta Buy 145000 108.74

11-Mar-11 Bedmutha Industries Parikh Jasvant Amratlal Sell 150000 105.13

11-Mar-11 Bedmutha Industries Raj Finvest Buy 122845 118.76

11-Mar-11 Bedmutha Industries Saakshi Shares Buy 75110 105.97

11-Mar-11 Carol Info Services The Investment Trust Of India

Buy 702142 130.1

11-Mar-11 Carol Info Services Vanraj Vinod Shah Huf Sell 609075 130.1

11-Mar-11 Chandni Textiles Engineering Industries

Amrapali Capital & Finance Services

Sell 442049 64.3


C.Mahendra Capital . Sell 100000 65.82


Gulshan Investment Company

Buy 250000 69


Magan Mercantile Buy 250000 69.8


Solar Infrastructure Project

Buy 100000 65.95

11-Mar-11 Clarus Finance & Securities

Jigar Praful Ghoghari Buy 100000 105.89


Kanta S Jain Sell 104991 105.87


Subhash B Jain Sell 165806 105.89

11-Mar-11 Educomp Solutions Oppenheimer Funds Inc A/C Oppenheimer International Growth

Sell 700000 422.98

11-Mar-11 Fineotex Chemical Ambit Securities Broking Buy 17500 108.57

11-Mar-11 Fineotex Chemical Anita Deepak Dalal Buy 100000 97.33

11-Mar-11 Fineotex Chemical Bhairvi Dharnendra Jhaveri

Buy 84920 99.49

11-Mar-11 Fineotex Chemical Coronet Vyapaar Buy 165000 103.41

11-Mar-11 Fineotex Chemical Latin Manharlal Securities Buy 30000 111.36

11-Mar-11 Fineotex Chemical Maru Securities Buy 20000 109.51

11-Mar-11 Fineotex Chemical Mathran Securities Buy 120000 115.37

11-Mar-11 Fineotex Chemical Nawaneet Somani Securities

Sell 78582 110.05

11-Mar-11 Fineotex Chemical North Eastern Publishing & Advertising Company

Buy 250000 125.12

11-Mar-11 Fineotex Chemical Olympia Builders Buy 300000 103

11-Mar-11 Fineotex Chemical Pneumatic Leasing Services

Buy 150000 101.14

11-Mar-11 Fineotex Chemical Pradeep Kumar Dhelia Buy 150000 118.33

7


Date Company Name Acquirer/Seller B/S Qty Traded Price

11-Mar-11 Fineotex Chemical Prism Commodeal Buy 60000 114

11-Mar-11 Fineotex Chemical Ratilal Shamji Dedhia Buy 275000 115

11-Mar-11 Fineotex Chemical Salasar Stock Broking Buy 428860 100.46

11-Mar-11 Fineotex Chemical Sandeep Agarwal Buy 100000 101.25

11-Mar-11 Fineotex Chemical Saumil Bhavnagari Lopa Buy 278234 115.79

11-Mar-11 Fineotex Chemical Shree Bahubali Corporation

Buy 15000 114.35

11-Mar-11 Fineotex Chemical Shyam Gupta Sell 69004 105.03

11-Mar-11 Fineotex Chemical Snap Securities Buy 82175 114.54

11-Mar-11 Fineotex Chemical Stenly Securities Buy 46883 107.61

11-Mar-11 Fineotex Chemical Suresh Chand Lalwani Buy 60000 115.49

11-Mar-11 Fineotex Chemical Trans Financial Resources Buy 124943 108.14

11-Mar-11 Fineotex Chemical Urmilaben Ramanlal Jhaveri

Buy 101017 98.8

11-Mar-11 Fineotex Chemical V P Patel Buy 301657 114.82

11-Mar-11 Fineotex Chemical Vb Currency & Derivative Trading

Buy 95000 106.5

11-Mar-11 Fineotex Chemical Welspun Realty Buy 500000 107

11-Mar-11 Fortune Financial Services (India)

Aatash Shares & Commodities Broking

Buy 103050 138.75

11-Mar-11 Fortune Financial Services (India)

Minal Bharat Patel Sell 103050 138.75

11-Mar-11 Gemstone Investment Jaydeep Ramniklal Padalia

Sell 500000 5.91

11-Mar-11 Gemstone Investment Vinesh Velji Kothari Sell 500000 5.97

11-Mar-11 Greycells Education Csa Holdings Buy 65000 45.57

11-Mar-11 Greycells Education Igft Sell 54008 43.92

11-Mar-11 Heritage Foods (India)

Perfect Homfin Sell 94500 172.05

11-Mar-11 Heritage Foods (India)

