india daily, september 5, 2012 · 2012. 9. 5. · for private circulation only. for important...

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES. REFER TO THE END OF THIS MATERIAL.

INDIA DAILYSeptember 5, 2012 India 4-Sep 1-day1-mo 3-mo

Sensex 17,441 0.3 1.4 8.9

Nifty 5,274 0.4 1.1 8.4

Global/Regional indices

Dow Jones 13,036 (0.4) (0.5) 7.5

Nasdaq Composite 3,075 0.3 3.6 10.7

FTSE 5,672 (1.5) (2.0) 7.8

Nikkie 8,717 (0.7) 1.9 4.0

Hang Seng 19,211 (1.1) (2.3) 5.2

KOSPI 1,879 (1.5) 1.7 4.3

Value traded – India

Cash (NSE+BSE) 94 117 116

Derivatives (NSE) 735 1,002 816

Deri. open interest 1,130 1,223 942

Forex/money market

Change, basis points

4-Sep 1-day 1-mo 3-mo

Rs/US$ 55.7 0 40 14

10yr govt bond, % 8.4 - (1) (8)

Net investment (US$mn)

3-Sep MTD CYTD

FIIs (8) (8) 12,280

MFs (27) (27) (282)

Top movers -3mo basis

Change, %

Best performers 4-Sep 1-day 1-mo 3-mo

UNSP IN Equity 1009.6 2.3 17.2 72.1

FTECH IN Equity 843.5 0.2 10.4 39.9

Z IN Equity 169.0 4.9 3.7 34.0

GRASIM IN Equity 2964.9 (0.4) 1.9 28.3

HUVR IN Equity 521.1 1.2 11.7 27.9

Worst performers

ADE IN Equity 158.2 0.7 (12.0) (30.9)

BOI IN Equity 262.3 2.6 (9.3) (22.1)

WLCO IN Equity 94.0 0.1 (6.8) (22.0)

RCOM IN Equity 50.2 4.7 (10.3) (19.2)

UNBK IN Equity 158.2 (0.5) (7.6) (18.4)

Contents

Daily Alerts

Change in Reco

Reliance Industries: Rupee helps, margins may not

Sector

Banks/Financial Institutions: Funding environment improving

Metals & Mining: Steel slide

For private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

Refining margins have moderated in recent weeks; downside risks exist in the medium term

Exhibit 1 shows that refining margins have moderated in the recent weeks from the peaks in mid-August 2012. We expect refining margins to soften further once several Asian refineries restart operations post their scheduled maintenance/temporary outages in the coming weeks. In the medium term, we expect refining margins to remain weak given large net addition of 3.4 mn b/d to global refining capacity in CY2012-14E and 0.9 mn b/d of increase in NGLs production, which will outpace 2.8 mn b/d of incremental global oil demand. We also see risks to growth in oil demand from potential slowdown in the global economy.

Chemical margins have contracted in recent months; may remain subdued in the medium term

Exhibit 2 shows that the margins of key polymers have contracted sharply in the recent months. The recent sharp decline in petchem margins reflects (1) sharp increase in naphtha prices led by surge in crude oil prices and (2) lack of commensurate increase in product prices given continued weakness in downstream demand. We expect chemical margins to remain subdued given weak operating rates for petchem plants in CY2012-13E, with downside risks from sluggish demand.

Upstream segment unlikely to surprise positively

We do not see upside risks to our generous assumptions for the upstream segment—(1) recoverable reserves of 6 tcf in KG D-6 block versus RIL’s implied gross reserves of 4.9 tcf, (2) production of 28 mcm/d in FY2013E and 23 mcm/d in FY2014E, (3) gas price of US$6/mn BTU from FY2015E onwards and (4) income tax exemption on gas production. We rule out any revival in production till FY2015E given lack of progress on development activities for satellite fields.

Revise earnings to reflect new exchange rate assumptions

We have revised our FY2013E, FY2014E and FY2015E EPS estimates for RIL to `64, `63 and `71.8 from `60, `56.9 and `62.8 previously to reflect (1) new exchange rate assumptions, (2) modestly higher refining margins of US$8.1/bbl (+US$0.3/bbl) for FY2013E, lower refining margins of US$7.9-8.1/bbl for FY2014-15E, (3) lower KG D-6 gas production at 28 mcm/d (-2mcm/d) for FY2013E and 23 mcm/d (-2 mcm/d) for FY2014E and (4) other minor changes. Our economists team now assumes exchange rate of `55.1/US$ in FY2013E and `55/US$ in FY2014-15E versus `53.75/US$, `51.5/US$ and `50/US$ earlier.

Reliance Industries (RIL)

Energy

Rupee helps, margins may not. We have raised our FY2013-15E EPS estimates for RIL by 7-14% to reflect weaker Rupee forecasts of our economists team. However, we see a subdued outlook for the refining and chemical cycles over the next 12-18 months given unfavorable global supply-demand balance. Higher proportion of other income in the earnings will keep ROEs suppressed in the near term. We revise our rating on the stock to REDUCE from SELL earlier with a revised 12-month forward target price of `750 (`730 previously).

Reliance IndustriesStock data Forecasts/Valuations 2012 2013E 2014E

52-week range (Rs) (high,low) EPS (Rs) 61.3 64.0 63.0Market Cap. (Rs bn) 2,274.7 EPS growth (%) (1.1) 4.5 (1.6)

Shareholding pattern (%) P/E (X) 12.5 11.9 12.1Promoters 41.1 Sales (Rs bn) 3,299.0 3,882.5 3,722.6FIIs 21.0 Net profits (Rs bn) 200.4 207.5 204.3MFs 2.6 EBITDA (Rs bn) 339.8 310.8 309.0

Price performance (%) 1M 3M 12M EV/EBITDA (X) 7.3 7.6 7.0Absolute 2.8 10.1 (5.3) ROE (%) 11.7 11.2 10.1Rel. to BSE-30 1.7 1.3 (8.3) Div. Yield (%) 1.0 1.1 1.1

Company data and valuation summary

905-673

REDUCE

SEPTEMBER 04, 2012

CHANGE IN RECO.

Coverage view: Neutral

Price (Rs): 780

Target price (Rs): 750

BSE-30: 17,441

QUICK NUMBERS

• 3.4 mn b/d of net addition to refining capacity in CY2012-14E

• Asia PE margins have declined to US$310-345/ton; PP margins at ~US$425/ton

• KG D-6 gas production has declined to 28 mcm/d in August

Reliance Industries Energy

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Singapore complex refining margins have moderated from recent peaks Singapore refining margins (US$/bbl)

Simple refining margins, March fiscal year-ends (US$/bbl) Complex refining margins, March fiscal year-ends (US$/bbl)2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013YTD 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013YTD

1Q 0.3 1.0 1.7 3.0 2.5 2.3 2.4 (1.5) (0.9) 0.8 0.5 1Q 0.8 1.2 4.6 4.9 6.2 6.6 4.3 (0.1) (0.1) 1.8 0.62Q 0.1 1.2 3.1 2.8 (0.7) 1.0 1.7 (1.3) 0.2 1.3 2.4 2Q 0.1 2.3 5.8 6.1 2.5 2.9 0.7 (0.7) 0.4 2.5 2.93Q 1.4 1.6 6.5 2.2 (1.2) 2.3 1.3 (2.5) (0.7) 1.5 3Q 1.6 3.2 9.0 3.9 1.0 3.9 1.0 (2.7) 0.5 0.34Q 3.0 2.9 2.1 1.1 1.2 0.2 0.7 (0.3) 0.7 0.6 4Q 3.7 5.4 5.0 2.8 4.1 2.8 2.4 0.8 1.6 0.4Average 1.2 1.7 3.3 2.3 0.5 1.5 1.5 (1.4) (0.2) 1.1 1.3 Average 1.5 3.1 6.1 4.4 3.4 4.0 2.1 (0.7) 0.6 1.3 1.6

Weekly margins Weekly marginsCurrent -1 Wk -2 Wk -3 Wk -4 Wk Current -1 Wk -2 Wk -3 Wk -4 Wk

3.4 1.9 2.2 3.5 2.8 3.3 2.5 3.9 5.0 3.9

(4)

(2)

0

2

4

6

8

10

12

Apr-91 Apr-93 Apr-95 Apr-97 Apr-99 Apr-01 Apr-03 Apr-05 Apr-07 Apr-09 Apr-11

Singapore simple refining margins Singapore complex refining margins

2.8

3.7

(US$/bbl)

Source: Bloomberg, Kotak Institutional Equities

Margins for key polymers have contracted in the recent months Asia chemical margins, calendar year-ending (US$/ton)

Quarterly average Monthly averageAnnual average margins qoq mom Recent

2009 2010 2011 2012 3Q11 4Q11 1Q12 2Q12 (%) May June July Aug (%) Aug 10 Aug 17 Aug 24 Aug 31Ethylene chainEthylene – naphtha 274 355 225 243 135 160 244 258 5.7 275 152 193 246 27.7 213 246 244 338 HDPE – 1.015 x ethylene 270 116 153 119 271 210 57 162 184.0 131 341 217 81 (62.7) 109 72 63 (20) LLDPE – 1.015 x ethylene 307 190 131 70 213 123 (22) 116 NA 86 289 205 70 (65.8) 89 62 52 (15) LDPE – 1.015 x ethylene 331 367 378 111 429 316 70 148 113.4 122 308 189 49 (74.1) 75 30 27 (45) HDPE – naphtha 556 488 395 380 422 386 320 437 36.5 424 507 426 345 (19.0) 339 336 325 338 LLDPE – naphtha 594 561 373 331 365 298 241 392 62.4 379 455 414 334 (19.2) 319 326 314 343 LDPE – naphtha 618 739 620 372 580 491 333 424 27.3 415 474 397 313 (21.2) 305 294 289 313 Propylene chainPropylene – naphtha 336 454 470 383 534 342 338 417 23.6 358 468 437 360 (17.7) 344 376 354 358 PP – 1.01 x propylene 151 106 91 32 23 130 (8) 56 NA 99 87 58 53 (8.6) 68 21 42 52 PP – naphtha 495 571 575 428 572 485 344 486 41.5 470 567 508 426 (16.1) 425 410 409 423 Styrene chainBenzene – naphtha 126 190 168 208 173 109 161 221 37.2 236 279 298 219 (26.5) 242 198 186 195 Styrene – 0.81 x benzene 157 137 161 128 227 188 107 143 33.9 144 172 140 130 (7.3) 139 134 130 102 – 0.29 x ethylenePolystyrene – 0.98 styrene 132 139 142 157 152 172 143 166 16.2 166 193 169 158 (6.5) 156 168 159 151 PS – naphtha 508 581 571 589 624 557 524 624 19.1 643 684 664 603 (9.1) 618 601 579 578 Vinyl chainEDC – (0.3 x ethylene) 109 176 99 (82) 124 (16) (73) (75) NA (63) (60) (101) (114) NA (110) (115) (111) (140) PVC – 1.025 (0.235 x ethylene 283 286 387 449 429 387 420 470 12.0 485 488 463 459 (0.9) 435 484 470 447 + 0.864 x EDC)PVC – naphtha 244 265 128 35 138 17 (24) 93 NA 125 143 54 16 (70.1) (17) 36 14 13 Polyester/intermediatesPSF – 0.85 x PTA – 0.34 x MEG 269 413 461 360 299 368 311 415 33.4 396 489 353 352 (0.3) — — 343 —PFY – 0.85 x PTA – 0.34 x MEG 425 722 676 616 594 676 626 641 2.5 601 709 573 552 (3.7) — — 543 —PTA – 0.67 x PX 179 269 236 111 196 136 118 124 4.5 129 107 94 66 (29.4) 73 61 67 54 PX – naphtha 422 320 607 534 617 568 569 525 (7.8) 572 501 507 483 (4.7) 492 485 462 480 MEG – naphtha 77 160 246 55 293 229 50 47 (6.1) 85 117 71 75 5.6 79 52 58 82 MEG – 0.6 x ethylene 135 236 485 286 593 488 311 250 (19.7) 281 325 294 306 4.2 326 286 302 270

Source: Platts, Kotak Institutional Equities

Energy Reliance Industries

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Key assumptions behind earnings model

We discuss the key assumptions behind our earnings model below.

Refining margins. We model FY2013E, FY2014E and FY2015E refining margins at US$8.1/bbl, US$7.9/bbl and US$8.1/bbl (see Exhibit 3). We expect refining margins to decline from current high levels and remain subdued over the next 12-18 months led by (1) net additions of 1.8 mn b/d to global refining capacity in CY2012-13E (see Exhibit 4), (2) 0.7 mn b/d of increase in NGLs supply and (3) downside risks to incremental oil demand of 1.7 mn b/d in CY2012-13E (see Exhibit 5) from slowdown in the global economy. CY2014E will see addition of another 1.5 mn b/d of new refining capacity, which will likely keep a lid on global refining margins.

Major assumptions for RIL's refining segment, March fiscal year-ends, 2008-15E (US$/bbl)

2008 2009 2010 2011 2012 2013E 2014E 2015ERIL refineryRupee-dollar exchange rate 40.3 45.8 47.4 45.6 47.9 55.1 55.0 55.0 Import tariff on crude (%) 2.4 1.3 1.1 5.4 1.7 0.5 0.5 0.5 Refinery yield (per bbl of crude throughput) 98.1 104.8 82.1 96.0 128.3 118.1 112.6 107.1 Cost of inputs (per bbl of crude throughput) 83.1 92.6 75.7 88.4 121.5 111.2 105.1 99.4 Net refining margin 15.0 12.2 6.4 7.6 6.8 6.9 7.5 7.7 Crude throughput (mn tons) 31.8 32.0 34.5 34.5 35.2 35.5 35.5 35.5 Fuel and loss-own fuel used (%) 8.0 8.0 6.0 6.0 6.0 6.0 6.0 6.0 Fuel & loss equivalent-gas used (%) 2.0 2.0 2.0 2.0 2.0 2.0 SEZ refineryImport tariff on crude (%) — 0.6 0.7 0.5 0.5 0.5 Refinery yield (per bbl of crude throughput) 71.1 91.9 129.8 119.2 112.2 106.4 Cost of inputs (per bbl of crude throughput) 64.2 82.7 119.3 109.8 103.7 97.9 Net refining margin 7.0 9.2 10.5 9.3 8.4 8.5 Crude throughput (mn tons) 26.4 32.1 32.4 33.5 33.5 33.5 Fuel and loss-own fuel used (%) 6.5 6.5 6.5 6.5 6.5 6.5 Fuel & loss equivalent-gas used (%) 2.0 2.0 2.0 2.0 2.0 2.0 Blended refining margin (US$/bbl) 6.6 8.4 8.6 8.1 7.9 8.1 Total crude throughput (mn tons) 60.9 66.6 67.6 69.0 69.0 69.0

Notes:(a) Refining margins do not include sales tax incentives.

Source: Kotak Institutional Equities estimates

We expect 1.8 mn b/d of net addition to refining capacity in CY2012-13E World refinery capacity additions (net), calendar year-ends, 2007-14E ('000 b/d)

2007 2008 2009 2010 2011 2012E 2013E 2014EOECD North America 240 — (124) (211) 164 53 325 —OECD Europe — 30 (270) (121) (89) (312) (154) —OECD Pacific — — (57) (17) — (105) — —FSU — 84 — 140 — 203 39 44Non-OECD Europe — — — (70) — — — 30China — 206 446 560 266 580 300 70Other Asia 315 65 790 229 140 480 120 300Latin America — — (235) 50 85 (585) 365 285Middle East 77 226 179 70 95 70 400 817Africa — 6 6 — 60 30 20 —Total World 632 616 735 630 721 414 1,415 1,546

Source: OGJ, Downstream, Kotak Institutional Equities estimates



We see downside risks to growth in global oil demand in CY2012-13E Estimated global crude demand, supply and prices, calendar year-ends, 2007-15E

2007 2008 2009 2010 2011 2012E 2013E 2014E 2015EDemand (mn b/d)

Total demand 87.0 86.5 85.5 88.1 88.8 89.6 90.5 91.5 92.7Yoy growth 1.4 (0.5) (1.0) 2.6 0.6 0.9 0.8 1.1 1.1

Supply (mn b/d)Non-OPEC 50.7 50.6 51.5 52.6 52.8 53.2 53.9 54.5 55.6

Yoy growth 0.4 (0.1) 0.9 1.1 0.2 0.4 0.7 0.6 1.1

OPECCrude 30.7 31.6 29.2 29.3 29.9 30.2 30.1 30.3 30.0

NGLs 4.3 4.5 4.9 5.4 5.8 6.2 6.5 6.7 7.0Total OPEC 35.0 36.2 34.1 34.7 35.7 36.4 36.6 37.0 37.0

Total supply 85.8 86.8 85.6 87.3 88.4 89.6 90.5 91.5 92.7Total stock change (1.3) 0.0 0.0 (0.9) (0.3)

OPEC crude capacity 34.4 34.2 34.9 35.7 34.7 35.3 36.4 37.0 37.8

Implied OPEC spare capacity 2.4 2.5 5.7 5.5 4.5 5.1 6.3 6.7 7.8

Demand growth (yoy, %) 1.6 (0.6) (1.1) 3.0 0.7 1.0 0.9 1.2 1.3Supply growth (yoy, %)

Non-OPEC 0.7 (0.3) 1.8 2.1 0.3 0.8 1.3 1.1 2.1OPEC (0.5) 3.3 (5.8) 1.8 2.8 2.1 0.4 1.2 0.0

Total 0.2 1.2 (1.3) 2.0 1.3 1.3 0.9 1.2 1.3

Dated Brent (US$/bbl) 72.7 102.0 62.1 79.7 111.1 107.5 100.0 96.3 91.3World GDP growth (%) 5.4 2.8 (0.6) 5.3 3.9 3.5 3.9 4.0 4.1

Source: IEA, Kotak Institutional Equities estimates

Chemical margins. Exhibit 6 shows our major assumptions for RIL’s chemical prices and margins. We model a decline in chemical margins in FY2013E compared to FY2012 levels leading to lower EBITDA of the chemical segment in FY2013E despite weaker Rupee assumptions. However, we expect margins to improve subsequently to reflect gradual improvement in global operating rates (see Exhibit 7) and recovery in downstream demand.

Key chemical prices and margins assumptions, March fiscal year-ends, 2008-15E (US$/ton)

2008 2009 2010 2011 2012 2013E 2014E 2015EChemical pricesLDPE 1,600 1,400 1,500 1,555 1,650 1,475 1,490 1,450LLDPE 1,575 1,330 1,400 1,455 1,525 1,425 1,440 1,400HDPE 1,500 1,275 1,375 1,415 1,550 1,450 1,465 1,425Polypropylene 1,470 1,300 1,360 1,525 1,635 1,485 1,500 1,460PVC 1,100 925 1,000 1,075 1,100 1,025 1,040 1,000PFY 1,550 1,485 1,380 1,640 1,790 1,600 1,615 1,575PSF 1,475 1,320 1,310 1,660 1,910 1,675 1,690 1,650Paraxylene 1,200 1,085 1,050 1,125 1,550 1,375 1,350 1,310Chemical marginsLLDPE—naphtha 850 655 770 725 590 565 580 575 HDPE—naphtha 775 600 745 685 615 590 605 600 PP—naphtha 745 625 730 795 700 625 640 635 PVC—1.025 x (0.235 x ethylene + 0.864 x EDC) 396 401 389 367 383 541 553 557 POY—naphtha 825 810 750 910 855 740 755 750 PSF—naphtha 750 645 680 930 975 815 830 825 PX—naphtha 475 410 420 395 615 515 490 485 POY—0.85 x PTA—0.34 x MEG 364 496 341 437 349 334 331 330 PSF—0.85 x PTA—0.34 x MEG 289 331 271 457 469 409 406 405 PTA—0.67 x PX 121 133 217 281 187 179 211 207




Global operating rates for key chemical products remain well below their historical levels World demand and capacity (mn tons), operating rate (%), 1996-2014E

-

30

60

90

120

150

180

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

E

2013

E

2014

E

(mn tons)

80

83

86

89

92

95(%)

Demand [LHS] Capacity [LHS] Operating rate [RHS]

-

20

40

60

80

100

120

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

E

2013

E

2014

E

(mn tons)

80

82

84

86

88

90(%)


-

10

20

30

40

50

60

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

E

2013

E

2014

E(mn tons)

65

70

75

80

85

90

95(%)


-

10

20

30

40

50

60

70

80

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

E

2013

E

2014

E

(mn tons)

75

80

85

90

95(%)


Ethylene Polyethylene

PVC Polypropylene

Source: CMAI, Kotak Institutional Equities estimates

E&P segment. We model FY2013-15E KG D-6 gas production at 28 mcm/d, 23 mcm/d and 20 mcm/d. Exhibit 8 shows that our estimates of gas production from KG D-6 block are comparable with Niko’s estimates. We highlight that Niko has already factored in development of key satellite fields in its estimates and hence, we rule out any meaningful upside to the same. We have assumed gas price of US$4.2/mn BTU for FY2013-14E and US$6/mn BTU from FY2015E. We doubt that the Government will increase domestic gas price beyond US$6-8/mn BTU given its negative impact on the price-sensitive power and fertilizer sectors. Our fair value of RIL will increase by `33/share if we assume US$8/mn BTU gas price in perpetuity.

Niko expects peak production of ~40 mcm/d from KG D-6 block by FY2018E Niko's estimates of production from KG D-6 block, March fiscal year-ends, 2013-19E (mcm/d)

-

10

20

30

40

50

2013 2014 2015 2016 2017 2018 2019

Niko's estimates KIE estimates

(mcm/d)

Source: Niko, Kotak Institutional Equities estimates



Other income. We model RIL’s other income to likely grow strongly over the next few years driven by its increasing cash pile. We expect RIL to generate `690 bn of free cash flow in FY2013-15E. The quantum of other income will depend on (1) RIL’s dividend policy; RIL has followed a conservative dividend pay-out policy historically, (2) amount returned to the shareholders in the ongoing buy-back program (`28 bn so far in the current ongoing program), (3) acquisitions and (4) capex, which would depend on new E&P discoveries and schedule of new proposed petrochemical projects.

Taxation. We assume effective tax rate at 18%, 21.1% and 24.4% for FY2013E, FY2014E and FY2015E versus 22.2% in FY2012 and 19.6% in FY2011. We have assumed lower effective tax rate for FY2013E to reflect management’s guidance of lower tax rate for FY2013E. We assume that RIL will continue to avail of income tax exemption on gas production from KG D-6 block and prepare our forecasts accordingly. However, in case the income tax exemption is not available, we compute RIL’s FY2013E and FY2014E EPS to drop by 2.5% and 2.1% to `62.4 and `61.7.

Exchange rate. We have revised our Rupee-Dollar exchange rate for FY2013E, FY2014E and FY2015E to `55.1/US$, `55/US$ and `55/US$ from `53.75/US$, `51.5/US$ and `50/US$ previously.

Exhibit 9 gives sensitivity of RIL’s earnings to various key variables. Exhibits 10-11 give our SOTP valuations for RIL for FY2013E and FY2014E while Exhibit 12 is our summary financial statement for RIL.