Sumeera Gupta Buy 94500 172.05

11-Mar-11 Indo Bonito Multinational

Hiten Vallabhji Haria Buy 329291 7.21


Shivcharan Shreedhar Kashyap

Sell 1,125,786 7.0


Surendra Kumar Kulhari Sell 250,000 7.3

11-Mar-11 Investment & Precision Castings

Anita Rakeshkumar Ranka

Sell 60,814 115.8

11-Mar-11 JMD Telefilms Industries

Jolly Trading & Merchandise

Sell 555,000 15.6

11-Mar-11 KIC Metaliks Haridarshan Sales Sell 91,661 190.0

11-Mar-11 KIC Metaliks Utkarsh Agro Agen Sell 56,010 190.0

11-Mar-11 Kinetic Motor Company

Jmp Securities Sell 82,760 23.4

11-Mar-11 Kiri Dyes & Chemicals Prudential Stock & Securities

Buy 301,287 312.0

11-Mar-11 Landmarc Leisure Corporation

Roopa Shrenik Shah Sell 4,154,904 0.9

11-Mar-11 Landmarc Leisure Corporation

Yashaswini Leisure Buy 4,150,000 0.9


8


11-Mar-11 Lee & Nee Software (Exports)

Leela Tarachand Kothari Buy 336,756 9.6

11-Mar-11 Living Room Lifestyle Jmd Telefilms Industries Sell 20,000 186.6

11-Mar-11 Living Room Lifestyle Suryamukhi Projects Buy 20,000 186.6

11-Mar-11 Midfield Industries Avichal Securities Sell 69,501 65.2

11-Mar-11 NCL Research and Financial Services

Anuska Vanijya Sell 35000 51.0


Deepa Lahoti Buy 50000 51.0


Devi Haran Sukhi Buy 30000 51.0


Khoobsurat Sell 165000 51.0


Khushi Tradelink Sell 50000 51.0


Kohinoor Vincome Sell 50000 51.0


Kumar Haran Sumeeth Buy 30000 51.0


Riddhi Gaurav Galia Buy 30000 51.0


Rockers Tradelink Sell 100000 51.0


Roychand Chenraj Buy 34571 51.0


Saravana Securities (Prop: D. Sathyamoorthi)

Buy 50000 51.0


Shailesh Haran Buy 20000 51.0


Shobhagya Vinimay Sell 50000 51.0


Swapanpuri Tradelink Sell 40000 51.0


Vasant Harshi Galia Huf Buy 30000 51.0

11-Mar-11 Neha International Aashka Construction Sell 501000 128.5

11-Mar-11 Neha International Kavya Share & Securities Buy 250480 128.5

11-Mar-11 Neha International Kavya Share & Securities Buy 248850 128.5

11-Mar-11 Nitin Alloys Global Hvn Reality & Enterprises India

Buy 20400 68.0

11-Mar-11 Parichay Investments Amul Gagabhai Desai Sell 10000 278.5

11-Mar-11 Parichay Investments Mahesh Somabhai Desai Buy 15750 279.6

11-Mar-11 Parichay Investments Shyam Construction Buy 49700 279.7

11-Mar-11 Parichay Investments Sushila Kumari Daga Sell 20000 278.0

11-Mar-11 Premier Explosives Anmol Finpro Buy 67400 69.7

11-Mar-11 Premier Explosives Fe Securities Sell 67400 69.7

11-Mar-11 Roselabs Industries Kamini Bharat Takwani Sell 130000 13.8

11-Mar-11 Roselabs Industries Kantibhai G Patel Buy 130000 13.7

11-Mar-11 Scope Industries (India)