Reliance's earnings have high leverage to refining margins Sensitivity of RIL's earnings to key variables

Fiscal 2013E Fiscal 2014E Fiscal 2015EDownside Base case Upside Downside Base case Upside Downside Base case Upside

Rupee-dollar exchange rateRupee-dollar exchange rate 54.1 55.1 56.1 54.0 55.0 56.0 54.0 55.0 56.0 Net profits (Rs mn) 201,035 207,549 214,062 197,812 204,330 210,848 225,653 232,948 240,242 EPS (Rs) 62.0 64.0 66.0 61.0 63.0 65.0 69.6 71.8 74.1 % upside/(downside) (3.1) 3.1 (3.2) 3.2 (3.1) 3.1

Chemical pricesChange in prices (%) (5.0) 5.0 (5.0) 5.0 (5.0) 5.0 Net profits (Rs mn) 201,873 207,549 213,224 197,952 204,330 210,708 224,926 232,948 240,969 EPS (Rs) 62.3 64.0 65.8 61.1 63.0 65.0 69.4 71.8 74.3 % upside/(downside) (2.7) 2.7 (3.1) 3.1 (3.4) 3.4

Blended refining marginsMargins (US$/bbl) 7.1 8.1 9.1 6.9 7.9 8.9 7.1 8.1 9.1 Net profits (Rs mn) 184,212 207,549 230,873 181,243 204,330 227,433 209,854 232,948 256,046 EPS (Rs) 56.8 64.0 71.2 55.9 63.0 70.1 64.7 71.8 79.0 % upside/(downside) (11.2) 11.2 (11.3) 11.3 (9.9) 9.9

Natural gas priceNatural gas price (US$/bbl) 4.2 5.2 4.2 5.2 5.0 6.0 7.0 Net profits (Rs mn) 207,549 216,826 204,330 211,914 226,295 232,948 239,670 EPS (Rs) 64.0 66.9 63.0 65.4 69.8 71.8 73.9 % upside/(downside) 4.5 3.7 (2.9) 2.9




SOTP valuation of Reliance is `725 per share on FY2013E estimates Sum-of-the-parts valuation of Reliance Industries, FY2013E basis (`)

Valuation base (Rs bn) Multiple (X) EV ValuationOther EBITDA Multiple EV/EBITDA (Rs bn) (Rs/share)

Chemicals 91 6.5 591 200Refining & Marketing 151 6.0 904 306Oil and gas—producing (PMT and Yemen) 26 2.5 65 22Gas—producing and developing (DCF-based) (a) 209 209 71 KG D-6 179 179 61 NEC-25 30 30 10Oil—KG-DWN-98/3 (b) 12 12 4Investments other than valued separately 347 347 117Retailing 78 0.8 62 21Shale gas 33 0.5 16 6Telecom 48 0.5 24 8Capital WIP for petchem segment (book value) 88 1.0 88 30Total enterprise value 2,318 786Net debt 184 62Implied equity value 2,134 723

Notes:(a) We value KG D-6 and NEC-25 blocks on DCF.(b) 25 mn bbls of recoverable reserves.(c) Capital WIP includes capex on new petrochemical units.(d) We use 2.95 bn shares (excluding treasury shares) for per share computations.


SOTP valuation of Reliance is `795 per share on FY2014E estimates Sum-of-the-parts valuation of Reliance Industries, FY2014E basis (`)

Valuation base (Rs bn) Multiple (X) EV ValuationOther EBITDA Multiple EV/EBITDA (Rs bn) (Rs/share)

Chemicals 106 6.5 692 234Refining & Marketing 144 6.0 865 293Oil and gas—producing (PMT and Yemen) 24 2.5 59 20Gas—producing and developing (DCF-based) (a) 229 229 78 KG D-6 193 193 65 NEC-25 36 36 12Oil—KG-DWN-98/3 (b) 12 12 4Investments other than valued separately 347 347 117Retailing 78 0.8 62 21Shale gas 33 0.5 16 6Telecom 48 0.5 24 8Total enterprise value 2,306 782Net debt (33) (11)Implied equity value 2,338 793

Notes:(a) We value KG D-6 and NEC-25 blocks on DCF.(b) 25 mn bbls of gross recoverable reserves.(c) Capital WIP includes capex on new petrochemical units.(d) We use 2.95 bn shares (excluding treasury shares) for per share computations.




RIL: Profit model, balance sheet, cash model, March fiscal year-ends, 2008-15E (` mn)

2008 2009 2010 2011 2012 2013E 2014E 2015EProfit model (Rs mn)Net sales 1,334,430 1,418,475 1,924,610 2,481,700 3,299,040 3,882,511 3,722,571 3,708,541EBITDA 233,056 233,139 305,807 381,257 336,190 307,216 305,459 343,255Other income 8,953 20,599 24,605 30,517 61,920 70,751 70,516 77,906Interest (10,774) (17,452) (19,972) (23,276) (26,670) (29,987) (22,712) (17,550)Depreciation & depletion (48,471) (51,953) (104,965) (136,076) (113,940) (94,782) (94,146) (95,605)Pretax profits 182,764 184,332 205,474 252,422 257,500 253,198 259,118 308,006Extraordinary items 47,335 — — — — — — —Tax (26,520) (12,634) (31,118) (43,204) (51,500) (50,649) (53,347) (69,560)Deferred taxation (8,999) (18,605) (12,000) (6,355) (5,600) 5,000 (1,440) (5,499)Net profits 194,580 153,093 162,357 202,863 200,400 207,549 204,330 232,948Adjusted net profits 152,605 153,093 162,357 202,863 200,400 207,549 204,330 232,948Earnings per share (Rs) 52.5 50.6 49.6 62.0 61.3 64.0 63.0 71.8

Balance sheet (Rs mn)Total equity 847,853 1,263,730 1,371,706 1,515,403 1,660,960 1,814,629 1,988,098 2,186,755Deferred taxation liability 78,725 97,263 109,263 115,618 121,220 116,220 117,660 123,159Minority interest 33,622 — — — — — — —Total borrowings 493,072 739,045 624,947 673,967 684,470 560,844 405,970 311,642Currrent liabilities 251,427 357,019 404,148 542,206 484,750 561,232 538,026 530,056Total liabilities and equity 1,704,700 2,457,057 2,510,064 2,847,194 2,951,400 3,052,925 3,049,753 3,151,611Cash 42,823 221,765 134,627 271,349 395,980 376,656 438,838 593,720Current assets 402,720 325,357 489,165 644,070 800,570 924,459 895,407 889,175Total fixed assets 1,081,638 1,693,869 1,653,987 1,555,260 1,214,770 1,211,729 1,175,429 1,128,636Investments 177,519 216,065 232,286 376,515 540,080 540,080 540,080 540,080Deferred expenditure — — — — — — — —Total assets 1,704,700 2,457,057 2,510,064 2,847,194 2,951,400 3,052,925 3,049,753 3,151,611

Free cash flow (Rs mn)Operating cash flow, excl. working capital 180,718 174,508 222,605 304,310 265,810 223,630 226,839 255,383Working capital (31,071) (37,983) (53,015) 695 (27,700) (47,407) 5,846 (1,738)Capital expenditure (239,691) (247,128) (219,427) (123,661) (80,080) (76,211) (67,942) (48,050)Investments (78,953) (10,392) 14,206 (195,439) (201,760) — — —Other income 6,132 16,195 22,043 23,316 18,930 70,751 70,516 77,906Free cash flow (162,865) (104,800) (13,587) 9,220 (24,800) 170,762 235,259 283,501

Ratios (%)Debt/equity 53.2 54.3 42.2 41.3 38.4 29.0 19.3 13.5 Net debt/equity 48.6 38.0 33.1 24.7 16.2 9.5 (1.6) (12.2) RoAE 18.9 13.6 11.8 13.1 11.6 11.0 10.0 10.4 RoACE 12.7 10.0 8.6 10.1 9.2 9.2 8.8 9.5 Adjusted ROACE 21.7 17.3 12.3 12.5 11.6 12.0 11.4 12.9

Source: Company, Kotak Institutional Equities estimates


Wholesale rates coming off as liquidity conditions improve

We note that most banks have started to reduce their wholesale deposit rates with liquidity conditions turning comfortable in recent weeks. Incremental CD ratio (since April 6, 2012) is at 16% as credit demand is currently in a slack period while growth in deposits has been strong and note positive impact from the recent cut in SLR of 1%. Borrowing through repo is ~1% of NDTL. Select banks are still offering bulk deposits at a marginal premium over the retail term deposits – trend that we expect to reverse over the next few months as RBI has directed banks to have a well-defined policy on interest rates for similar tenor deposits and GoI has been insisting to reduce the share in the overall deposits for public banks.

Retail deposit rates likely to remain sticky as compared to previous cycle

We expect retail term deposit rates to remain a bit stickier than the previous cycle as (1) RBI is unlikely to reduce interest rates and (2) public banks are trying to replace bulk deposits (20% of total deposits). Deposit profile has significantly changed (primarily from urban markets, non-individual in nature who are interest-rate sensitive with high degree of awareness of alternate instruments) making it a challenging exercise to mobilize/retain them. Banks are yet to cut retail term deposit rates materially despite the 3M CD currently at 8.4% (10.7% in March 2012 and 9.1% in June 2012).

We believe that the decline in wholesale rates is likely to benefit Andhra Bank, Central Bank, Corporation Bank, IOB, OBC, UCO and Vijaya Bank among public banks and Yes Bank and IndusInd Bank among private banks. High CASA ratio banks like SBI and HDFC Bank are unlikely to be benefitted in the current phase.

NIM likely to remain under pressure; Basel-3 guidelines and provisions can act as a floor

We see NIM to remain under pressure in FY2013-14E as revenue growth is expected to slow down (13% CAGR) on the back of slower demand for credit (14% CAGR) and NIM compression (~20 bps) as pricing power shifts to borrowers. Lending spreads, especially for public banks, are at a near-term high (4% as of FY2012) and we expect a compression of about 40 bps going forward in FY2012-14E. Private banks are likely to report stable performance as we see NIM to improve for ICICI Bank and mid-tier private banks like Yes Bank and IndusInd Bank.

However, we don’t expect NIM to compress sharply (similar to FY2009-10) for two reasons—(1) Basel-3 guidelines require banks to shore up core equity which would require higher internal generation of capital and (2) overall provisioning environment will remain at elevated levels as banks make higher provisions for fresh slippages and impending regulations for dynamic provisions. Indian banks make ~70% of their overall revenues from NII, as contribution from fee business and treasury income is unlikely to change materially.

Banks/Financial Institutions India

Funding environment improving. Steady decline in market deposits (CD) and cuts in wholesale deposit rates on the back of improving liquidity conditions should benefit select wholesale banks though NIM (sector) would remain under pressure as pricing power shifts to borrowers. However, retail deposit rates are likely to be a bit stickier compared to the earlier cycle as (1) interest rates are unlikely to come down sharply, (2) RBI has directed banks to have a sound policy on differential rates and (3) GoI has asked banks to reduce their dependence on bulk deposits.

NEUTRAL

SEPTEMBER 04, 2012

UPDATE

BSE-30: 17,441

QUICK NUMBERS

• Interest rates on CD has declined 230 bps since March 2012

• Bulk deposits to total deposits is 20%



Bulk deposits interest rates are being realigned to retail deposit rates

Most banks have started to cut the differential between retail term deposit and bulk/wholesale deposit rates—trend that we expect to continue over the next few months given the comfortable liquidity conditions and meeting the requirements from RBI/GoI.

Our analysis of OBC (a mid-tier PSU bank with strong dependence on bulk deposits) indicates that the bank has started to reduce the difference between interest rates offered for similar tenors. The differential in these deposits is currently at 1-2% as compared to ~350-450 bps a quarter ago. Apart from OBC, we note that most of the other banks who publish their deposit rates have a differential of 50-150 bps across similar maturity buckets.

GoI has directed PSU banks to reduce their dependence on bulk deposits to ~15% by March 2013. However, the definition (GoI has defined as deposits that are different from published rates and does not define the ticket size of these deposits) of these deposits is in variance with RBI which should make it a bit easier for PSU banks to comply. As most of these deposits are short term in nature, we believe that most PSU banks should be able to comply within the desired timeframe.

Interest rates on certificate of deposits have declined >200 bps since March 2012

Since March 2012, we note that interest rates on certificate of deposits have declined by 230 bps (70 bps since June 2012) to 8.4% which should ease near-term concerns on NIM as banks have started to selectively reduce interest rates on retail products/reduce spreads across their mid-corporate portfolio. Our recent report ’Pressure on earnings for most sectors‘ dated September 3, 2012 highlighted that interest costs continue to rise across all sectors and are currently at 4.7% of sales in 1QFY13 as compared to 3% in FY2010. The sector is more likely to pass the benefit of lower costs of funds though select PSU banks and private banks are likely to show NIM expansion.

We believe that the decline in wholesale rates is likely to benefit Andhra Bank, Central Bank, Corporation Bank, IOB, OBC, UCO and Vijaya Bank among public banks and Yes Bank and IndusInd Bank among private banks. High CASA ratio banks like SBI and HDFC Bank are unlikely to be benefitted in the current phase.

OBC has reduced the difference between retail and bulk/wholesale deposits Difference between wholesale deposits (above `1.5 mn) and retail deposits (less than `1.5 mn) for OBC, 2011-12 (%)

Oct-11 Nov-11 Mar-12 Apr-12 Apr-12 Jul-12 Aug-12 Aug-12 Sep-12 Oct-11 Nov-11 Mar-12 Apr-12 Apr-12 Jul-12 Aug-12 Aug-12 Sep-127 days to 14 days — — — — — — — — — — 4.5 4.5 4.5 3.5 3.5 3.5 3.5 2.0

15 days to 30 days — — — — — — — — — — 4.0 4.0 4.0 3.0 3.0 3.0 3.0 1.5

31 days to 45 days — — 3.5 3.5 2.5 2.5 2.5 2.3 2.0 — 3.5 4.5 3.5 3.0 3.0 3.0 3.0 2.0

46 days to 90 days — — 3.3 2.8 2.3 2.3 2.3 1.8 1.3 — 2.8 3.8 2.8 2.3 2.3 2.3 2.3 1.3

91 days to 179 days — — 1.0 1.0 0.3 0.3 0.3 0.3 0.3 1.1 1.1 1.5 1.5 1.0 1.0 0.8 0.6 0.5

180 days to 269 days — — 0.5 0.5 - — — — — 0.4 0.4 1.0 1.0 0.5 0.5 0.5 0.3 0.3

270 days to <1 year — — 0.5 0.5 0.5 — — — — 0.4 0.4 1.0 1.0 0.5 0.5 0.5 0.5 0.3

1 year to <2 years — — — — — — — — — (0.2) — — — — — — (0.1) (0.1)

2 years to <3 years — — — — — — — — — — — — — — — — (0.3) (0.3)

3 years to <5 years — — — — — — — — — (0.3) (0.3) (0.3) (0.3) (0.3) (0.3) (0.3) (0.3) (0.3)

5 years to <10 years — — 0.3 0.3 0.3 — — — — (0.5) (0.5) (0.3) (0.3) (0.3) (0.3) (0.3) (0.3) (0.3)

Difference between Rs1.5 mn - 10 mn and retail deposits Difference between >10 mn and retail deposits

Source: Company, Kotak Institutional Equities

India Banks/Financial Institutions


Banks have nearly 20% of their total deposits in bulk portfolio Bulk deposits to total deposits, March fiscal year-ends, 1QFY13

Total deposits Bulk deposits(Rs bn) (Rs bn) (%)

Allahabad Bank 1,569 300 19.1 Andhra Bank 1,077 310 28.8 Bank of Baroda 3,827 765 20.0 Bank of India 3,390 508 15.0 Bank of Maharashtra 799 124 15.5 Canara Bank 3,346 736 22.0 Central Bank 1,970 617 31.3 Corporation Bank 1,341 469 35.0 Dena Bank 797 104 13.0 Indian Bank 1,270 114 9.0 Indian Overseas Bank 1,849 545 29.5 Oriental Bank of Commerce 1,582 415 26.2 Punjab National Bank 3,854 854 22.2 State Bank of India 11,029 1,162 10.5 Syndicate bank 1,573 323 20.5 UCO Bank 1,550 661 42.6 Union Bank 2,221 369 16.6 United Bank 896 143 16.0 Vijaya Bank 865 397 45.9 Total 44,873 8,928 19.9


Wholesale rates have started to decline Rates for 3M certificate of deposits, 2011-12 (%)

7

8

9

10

11

12

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Source: Bloomberg

Certificate of deposits to total deposits is about 6.5% CD to total deposits, 2008-12 (%)

4.0

5.2

6.4

7.6

8.8

10.0

Aug

-08

Dec

-08

Apr

-09

Aug

-09

Dec

-09

Apr

-10

Aug

-10

Dec

-10

Apr

-11

Aug

-11

Dec

-11

Apr

-12

Aug

-12

Source: RBI



Deposit rates across maturities and ticket sizes show significant variance for select banks Deposit rates across buckets and ticket size, Sep 2012 (%)

7-14 days

15-30 days

31-45 days

46 -90 days

91-120days

120-180 days

181-270 days

271 days-1year

1 year-2year

2 year-3year

3 years- 5 years

5 years and

aboveAndhra BankLess than Rs1.5 mn 4.0 4.5 4.5 6.0 7.3 7.3 8.5 8.5 9.3 9.3 9.0 9.0 Rs1.5 mn to less than Rs10 mn 4.0 4.5 4.5 6.0 7.3 7.3 8.5 8.5 9.3 9.3 9.0 9.0 Rs10 mn to less than Rs100 mn 4.0 4.5 4.5 6.0 7.3 7.3 8.8 8.8 9.3 9.3 9.0 9.0 Bank of BarodaLess than Rs1.5 mn 4.5 4.5 4.5 6.3 7.0 7.0 7.5 7.8 9.0 9.0 9-9.15 9.0 Rs1.5 mn to less than Rs10 mn 4.5 4.5 4.5 6.5 7.3 7.3 7.5 7.8 9.0 9.0 9-9.15 9.0 Rs10 mn to less than Rs100 mn 5.0 5.0 5.0 7.0 7.8 7.8 7.5 8.8 9.3 9.3 9-9.15 9.0 Bank of IndiaLess than Rs1.5 mn 4.0 4.5 7.0 7.0 7.3 7.3 8.0 8.3 9.25-9.35 9.0 9.0-9.10 9.0 Rs1.5 mn to less than Rs10 mn 4.0 4.5 7.0 7.0 7.3 7.3 8.0 8.3 9.25-9.35 9.0 9.0-9.10 9.0 Rs10 mn to less than Rs100 mn 4.5 5.0 8.0 7.5 8.0 8.0 8.5 8.5 8.8 8.3 7.3 7.0 Canara BankLess than Rs1.5 mn 4.0 4.5 4.5 7.0 7.3 7.3 8.0 8.0 9.0 9.0 9.0 9.0 Rs1.5 mn to less than Rs10 mn 4.0 4.5 4.5 7.0 7.3 7.3 8.0 8.0 9.0 9.0 9.0 9.0 Rs10 mn to less than Rs100 mn 4.0 4.5 4.5 7.5 8.0 8.0 8.5 8.5 8.8 8.8 8.5 8.5 Corporation BankLess than Rs1.5 mn 6.0 6.5 6.5-8.0 8.0 8.5 9.0 9.0 9.3 9.3 9.3 9.0 Rs1.5 mn to less than Rs10 mn 6.5 6.5 6.5-8.0 8.0 8.5 9.0 9.0 9.3 9.3 9.3 9.0 Indian Overseas BankLess than Rs5 mn 7.0 7.0 7.0 7.0 7.5 7.5 8.0 8.5 9.3 9.3 9.3 9.0 Rs5 mn to less than Rs10 mn 8.0 8.0 8.0 8.0 8.0 8.0 8.5 8.5 9.3 9.3 9.3 9.0 Oriental Bank of CommerceLess than Rs1.5 mn 4.0 4.5 5.0 5.8 8.0 8.0 8.5 8.5 9.3 9.3 9.3 9.0 Rs1.5 mn to less than Rs10 mn 4.0 4.5 7.0 7.0 8.3 8.3 8.5 8.5 9.3 9.3 9.3 9.0 Rs10 mn to less than Rs100 mn 6.0 6.0 7.0 7.0 8.5 8.5 8.8 8.8 9.2 9.0 9.0 8.8 Punjab National BankLess than Rs10 mn 4.0 4.5 4.5 5.5 6.8 6.8 7.5 7.5 8.50-9.00 8.8 8.50-9.00 8.5 10 mn to less than Rs100 mn 4.0 4.5 4.5 7.0 8.0 8.0 8.3 8.5 8.50-9.00 8.8 8.50-9.00 8.5 SBILess than Rs1.5 mn 7.0 7.0 7.0 7.0 7.0 7.0 7.25-7.5 7.5 9.0 9.0 9.0 8.5 Rs1.5 mn to less than Rs10 mn 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 9.0 9.0 9.0 8.5 Rs10 mn to less than Rs100 mn 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 9.0 9.0 9.0 8.5 ICICI BankLess than Rs1.5 mn 3.8 4.0 5.0 6.25-6.5 7.0 7.0 7.0-7.5 7.5-7.75 8.0 8-9.25 9.3 8.5 Rs1.5 mn to less than Rs10 mn 3.8 4.0 5.0 6.25-6.5 7.0 7.0 7.0-7.5 7.5-7.75 8.0 8-9.25 9.3 8.5 Axis BankLess than Rs10 mn 3.5 3.5 5.0 6.25-6.5 7.0 7.0 7.5 7.5 9.0-9.25 9.3 9.3 8.5 More than Rs10 mn 4.0 4.0 7.0 7.0 8.0 8-8.5 8.5 8.5 9.0-9.25 9.3 9.3 8.5

Source: Company websites, Kotak Institutional Equities

NIM compression assumes a conservative decline of 20 bps for FY2012-14E

We believe that our NIM assumption factors a fairly conservative decline for FY2012-14E (NIM to decline by 15 bps in FY2013E). Lending spreads are at a near-term high—implying a higher risk of downside from current levels. We believe that the compression will largely be led by pressure in lending yields (investment spreads to decline ~20 bps in FY2013E and ~10 bps in FY2014E) as growth visibility reduces though investment spread should improve.

We expect NIM for public banks to reduce ~25-30 bps in FY2013-14E while private banks should broadly report a stable NIM performance. The lower impact on private banks would be primarily due to NIM expansion that we are building for ICICI Bank on the back of strong deposit profile while Yes Bank and IndusInd Bank would benefit from sharp decline in wholesale deposit rates.



NIM for private banks to remain stable for FY2013-15E NIM for private banks, March fiscal year-ends, 2005-15E (%)

1.0

1.8

2.6

3.4

4.2

5.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

E

2014

E

2015

E

40

50

60

70

80

90

Lending spread (LHS) Investment spread (LHS)NIM (LHS) CD Ratio (RHS)


NIM for public banks to decline as lending spreads decline NIM for public banks, March fiscal year-ends, 2005-15E (%)

1.0

1.7

2.4

3.1

3.8

4.5

2005

2006

2007

2008

2009

2010

2011

2012

2013

E

2014

E

2015

E

40

50

60

70

80

90

Lending spread (LHS) Investment spread (LHS)

NIM (LHS) CD Ratio (RHS)


Factoring compression in margins for the sector of about 20 bps in FY2012-14E Net interest margins (KS calc), March fiscal year-ends, 2008-15E (%)

2008 2009 2010 2011 2012 2013E 2014E 2015EPublic banksAndhra Bank 2.7 2.7 2.8 3.3 3.3 3.0 3.1 3.0 Bank of Baroda 2.6 2.6 2.4 2.9 2.6 2.5 2.5 2.5 Bank of India 2.7 2.8 2.4 2.6 2.4 2.4 2.4 2.4 Canara Bank 2.1 2.5 2.4 2.7 2.2 2.1 2.3 2.5 Corporation Bank 2.5 2.3 2.3 2.4 2.1 2.1 2.4 2.4 Indian Bank 3.2 3.5 3.7 3.7 3.5 3.2 3.2 3.1 IOB 3.0 2.7 2.6 2.8 2.6 2.5 2.5 2.5 OBC 2.1 2.0 2.4 2.9 2.6 2.7 2.7 2.6

PNB 3.2 3.2 3.3 3.6 3.3 3.3 3.2 3.1 SBI 2.8 2.6 2.5 3.0 3.6 3.3 3.1 3.0

Union Bank 2.7 2.8 2.4 3.0 2.9 2.8 2.7 2.6

Old private banksFederal Bank 3.2 3.8 3.5 3.8 3.6 3.3 3.3 3.2

J&K Bank 2.7 2.9 2.9 3.4 3.4 3.4 3.2 3.0

New private banksAxis Bank 2.9 3.0 3.1 3.2 3.1 3.0 2.9 2.9 HDFC Bank 4.9 4.9 4.3 4.4 4.3 4.3 4.1 4.0

ICICI Bank 2.1 2.4 2.4 2.6 2.7 3.0 3.0 3.2

IndusInd Bank 1.5 1.9 3.0 3.6 3.4 3.5 3.6 3.7

Yes Bank 2.5 2.7 2.8 2.7 2.6 2.7 2.9 2.9


Dynamic provisions, low growth and RoE to be key factors for NIM

We believe that a few key factors would be critical in our assumption of ~20 bps decline in NIM for FY2012-14E. We note that NII contributes nearly 70% of the total income for the sector (65% for private banks and ~75% for public banks)



Slowdown in loan growth. We don’t see a sharp decline in interest rates despite loan growth showing strong signs of slowdown. Reducing interest rates are unlikely to result in strong loan growth. Sanctions for term loans have dropped sharply (~50% yoy) as investment climate has significantly deteriorated given the uncertainties on existing projects, regulatory action on sectors like mining and external slowdown. We are building loan growth of 14-15% CAGR for FY2012-14E as existing sanctions gets utilized and working capital demand moves in line with inflation requirements and marginally elongated cycle.