Koganti Phaneedranadh Buy 45000 68.9

11-Mar-11 Shree Nath Commercial & Finance

Guru Ashish Estate & Investment

Sell 330000 20.0

9



11-Mar-11 Splash Media & Infra Kemfin Services Buy 1000000 48.0

11-Mar-11 Sudar Garments Archana Ketan Chalishzar Buy 130100 88.0

11-Mar-11 Sudar Garments Arv Enterprises Buy 25000 106.4

11-Mar-11 Sudar Garments Blue Peacock Securities Lt

Buy 105500 101.1

11-Mar-11 Sudar Garments Dinesh Jagmohan Shah Sell 163258 92.5

11-Mar-11 Sudar Garments Dsn Securities . Buy 20000 105.6

11-Mar-11 Sudar Garments Excel Mercantile Buy 589028 106.0

11-Mar-11 Sudar Garments Manishbhai Dilipbhai Sanghani

Sell 100924 109.7

11-Mar-11 Sudar Garments Mridul Ventures Buy 200782 101.0

11-Mar-11 Sudar Garments Pinac Stock Brokers Buy 122000 92.8

11-Mar-11 Sudar Garments Prudent Broking Services Buy 91287 88.5

11-Mar-11 Sudar Garments Ramesh M Damani Sell 150971 89.6

11-Mar-11 Sudar Garments Ramniwa Bajaj & Co. Huf Sell 231087 93.9

11-Mar-11 Sudar Garments Sagar Rajeshbhai Jhaveri Sell 177516 114.0

11-Mar-11 Sudar Garments Sailesh Subhodchandra Jhaveri

Sell 157147 114.0

11-Mar-11 Sudar Garments Samirkumar Dipakbhai Shah

Buy 534000 90.2

11-Mar-11 Sudar Garments Shailesh Jhaveri Buy 56000 89.5

11-Mar-11 Sudar Garments Varsha Nitin Goratela Buy 31936 93.0

11-Mar-11 Sudar Garments Vikabh Securities Sell 150000 92.5

11-Mar-11 Visisth Merchantile Madhusudan Narainlal Sarda

Sell 26800 198.3


10

The index declined by ~1% in Friday’s session spooked by the Earthquake and Tsunami in Japan. However it has managed to hold above 5400 on a closing basis which will keep the bulls in the hunt. Momentum oscillators on the hourly and daily chart have rolled bearish leading to near-term weakness. Technically Nifty is now consolidating within a triangle pattern and will continue to do so for few more sessions. Market breadth continued to be in favour of declining stocks for the second session. Nifty 50 stocks A/D ratio slipped sharply at 1:4. Nifty has been consolidating within a broader declining trend for the past three weeks and only on a break of the trading range of 5650-5400 will the index return to trending mode. We reiterate to wait out the near-term consolidation before a strong breakout is achieved. Barring the Oil & Gas and FMCG index, all other sectoral indices slipped in red. Metals and Technology shares declined by >1.5% closely followed by Power and Cap Goods stocks. BSE Realty index has made a higher high for the second consecutive week signaling a short-term uptrend for a target of 2200-2250. Bullish Setups: Petronet (PLNG), SAIL, IB Real Estate (IBREL), Tata Global (TGBL) Bearish Setups: Sterlite (STER), HUL (HUVR), Jindal Steel (JSP) Global equities have declined for the week ended as global risk aversion owing to various events kicks in. DXY has made a bullish outside bar for the week after three consecutive weekly losses adding to the near-term upside risk. Silver (SLV) has made a ‘spinning top’ candlestick pattern on the weekly chart signaling indecision with a potential to decline in the coming days.

TECHNICAL UPDATES

Nifty Index

Indicator Outlook Points*Candlestick Positive 1 Stochastic Positive 1 Moving Avg Negative (1)RSI Neutral 0 ADX Neutral 0 MACD Neutral 0 Aggregate Positive 1

25 1 8November

15 22 29 6 13December

20 27 32011

10 17 24 31 7February

14 21 28 7March

14 21 28-150

-100

-50

0

50

10000

20000

30000

x10000

5100

51505200

5250

5300

53505400

54505500

55505600

5650570057505800585059005950600060506100615062006250630063506400

Bloomberg Code NIFTY IndexSpot Price 5,445 Resistance 1 5,480 Resistance 2 5,520 Support 1 5,405 Support 2 5,375 Nifty 20 SDMA 5,455

Nifty 50 SDMA 5,599 Nifty 200 SDMA 5,667

Adv : Dec [NSE] 363 : 1073

Turnover ` Crs. 15172BSE+NSE cash

11


EYE CATCHERS

Futures Snapshot

Top OI Rises Top OI Falls

Scrip% OI Chg OI

% Price Chg

% Future

Vol Chg

CNX IT (20) 12 (1.5) 80

Bharat Earth Movers (12) 242 1.8 265

Alstom Projects (12) 233 (2.3) (55)

BGR Energy (8) 1,060 (2.0) 67

GE Shipping (6) 544 0.2 83

RCOM (5) 28,340 1.9 -

Ranbaxy (5) 1,785 (1.2) 114

Praj Industries (5) 7,736 (1.0) 7

Scrip% OI Chg OI

% Price

Chg

% Future

Vol Chg

Nifty Midcap 50 37 1 (1.5) 420

Tulip IT 29 2,204 0.2 1,469

Tata Tea 14 4,858 5.1 942

IOB 14 1,976 1.2 134

Orchid Chemicals 12 7,296 1.1 304

Bhushan Steel 12 1,024 0.1 12

BHEL 12 2,438 (4.0) 78

Lanco Infra 11 12,896 (4.2) 125


12

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