High provisions in the medium term. We believe that credit costs or loan-loss provisions will remain high in the medium term despite any change in our outlook on asset quality. We are factoring credit costs at 120-130 bps for the sector as any improvement in asset quality is likely to result in banks starting to improve coverage ratio or make higher provisions for dynamic provisions (recommended a provision of ~140 bps). We continue to factor reasonably higher slippages (>2%) in the medium term and restructuring will remain high, which should keep credit costs at elevated levels that should bar banks from reducing lending rates aggressively.

Capital requirements to meet Basel-3. We expect a total capital infusion of US$20 bn for FY2013-18E as banks make a transition to Basel-3 requirements (‘Rising capitalization buffers; low valuations pose risks to book value‘, dated July 2, 2012). Reducing NIM at the cost of profitability can impact meeting Basel-3 requirements from internal sources. Public banks would require US$17 bn while private banks would need an infusion of US$3 bn. These estimates are highly contingent on dividend payout policy, loan growth and profitability as we have taken conservative estimates over the medium term. We are building overall RWA growth to be at 14% CAGR broadly reflecting a similar loan growth. RoEs are likely to remain lower at 16% for FY2012-15E, maintaining a dividend payout ratio of 16-20% for the sector.

NIM to come off by ~20 bps but LLP to remain high NIM and LLP, March fiscal year-ends, 2005-15E (%)

2.0

2.3

2.6

2.9

3.2

3.5

2005

2006

2007

2008

2009

2010

2011

2012

2013

E

2014

E

2015

E

-

0.3

0.6

0.9

1.2

1.5LLP (RHS) NIM (LHS)


RoE and RoA to remain under pressure for FY2012-15E RoE and RoA for banks, March fiscal year-ends, 2005-15E (%)

0.6

0.7

0.9

1.0

1.2

1.3

2005

2006

2007

2008

2009

2010

2011

2012

2013

E

2014

E

2015

E

12

13

14

15

16

17RoE (RHS) RoA (LHS)




US$20 bn of capital to be raised over FY2013-18E

Asset growth (CAGR 2012-18E%)

RWA growth (CAGR 2012-18E%)

ROE (2012-18E %)

Target Tier-1 capital (%) 2013E 2014E 2015E 2016E 2017E 2018E

Public BanksAllahabad 15.0 15.0 17.0 9.5 5.8 2.1 1.7 1.8 2.0 2.2 BoB 14.0 14.0 17.0 9.5 — — — — — —BoI 14.0 14.0 16.0 9.5 21.1 3.5 3.5 4.2 4.4 4.7 BoMH 14.0 14.5 13.0 9.5 9.5 3.9 3.7 4.0 4.5 5.0 CBoI 14.0 14.5 14.5 9.5 31.7 9.3 7.6 8.3 9.4 10.7 Dena 15.0 15.0 17.0 9.5 4.1 1.0 0.6 0.5 0.5 0.6 IDBI 14.0 14.0 13.0 9.5 34.5 13.1 12.2 13.5 15.3 17.4 IOB 16.0 16.5 15.0 9.5 24.9 9.9 9.9 12.6 14.7 17.0 PNB 14.0 15.0 17.0 9.5 3.0 — — — 2.2 5.1 Punjab & Sind 14.0 15.0 14.5 9.5 6.7 1.9 1.4 1.5 1.7 1.9 SBI 14.0 14.5 15.5 9.5 — 33.7 43.8 50.0 56.4 63.7 Syndicate 14.0 14.5 16.0 9.5 9.4 5.3 5.3 5.9 6.6 7.4 UCO 14.0 14.5 15.0 9.5 20.8 8.4 7.8 8.4 9.3 10.4 Union 15.0 15.0 15.0 9.5 25.0 8.4 12.2 9.8 10.6 11.9 United 15.0 14.0 16.0 9.5 5.7 2.0 1.5 1.4 1.5 1.5 Vijaya 17.0 16.0 14.5 9.5 2.5 4.3 4.9 5.4 6.0 6.8 Private Banks Axis 17.0 17.0 16.5 9.5 3.1 5.7 8.8 11.0 13.2 15.6 HDFC Bank 19.0 19.0 18.0 9.5 — — — — — 23.4 ICICI 14.0 13.0 13.0 9.5 — — — — — —IndusInd 20.0 21.0 18.0 9.5 — — — — 2.5 6.4 Yes 20.0 21.0 19.0 9.5 — — 1.9 5.3 6.8 8.1 Total 208 113 127 144 168 220

Assumptions Capital required (Rs bn)

Notes: a) We have assumed that banks would need a minimum tier-1 ratio of 9.5%. Incremental capital raised in the form of core equity. b) Changes to dividend policy ratios, RoEs and loan growth can have disproportionate impact on capital raised. c) Explicit forecasts of estimates have been used for banks under coverage till FY2015E while an estimate has been used based on expected growth

trends, RoEs and payout ratios for banks not under coverage. d) Tier-2 capital would broadly grow in line with risk-weighted asset growth.


We expect US$5-40 bn based on sensitivity to ROE and RWA Capital required variation with ROE and RWA growth assumptions (` bn)

RWA-2 RWA-1 RWA RWA+1 RWA+2ROE-2 782 1,080 1,409 1,763 2,154 ROE-1 598 876 1,195 1,544 1,922 ROE 434 677 978 1,324 1,686 ROE+1 328 521 784 1,121 1,472 ROE+2 274 384 618 914 1,262 Notes: a) RWA and ROE represent our growth rate expectation for individual banks




Term deposits dominate in urban/metro regions primarily by non-individuals

Of the total term deposits, the contribution from individuals has been steadily declining over the past decade—probably an indication of better investment opportunities (‘Private banks gain share in SA‘, dated June 22, 2012). Their share in overall term deposits is currently at 46% levels as compared to nearly 80% over a decade earlier. Alternate investment opportunities in non-financial assets or insurance/MF/government sponsored schemes could have moved deposits away from banks making it a challenging exercise for them, especially PSU banks, to attract these deposits without keeping interest rates attractive. Also, the overall contribution of term deposits is largely urban—with nearly 83% of the overall deposits mobilized from this region compared to 65% levels a decade ago.

Term deposits are seeing a gradual shift from individuals to non-individuals Contribution of term deposits by individuals and non-individuals, March fiscal year-ends, 1999-2011 (%)

RuralSemi-urban

Urban/Metro Total Rural

Semi-urban

Urban/Metro Total Rural

Semi-urban

Urban/Metro

1999 14 18 47 78 1 2 19 22 15 19 66

2000 14 18 46 78 1 2 20 22 15 20 66

2001 14 18 47 79 1 2 19 21 15 19 66

2002 13 17 43 73 1 2 25 27 14 18 68

2003 12 16 43 72 1 2 26 28 13 18 69

2004 11 15 40 66 1 2 32 34 12 16 72

2005 10 13 36 59 1 2 38 41 11 15 74

2006 8 10 33 51 1 2 46 49 9 12 79

2007 7 8 30 45 1 3 51 55 8 11 81

2008 6 9 31 46 1 2 51 54 8 11 82

2009 6 9 34 49 1 2 48 51 7 11 82

2010 6 8 32 46 1 2 51 54 7 11 82

2011 6 8 32 46 1 2 51 54 7 10 83

Individual Others Total

Source: RBI, Kotak Institutional Equities

Duration across regions, especially high share segments like urban/metro, is moving to <2-year buckets Break-up of term deposits (at origination) in different geographies, March fiscal year-ends, 1999-2011 (%)

Upto 6 months

6 Months - 1 year

1 year - 2 years Others

Upto 6 months

6 Months - 1 year


Upto 6 months

6 Months - 1 year


1999 8.2 8.2 18.3 65.2 11.3 10.4 21.2 57.0 18.0 14.6 24.7 42.7

2000 9.4 9.6 18.9 62.0 12.9 12.2 21.0 53.9 19.3 14.7 24.5 41.4

2001 10.8 10.9 18.7 59.6 14.2 13.3 20.6 52.0 19.6 16.4 24.2 39.8

2002 14.9 12.3 20.4 52.4 19.1 14.0 22.4 44.5 23.7 14.7 23.8 37.8

2003 16.0 12.2 20.2 51.7 19.8 13.9 21.9 44.4 24.5 13.8 23.8 37.9

2004 16.3 12.0 19.8 51.9 19.7 13.3 22.2 44.8 26.8 15.1 23.5 34.6

2005 17.0 12.4 19.8 50.7 20.7 13.6 22.4 43.3 27.0 15.8 24.6 32.6

2006 17.3 12.0 20.0 50.7 19.7 12.6 23.0 44.7 24.5 17.8 28.2 29.5

2007 14.6 10.5 24.0 50.9 16.0 10.8 29.7 43.5 20.9 19.4 34.8 25.0

2008 9.6 7.7 32.6 50.1 11.2 8.0 40.1 40.7 17.4 15.6 41.5 25.4

2009 6.9 7.5 36.0 49.6 8.4 7.9 42.5 41.2 15.8 14.9 42.7 26.6

2010 7.7 7.4 31.7 53.2 9.2 7.6 38.0 45.2 16.9 15.0 39.2 28.9

2011 6.2 5.9 35.8 52.0 8.7 6.4 41.8 43.1 17.9 11.4 41.9 28.8

Rural Semi-urban Urban/Metro

Source: RBI, Kotak Institutional Equities


Steel prices collapse in China but have not reached the bottom

Steel prices declined 18.1 % over the past two months, led by a slowdown in China, weak PMI and industrial production data and lack of supply discipline. Steel production, on the other hand, has been surprisingly resilient in China with production of 1.93 mn tonnes a day, barely down from previous months. Exhibit 14 indicates that steel inventory in China is still pretty high. We believe production will eventually adjust to the lower demand but cause pain in the process.

Raw material prices decline in anticipation of steel production cuts

Iron ore prices declined 21% during the past month to less than US$98/tonne. China CFR (63.5% Fe grade) and fears of steel production cuts with stubbornly high inventory at Chinese ports impacted prices. Iron ore prices are now below cost of production of marginal producers in China (production cost of US$100-120/tonne). We expect iron ore prices to stabilize above US$100/tonne though downside risks exist from high iron ore inventory at Chinese ports and a potential cut in production. Hard coking coal prices also slid by 19.2 % during the past month to US$173/tonne but may stabilize at current levels; note that 3Q2012 contract coking price of US$225/tonne is 30.1% higher than spot.

Aggressive export HRC offers from China are 6% lower than domestic prices

A decline in steel prices and high inventories are reflecting in aggressive HRC offers from China. Export HRC offers from China stand at US$515/tonne FOB, translating into landed cost of Rs32,000/tonne in the domestic market. This is ~Rs2,000/tonne lower than prevailing HRC prices in India. A further cut in export offers from China will reflect in domestic steel prices. The Indian steel sector has been helped by sharp Rupee depreciation and duty protection, enabling flattish finished steel prices despite a 29% correction in HR prices in China over the past 12 months.

We cut steel price and iron ore price assumptions

We now model FY2013 and FY2014 HRC import price CNF to Mumbai at US$565/tonne and US$535/tonne, down from US$620/tonne and US$615/tonne earlier. These are prices are based on underlying iron ore price assumption of US$100/tonne and US$90/tonne for FY2013 and FY2014, respectively. We highlight that iron ore prices have potential to decline in the near term before recovering. We also incorporate our economists’ revised USD/INR rate assumption of Rs55.1 for FY2013 and Rs55 for FY2014 from Rs53.75 and Rs51.5 earlier. Exhibits 3 and 5 summarize key changes to our estimates over FY2013-15. We cut (1) Tata Steel’s target price to Rs390 from Rs440 earlier; and (2) JSPL’s target price by 5.3% to Rs445. We maintain our ratings though potential exists for stocks to undershoot our target prices. We believe JSPL is the only stock in which concerns are adequately discounted in the stock price.

Metals & Mining India

Steel slide. We incorporate revised steel prices, steel-making raw material prices and the USD/INR rate in our steel companies’ models and cut EBITDA estimates by 1-8% over FY2013-15. We believe stocks have further downside potential before stabilizing. We cut target prices by 5-11% for steel names. Lack of discipline in global production, especially in China, high inventories and distressed offers pose a risk to Indian steel prices. We prefer JSP among steel equities.

CAUTIOUS

SEPTEMBER 5, 2012

UPDATE

BSE-30: 17,441



Tata Steel: Further downside likely in the near term

Exhibits 1 and 2 detail potential steel pricing scenarios at various levels of iron ore prices and the consequent impact on valuations for Tata Steel. We believe an iron ore price downside may not be material from the current level though a rebound may take some time. At the spot iron ore and coking coal prices, we believe the landed cost of HRC in India could be Rs32,000, 5.9% lower than the current price. At depressed iron ore prices of US$85/tonne, Tata Steel’s fair value would be materially lower.

Exhibit 1: Indian HRC prices, assuming prices set by import offers from China, at various iron ore price levels (US$/tonne)

Total Cost (US$)US$100 US$125 US$85

Iron ore 160.0 200.0 136.0 Others 306.6 306.55 296.55 Total Cost 467 507 433 Add: VAT 79 86 74 Total FOB cost 546 593 506 Ocean freight 20 20 20 Mumbai CFR offer 566 613 526 Port charges 5 5 5 Import duty 43 46 40 Landed cost 614 664 571 Inland transportation 10 10 10 HRC price India 624 674 581 Re/US$ rate 55.0 55.0 55.0 HRC price India (Rs/tonne) 34,302 37,069 31,950

Source: Kotak Institutional Equities

India Metals & Mining


Exhibit 2: Tata Steel fair value in various scenarios

Base case Scenario 1 Scenario 2 Scenario 3Tata Steel IndiaHRC price (Mumbai ex-duties) 622 674 581 581 India EBITDA/ tonne (US$) 280 325 247 247 Volumes (mn) 7.6 7.6 7.6 7.6 EBITDA (US$ mn) 2,129 2,471 1,878 1,878 Tata Steel EuropeCorus EBITDA (US$ mn) 354 677 — —Volumes (mn) 13.5 13.5 13.5 13.5 EBITDA/ tonne (US$) 26 50 — —

Others (US$) 170 170 170 170 Consolidated EBITDA (US$ mn) 2,653 3,319 2,048 2,048 EBITDA multiple (X) 6.4 6.4 7.3 7.3 Enterprise valuation (US$mn) 17,056 21,339 14,846 14,846 Less: Net debt (US$ mn) 10,457 9,917 10,997 10,997 Add: Value for New Millenium Iron Corp and DSO 200 200 —Add: Value for stake in Benga Coking Coal project 300 300 —Equity value (US$mn) 6,598 11,922 4,348 3,848 Investment value (US$mn) 456 467 467 —Equity value after investments (US$mn) 7,055 12,388 4,815 3,848 Value per share (Rs/share) 391 686 267 214

Note:No adjustments are made for capex and value assinged for new projects while arriving at base case and scenario SOTPEntire analysis is done at Re/US$ rate of 55 Spot rate is 55.5Scenario analysis done after assuming EBITDA margin of US$15/ tonne for inefficient Chinese Steel mills

1. Scenario 1 has iron ore prices of US$125/ tonne and TSE profitability of US$50/ tonne2. Scenario 2 has iron ore prices of US$85/ tonne and TSE profitability of US$0/ tonne3. Scenario 3 has iron ore prices of US$85/tonne, TSE profitability of US$0/tonne and no value for any investment or raw material project




Exhibit 3 :Tata Steel, changes in estimates, March fiscal year ends, FY2013-15E (Rs mn)

Revised estimates Old estimates % change2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E

Earnings (consolidated)Net sales 1,405,533 1,457,169 1,469,107 1,422,754 1,438,675 1,476,429 (1.2) 1.3 (0.5) EBITDA 145,925 166,377 175,110 154,493 178,859 189,609 (5.5) (7.0) (7.6) Adj. PAT 33,844 48,450 53,678 39,488 58,992 65,730 (14.3) (17.9) (18.3) EPS (Rs) 34.8 49.9 55.3 40.7 60.7 67.7 (14.3) (17.9) (18.3) VolumesIndia (mn tonnes) 7.6 9.1 9.6 7.6 9.1 9.6 — — —International operations (mn tonnes) 13.5 13.9 14.1 13.5 13.9 14.1 — — —PricingHRC price India (US$/tonne) 622 590 583 680 675 637 (8.5) (12.6) (8.5) Corus Realization (US$/tonne) 1,100 1,080 1,060 1,135 1,115 1,150 (3.1) (3.1) (7.8)

Re/US$ rate 55.1 55.0 54.5 53.8 51.5 51.0 2.5 6.8 6.8

Tata Steel IndiaNet sales 377,274 424,563 449,864 392,776 442,991 453,721 (3.9) (4.2) (0.9) EBITDA 117,292 128,225 131,838 129,518 144,085 132,364 (9.4) (11.0) (0.4) Adj. PAT 59,736 64,563 66,371 68,420 76,080 67,330 (12.7) (15.1) (1.4) EBITDA/tonne 280 256 252 317 307 270 (11.7) (16.7) (6.7) Re/US$ rate 55.1 55.0 54.5 53.8 51.5 51.0 2.5 6.8 6.8 Tata Steel EuropeNet sales 821,136 826,760 812,875 826,504 799,236 825,773 (0.6) 3.4 (1.6) EBITDA 19,490 29,283 33,051 15,974 26,254 47,459 22.0 11.5 (30.4) GBP/USD 1.57 1.58 1.57 1.57 1.57 1.57 — 0.6 —EBITDA/tonne 26 38 43 22 37 66 19.0 4.4 (34.8)


Exhibit 4:Tata Steel, valuation, September 2013E basis (Rs mn)

EBITDA Multiple Enterprise value EV

(Rs mn) (X) (Rs mn) (Rs/share)

Tata Steel standalone 122,758 6.3 767,240 790

Tata Steel Europe 24,387 5.0 121,934 126

Tata Steel thailand and other businesses 5,633 5.0 28,165 29

Total Enterprise Value 917,339 945

Consolidated group net debt 562,084

Total borrowings 562,084 579

Arrived market capitalization 355,255 366

Add: Value of investments 25,098 26

Arrived market capitalization 380,353 392

Target price (Rs) 390




Exhibit 5: Jindal Steel and Power (consolidated), change in estimates, March fiscal year-ends, 2013E-15E (Rs mn)

Revised estimates Old estimates % change2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E

ConsolidatedNet sales 204,861 213,279 253,102 209,320 214,255 251,291 (2.1) (0.5) 0.7 EBITDA 68,854 75,386 87,773 72,600 77,186 89,050 (5.2) (2.3) (1.4) EPS (Rs) 39.1 45.2 43.2 41.9 46.7 44.3 (6.9) (3.2) (2.5) Standalone businessNet sales 148,150 158,630 180,047 151,554 159,788 178,414 (2.2) (0.7) 0.9 EBITDA 44,471 52,506 54,587 48,501 54,021 55,525 (8.3) (2.8) (1.7) Profit after tax 19,110 23,848 19,747 22,008 24,939 20,421 (13.2) (4.4) (3.3) Jindal PowerNet sales 26,797 25,386 44,664 26,797 25,386 44,664 — — —EBITDA 21,149 20,237 30,641 21,149 20,237 30,641 — — —Profit after tax 16,895 17,595 19,973 16,895 17,595 19,973 — — —


Exhibit 6:Jindal Steel and Power, SOTP-based valuation, September 2013E (Rs mn)

(Rs mn) (Rs/share) Comments

Steel business + Shadeed EBITDA 41,158

Assigned multiple (X) 6.0

Enterprise value 246,949 264

Less: Debt of steel business 179,210 192

Add: CWIP for new projects 125,088 134 CWIP of Angul, Orissa and Patratu, Jharkhand Steel plant

Steel business equity value (A) 192,826 206

Power business

Jindal Power (100% subsidiary) -1000 MW 198

Tamnar II- first phase of 1200 MW 7 70% fuel supply through linkage with Coal India and balance from imports

Sale of surplus power from CPPs at Raigarh and Angul 33 Rs22/ share for Raigarh and Rs11/ share for Angul CPPs

Power business equity value (B) 221,235 238 Arrived market capitalization (A) + (B) 414,061 444

Target price (Rs/share) 445




Exhibit 7: JSW Steel, valuation details, September 2013E basis (Rs mn)

EBITDA Multiple Value Value(Rs mn) (X) (Rs mn) (Rs/share)

Consolidated EBITDA 61,882 6.0 371,295 1,536 Net debt 214,926 889 Arrived market capitalization for JSW 156,368 647 Ispat 10,760 6.0 64,560 267 Net debt 80,114 331 Value of Ispat per share of JSW (15,554) (64) Target price (Rs) 585


Exhibit 8: Indian steel companies, comparative valuations

Market cap. CMP (Rs) Target EPS (Rs) P/E (X)Company (US$ mn) 4-Sep price (Rs) Rating 2011 2012 2013E 2014E 2011 2012 2013E 2014EJindal Steel and Power 5,931 353 445 ADD 40.2 42.4 39.1 45.2 8.8 8.3 9.0 7.8JSW Steel 2,714 677 583 SELL 78.6 24.1 46.7 64.3 8.6 28.1 14.5 10.5Tata Steel 6,351 364 390 ADD 69.5 26.1 34.8 49.9 NM 14.0 10.4 7.3

EV/EBITDA (X) Price/BV (X) RoE (%)Company 2011 2012 2013E 2014E 2011 2012 2013E 2014E 2011 2012 2013E 2014EJindal Steel and Power 7.4 7.4 7.4 6.6 2.3 1.8 1.6 1.6 30.6 24.6 16.4 18.2 JSW Steel 6.3 5.2 5.8 6.0 0.9 0.9 0.9 0.9 13.6 3.2 6.1 7.9 Tata Steel 5.2 7.4 6.2 5.6 1.0 0.8 0.8 0.8 22.8 6.4 7.7 10.4




Exhibit 9: Global steel company valuations, December fiscal year-ends

Price Marketcap EV/EBITDA (X) Price-to-earnings (X) Price-to-book (X) Return on equity (%)

Company name (US$) (US$ bn) (US$ bn) 2011 2012E 2013E 2012E 2013E 2012E 2013E 2011 2012E 2013E

Asia

Angang Steel 0.6 4.0 9.4 9.8 9.9 7.1 - 31.1 0.5 0.5 (3.1) (1.4) 1.4

Baoshan Iron & Steel 0.7 12.2 21.4 5.5 5.5 5.6 7.3 9.1 0.7 0.7 7.2 9.9 7.1

Hyundai Steel 75.7 6.5 14.3 7.8 8.3 7.3 8.7 7.4 0.7 0.7 11.4 9.6 9.7

JFE Holdings 13.6 8.4 27.9 5.0 7.6 7.6 - 9.3 0.4 0.4 5.6 (0.9) 4.1

Maanshan Iron & Steel 0.3 2.1 6.8 7.9 9.6 7.3 - 70.7 0.6 0.6 1.5 (3.7) 0.0

Nippon Steel 2.1 14.5 37.2 6.2 8.1 7.3 - 28.8 0.6 0.6 5.5 2.8 2.9

POSCO 331.5 28.9 36.5 6.0 7.4 6.6 10.7 9.0 0.8 0.7 10.8 7.7 8.6

SAIL 1.5 6.1 8.3 5.4 7.2 6.1 8.7 8.9 0.9 0.8 14.1 9.6 9.2

Asian average 6.7 8.0 6.9 8.8 21.8 0.6 0.6 6.6 4.2 5.4

Europe

Arcelor Mittal 15.2 23.7 49.5 4.9 6.2 5.1 14.8 8.5 0.4 0.4 5.3 2.5 4.8

Severstal 12.5 10.5 14.4 3.8 4.8 4.4 9.5 8.4 1.2 1.1 24.2 16.1 16.6

Thyssenkrupp AG 20.8 10.7 19.1 4.3 7.7 5.7 - 20.0 1.1 1.0 8.7 (5.1) 4.7

European average 4.3 6.2 5.1 12.2 12.3 0.9 0.8 12.7 4.5 8.7

America

CSN 5.1 7.4 15.3 4.8 6.4 4.9 14.2 7.7 1.9 1.6 32.0 13.4 24.6

Nucor Corp 38.3 12.2 15.0 7.8 8.7 6.0 20.9 11.4 1.6 1.5 10.0 7.9 12.9

US Steel 20.4 2.9 6.2 6.4 5.3 3.9 12.6 7.5 0.9 0.8 1.0 4.4 12.7

American average 6.3 6.8 5.0 15.9 8.9 1.5 1.3 14.3 8.6 16.7

Global average 6.1 7.3 6.1 11.9 17.0 0.9 0.8 9.6 5.2 8.5

Notes:

(a) All figures are calendarized year-end.

Enterprise value

RatiosValuation parameters


Exhibit 10: CIS export and China export FOB HRC price trend over the last year (US$/tonne)

400

500

600

700

800

Aug

-09

Oct

-09

Dec

-09

Feb-

10A

pr-1

0Ju

n-10

Aug

-10

Oct

-10

Dec

-10

Feb-

11A

pr-1

1Ju

n-11

Aug

-11

Oct

-11

Dec

-11

Feb-

12A

pr-1

2Ju

n-12

Aug

-12

CIS HR Fob (US$/tonne) China HR FOB (US$/tonne)


Exhibit 11: China, domestic prices of various steel products (CNY/tonne)

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

Aug

-08

Aug

-09

Aug

-10

Aug

-11

Aug

-12

Steel Rebar HRC CRC Plate




Exhibit 12: China monthly iron ore imports (mn tonnes)

0

20

40

60

80

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

Oct

-11

Jan-

12

Apr

-12

Jul-1

2

China monthly Iron ore imports (mn tonnes)

Source: CRU, Kotak Institutional Equities

Exhibit 13: Iron ore inventory at Chinese ports (mn tonnes)

40

50

60

70

80

90

100

110

Aug

-09

Feb-

10

Aug

-10

Feb-

11

Aug

-11

Feb-

12

Aug

-12

Iron ore inventory across various Chinese ports (mn tonnes)


Exhibit 14: China’s inventory of key steel products rises due to supply-demand imbalance China distributor stocks of key steel products, December year ends, 2010-12 (mn tonnes)

0

5

10

15

20

25

Aug

-10

Oct

-10

Dec

-10

Feb-

11

Apr

-11

Jun-

11

Aug

-11

Oct

-11

Dec

-11

Feb-

12

Apr

-12

Jun-

12

Aug

-12

HR Coil CR Coil Rebar Medium plate Wire rod




Exhibit 15: China annualized daily steel output, 2010-2012 (mn tonnes)

500

550

600

650

700

750

800

Jan-

10

Feb-

10

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep-

10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

China average daily steel output (annualized) , 2011-12 (mn tonnes)

Source: CISA, Kotak Institutional Equities

Exhibit 16: China import price of 63.5% Fe Indian iron ore fines CFR (US$/tonne)

90

110

130

150

170

190

210

Sep-

10

Dec

-10

Mar

-11

Jun-

11

Sep-

11

Dec

-11

Mar

-12

Jun-

12

Sep-

12

Exhibit: China Indian Iron ore fines 63.5% Fe CFR(US$/tonne)


Exhibit 17: Australian HCC spot and contract prices (US$/tonne)

50

150

250

350

450

Aug

-08

Aug

-09

Aug

-10

Aug

-11

Aug

-12

Australian HCC spot (US$/tonne)

Austalian HCC contract (US$/tonne)




Exhibit 18: China manufacturing PMI, 2008-12

49.2

35

40

45

50

55

60

65

Feb-

08

Aug

-08

Feb-

09

Aug

-09

Feb-

10

Aug

-10

Feb-

11

Aug

-11

Feb-

12

Aug

-12

China manufacturing PMI, 2008-12


Exhibit 19:Seaborne iron ore trade, 2008-2013E (mn tonnes)

0

400

800

1200

2008 2009 2010 2011 2012E 2013E

50

54

58

62

66

70

Total Seaborne Trade China China as % of Total




Exhibit 20: World finished steel production, 2011-2013E (mn tonnes)

2011 2012E 2013EProduction (mn tonnes)European Union 153 151 156 Other Europe 33 35 37 CIS 54 56 59 NAFTA 121 128 134 Central & South America 46 49 53 Africa 23 25 28 Middle East 48 50 53 Asia & Oceania 896 929 966 World 1,373 1,422 1,486 China 624 649 675 World excl. China 749 774 811 Growth (%)World 5.6 3.6 4.5 China 6.2 4.0 4.0

Source: World Steel Association, Kotak Institutional Equities

Exhibit 21: Tata Steel, key assumptions, March fiscal-year ends, 2009-2015E (Rs mn)

2009 2010 2011 2012 2013E 2014E 2015ETata Steel (India)Average HRC Price (US$/tonne) 749 635 735 753 622 590 583 Crude Steel capacity (mn tonnes) 6.1 6.8 6.8 6.8 9.7 9.7 9.7 Volume (mn tonnes) 5.2 6.2 6.5 6.6 7.6 9.1 9.6 EBITDA margin (%) 37.6 35.8 39.1 34.0 31.1 30.2 29.3 EBITDA/tonne (US$/tonne) 380 307 387 363 280 256 252

CorusAverage HRC Price (US$/tonne) 1,236 981 1,102 1,225 1,100 1,080 1,060 Premium over HRC Price (US$/tonne) 403 394 343 430 410 410 410 Crude Steel capacity (mn tonnes) 21.4 21.4 18.4 17.8 17.4 17.4 17.4 Volume (mn tonnes) 19.0 14.2 14.7 14.0 13.5 13.9 14.1 EBITDA margin (%) 8.2 (2.1) 5.7 0.9 2.4 3.5 4.1 EBITDA/tonne (US$/tonne) 103 (20) 63 10 26 38 43

Re/US$ rate 46.0 47.3 45.6 47.9 55.1 55.0 54.5




Exhibit 22: Jindal Steel and Power, key assumptions, March fiscal year ends (2010-2015E)

2010 2011 2012E 2013E 2014E 2015ESales (tonnes)Metallics sales 588,562 315,582 163,975 92,634 16,147 111,644 Total finished steel sales 1,698,766 1,932,037 2,476,780 2,735,400 2,820,000 3,232,782 Iron ore pellets 11,893 522,603 2,028,330 2,117,257 2,528,317 1,015,267

Revenues (Rs mn)Sponge iron 4,523 1,923 1,815 1,726 275 1,906 Pig iron 4,741 4,779 1,995 156 11 1 Mild and finisehed steel sales 51,950 70,413 103,534 114,802 113,218 145,650 Iron ore pellets 72 4,677 18,981 17,032 20,201 7,757 Iron ore sales 5,376 8,791 4,681 — — —Power 3,872 3,965 5,879 3,084 2,821 3,548 Others 8,342 9,217 9,297 11,235 12,211 13,285 Total 78,876 103,764 146,181 148,034 148,738 172,148

Realization (Rs/ tonne)Sponge iron 13,171 16,881 23,106 20,112 17,632 17,081 Pig iron 19,337 23,693 23,348 22,867 20,387 19,836 Mild / finished steel 30,581 36,445 41,802 41,969 40,148 45,054 Mild / finished steel (US$/ tonne) 647 799 873 762 730 827 Iron ore pellets — 8,950 9,358 8,044 7,990 7,641 Iron ore sales 3,418 5,743 — — — —Power 4.0 4.3 4.0 2.6 2.6 2.6

Re/US$ rate 47.3 45.6 47.9 55.1 55.0 54.5

Raw material costsIron ore (Rs/ tonne) 1,375 1,309 2,132 2,501 2,571 2,673 Coking coal (Rs/ tonne) 9,797 9,746 12,713 11,847 10,725 10,346 Iron ore (US$/ tonne) 29 29 44 45 47 49 Coking coal (US$/ tonne) 207 214 265 215 195 190

EBITDA (Rs mn)Iron ore 1,727 4,694 — — — —Pellets — 3,523 10,868 8,034 9,456 3,442 Steel business 20,956 25,335 28,255 28,681 25,858 33,875 CPPs — — 2,064 6,547 16,085 15,879 Power 2,395 2,559 1,619 1,210 1,107 1,392 Total 25,078 36,110 42,806 44,471 52,506 54,587

EBITDA/ tonne (Rs)Iron ore 1,098 3,066 — — — —Pellets — 6,741 5,358 3,794 3,740 3,391 Steel business 9,162 11,272 10,699 10,142 9,117 10,129




Exhibit 23: Jindal Power and captive power plants, key assumptions, March fiscal year ends (2010-2015E)

2010 2011 2012E 2013E 2014E 2015ERevenues (Rs mn)Jindal Power 39,219 33,377 29,797 26,797 25,386 44,664 CPP of JSPL — — 3,898 12,720 22,556 22,556 Total 39,219 33,377 33,695 39,517 47,943 67,220

EBITDA (Rs mn)Jindal Power 33,844 27,214 23,942 21,149 20,237 30,641 CPP of JSPL — — 2,064 6,547 16,085 15,879 Total 33,844 27,214 26,006 27,696 36,322 46,520

Realization/ unit (Rs)Jindal Power 5.4 4.2 3.8 3.5 3.5 3.5 CPP of JSPL — — 3.5 3.3 3.3 3.3 Blended 5.4 4.2 3.8 3.4 3.4 3.4

Cost/ unit (Rs)Jindal Power 0.7 0.8 0.7 0.7 0.7 1.1 CPP of JSPL — — 1.6 1.6 0.9 1.0 Blended 0.7 0.8 0.9 1.0 0.8 1.1




Exhibit 24:Tata Steel (standalone), profit model, balance sheet and cash-flow model, March fiscal year-ends, 2009-2015E (Rs mn)

2009 2010 2011 2012 2013E 2014E 2015EProfit model (Rs mn)Net sales 243,157 250,220 293,964 339,335 377,274 424,563 449,864 EBITDA 91,334 89,521 114,823 115,368 117,292 128,225 131,838 Other income 3,083 8,538 5,284 8,864 2,106 2,106 2,106 Interest (11,527) (15,084) (17,357) (19,254) (17,994) (18,518) (18,248) Depreciation (9,734) (10,832) (11,462) (11,514) (16,066) (19,579) (20,879) Profit before tax 73,156 72,143 91,288 93,463 85,338 92,233 94,816 Extraordinaries — — 6,481 5,110 — — —Taxes (21,139) (21,675) (29,112) (31,609) (25,601) (27,670) (28,445) Profit after tax 52,017 50,468 68,657 66,964 59,736 64,563 66,371 Fully diluted EPS (Rs) 55.8 54.1 71.6 68.9 61.5 66.5 68.3

Balance sheet (Rs mn)Equity 242,319 371,688 469,446 526,214 572,311 623,236 675,969 Deferred tax liability 5,857 8,677 9,368 9,705 9,705 9,705 9,705 Total Borrowings 324,188 252,392 298,011 284,473 284,473 284,473 274,473 Current liabilities 100,077 99,607 118,692 141,519 143,807 151,581 155,740 Total liabilities 672,441 732,363 895,517 961,911 1,010,296 1,068,994 1,115,886 Net fixed assets 109,945 121,624 118,051 113,663 225,596 236,017 235,138 Capital work in progress 34,877 38,436 56,123 160,585 119,085 164,085 209,085 Investments 423,718 449,797 465,649 502,825 502,825 502,825 502,825 Cash 15,906 32,341 41,388 39,470 17,413 13,466 12,372 Other current assets 86,945 90,165 214,279 141,291 141,300 148,524 152,390 Miscellaneous expenditure 1,051 — 28 4,077 4,077 4,077 4,077 Total assets 672,442 732,363 895,517 961,911 1,010,296 1,068,994 1,115,886

Free cash flow (Rs mn)Operating cash flow excl. working cap 66,599 71,874 84,122 85,769 75,803 84,143 87,251 Working capital changes 7,373 11,818 (308) 17,260 2,277 549 294 Capital expenditure (27,711) (20,237) (37,312) (70,500) (86,500) (75,000) (65,000) Free cash flow 46,261 63,455 46,502 32,529 (8,420) 9,691 22,544

RatiosEBITDA margin (%) 37.6 35.8 39.1 34.0 31.1 30.2 29.3 EBT margin (%) 30.1 28.8 33.3 29.0 22.6 21.7 21.1 Debt/equity (X) 1.3 0.7 0.6 0.5 0.5 0.5 0.4 Net debt/equity (X) 1.1 0.5 0.5 0.4 0.4 0.4 0.4 Net debt/EBITDA (X) 3.0 2.3 2.0 2.0 2.2 2.0 1.9 RoAE (%) 22.7 16.5 16.3 13.5 11.0 10.9 10.3 RoACE (%) 13.9 12.3 12.9 11.5 10.7 11.0 10.7




Exhibit 25:Tata Steel (consolidated), profit model, balance sheet and cash-flow model, March fiscal year-ends, 2009-2015E (Rs mn)

2009 2010 2011 2012 2013E 2014E 2015EProfit model (Rs mn)Net sales 1,473,293 1,023,931 1,187,531 1,328,997 1,405,533 1,457,169 1,469,107 EBITDA 181,277 80,427 160,583 115,592 145,925 166,377 175,110 Other income 2,657 11,859 6,800 15,730 5,106 5,136 5,136 Interest (32,902) (30,221) (39,558) (42,501) (37,919) (38,444) (38,534) Depreciation (42,654) (44,917) (44,148) (45,167) (62,114) (67,356) (68,452) Profit before tax 108,378 17,147 83,677 43,654 50,997 65,714 73,260 Extraordinaries (40,945) (16,837) 30,459 33,619 — — —Taxes (18,940) (21,518) (32,459) (36,365) (21,419) (21,685) (24,176) Profit after tax 48,492 (21,208) 81,677 40,909 29,578 44,028 49,084 Minority interest 409 (152) 603 1,731 1,558 1,714 1,885 Share in profit/(loss) of associates 607 1,269 664 2,681 2,708 2,708 2,708 Reported net income 49,509 (20,092) 82,943 45,321 33,844 48,450 53,678 Adjusted net income 61,750 (3,255) 66,693 25,321 33,844 48,450 53,678 Fully diluted EPS (Rs) 66.2 (3.5) 69.5 26.1 34.8 49.9 55.3

Balance sheet (Rs mn)Equity 217,700 230,208 355,639 430,436 450,432 485,244 525,283 Deferred tax liability 17,094 16,541 20,126 24,424 24,424 24,424 24,424 Total Borrowings 653,732 531,004 620,771 620,719 620,719 620,719 620,719 Current liabilities 313,109 309,678 347,702 385,297 395,994 407,568 410,559 Minority interest 8,949 8,841 8,889 10,912 9,353 7,639 5,754 Total liabilities 1,210,583 1,096,272 1,353,127 1,471,787 1,500,922 1,545,594 1,586,738 Net fixed assets 364,175 365,252 365,685 421,003 537,089 536,233 517,031 Capital work in progress 88,880 92,706 135,508 200,397 133,897 178,897 223,897 Goodwill 153,649 145,418 152,982 173,546 173,546 173,546 173,546 Investments 64,111 54,178 78,473 40,213 37,920 30,628 33,336 Cash 61,484 68,151 108,591 108,016 58,821 50,482 59,384 Other current assets 477,229 370,566 511,887 528,613 559,648 575,807 579,543 Miscellaneous expenditure 1,055 — — — — — —Total assets 1,210,583 1,096,272 1,353,127 1,471,787 1,500,922 1,545,594 1,586,738

Free cash flow (Rs mn)Operating cash flow excl. working cap 116,077 23,343 87,095 66,314 86,587 106,248 112,400 Working capital changes 2,254 49,017 (77,508) 11,590 (20,340) (4,584) (745) Capital expenditure (83,608) (69,472) (93,360) (119,586) (111,700) (111,500) (94,250) Free cash flow 34,723 2,889 (83,772) (41,682) (45,453) (9,836) 17,405

RatiosEBITDA margin (%) 12.3 7.9 13.5 8.7 10.4 11.4 11.9 EBIT margin (%) 9.4 3.5 9.8 5.3 6.0 6.8 7.3 Debt/equity (X) 3.0 2.3 1.7 1.4 1.4 1.3 1.2 Net debt/equity (X) 2.6 1.9 1.4 1.2 1.2 1.2 1.1 Net debt/EBITDA (X) 3.1 5.5 3.0 4.3 3.8 3.4 3.2 RoAE (%) 24.5 (1.5) 22.8 6.4 7.7 10.4 10.6 RoACE (%) 9.9 (34.8) 9.6 4.9 5.2 6.2 6.4




Exhibit 26: Jindal Steel & Power, profit model, balance sheet and cash-flow model, March fiscal year-ends, 2009-2015E (Rs mn)

2009 2010 2011 2012 2013E 2014E 2015EProfit model (Rs mn)Net sales 76,532 73,676 95,742 133,340 148,150 158,630 180,047

EBITDA 26,013 25,078 35,545 40,625 44,471 52,506 54,587 Other income 1,462 1,173 1,432 1,845 1,400 1,400 1,400 Interest (1,689) (1,925) (2,850) (5,368) (9,561) (10,507) (15,095) Depreciaiton (4,330) (5,122) (6,878) (8,672) (9,916) (10,896) (13,964)

Profit before tax 20,019 19,075 27,249 28,430 20,652 32,502 26,928 Current tax (3,603) (3,126) (5,255) (7,256) (4,639) (5,337) (4,493) Deferred tax (1,051) (1,152) (1,633) (290) (371) (427) (359)

Net profit 15,365 14,797 20,360 21,107 14,953 23,848 19,747 Earnings per share (Rs) 15.3 15.8 21.9 20.8 20.4 25.5 21.1

Balance sheet (Rs mn)Equity 53,881 67,237 86,893 108,454 121,658 143,755 161,752 Deferred tax liability 5,998 7,150 8,783 10,678 11,049 11,476 11,836 Total Borrowings 49,627 83,833 121,109 157,143 198,643 215,643 220,643 Current liabilities 34,320 42,421 47,089 59,306 71,585 71,691 75,211

Total liabilities 144,097 200,864 263,892 335,581 402,935 442,565 469,442 Net fixed assets 80,639 131,393 170,815 220,430 260,360 288,968 314,266 Investments 12,334 10,671 12,100 14,122 14,122 14,122 14,122 Cash 3,090 601 437 309 19,433 33,582 30,277 Other current assets 48,005 58,168 80,523 100,720 109,021 105,893 110,777 Miscellaneous expenditure 30 30 17 0 — — —

Total assets 144,097 200,864 263,892 335,581 402,935 442,565 469,442

Free cash flow (Rs mn)Operating cash flow excl. working capital 20,262 18,459 24,186 25,990 25,241 35,171 34,070 Working capital changes 4,320 1,813 (12,922) (7,912) 3,979 3,234 (1,363) Capital expenditure (25,680) (56,323) (45,397) (50,674) (49,847) (39,505) (39,262)

Free cash flow (1,098) (36,050) (34,133) (32,595) (20,627) (1,101) (6,555)

RatiosDebt/equity 0.8 1.1 1.3 1.3 1.5 1.4 1.3 Net debt/equity 0.7 1.1 1.3 1.3 1.4 1.2 1.1 RoAE (%) 30.0 22.0 23.9 19.7 11.9 16.6 12.0

RoACE (%) 17.5 12.1 12.0 10.2 7.2 9.0 8.1




Exhibit 27: Jindal Steel & Power (consolidated), profit model, balance sheet and cash-flow model, March fiscal year-ends, 2009-2015E (Rs mn)

2009 2010 2011 2012 2013E 2014E 2015EProfit model (Rs mn)Net sales 108,510 110,915 131,122 182,086 204,861 213,279 253,102

EBITDA 51,695 58,477 63,162 67,932 68,854 75,386 87,773 Other income 624 603 815 1,419 2,718 4,968 6,225 Interest (4,567) (3,576) (2,596) (3,600) (7,903) (8,848) (17,792) Depreciaiton (9,641) (9,970) (11,510) (13,865) (14,911) (15,518) (20,137)

Profit before tax 38,111 45,405 49,870 51,886 43,017 55,987 56,070 Taxes (8,040) (9,189) (11,830) (11,863) (10,437) (13,315) (15,185)

Net profit 30,072 36,216 38,040 40,023 32,580 42,673 40,885 Share in profit/(loss) of associates 396 139 158 200 200 200 200 Minority interest (10) (755) (659) (574) (607) (632) (717)

Profit after tax and minority interest 30,457 35,600 37,539 39,649 32,174 42,241 40,368 Earnings per share (Rs) 32.8 38.2 40.2 42.4 39.1 45.2 43.2

Balance sheet (Rs mn)Equity 70,515 104,168 141,103 181,111 211,535 252,026 290,644 Deferred tax liability 7,170 8,455 10,055 11,920 12,270 12,669 15,315 Total Borrowings 81,133 86,043 139,728 170,908 232,494 261,060 276,118 Current liabilities 34,194 50,900 67,668 83,066 93,357 92,474 96,229 Minority interest 45 1,659 2,335 3,071 3,678 4,309 5,026

Total liabilities 193,057 251,224 360,889 450,075 553,333 622,539 683,333 Net fixed assets 126,863 178,444 242,040 301,460 349,504 384,241 416,776 Goodwill 363 1,007 1,018 918 918 918 918 Investments 5,139 3,185 2,979 3,776 3,977 4,177 4,377 Cash 6,694 1,128 4,640 1,492 50,590 90,302 110,582 Other current assets 53,967 67,383 110,008 142,430 148,345 142,902 150,680 Miscellaneous expenditure 31 78 204 — — — —

Total assets 193,057 251,224 360,889 450,075 553,333 622,539 683,333

Free cash flow (Rs mn)Operating cash flow excl. working capital 47,939 51,737 53,621 59,601 47,841 58,589 63,668 Working capital changes (9,152) 4,010 (18,799) (23,398) 4,375 4,561 (4,023) Capital expenditure (37,176) (62,419) (81,069) (64,332) (62,955) (50,256) (52,672)

Free cash flow 1,611 (6,672) (46,247) (28,129) (10,738) 12,895 6,973

RatiosDebt/equity 1.2 0.9 1.0 1.0 1.1 1.1 1.0 Net debt/equity 1.0 0.8 0.9 0.9 0.8 0.7 0.6 RoAE (%) 56.7 41.1 30.9 24.8 16.5 18.3 14.9

RoACE (%) 26.3 22.5 16.7 13.3 9.5 10.2 9.8


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Kotak Institutional Equities: Valuation summary of KIE Universe stocks

4-Sep-12 Mkt cap.O/S

shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) RoE (%)Target price Upside ADVT-3mo

Company Price (Rs) Rating (Rs mn) (US$ mn) (mn) 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E (Rs) (%) (US$ mn)

Automobiles

Apollo Tyres 92 BUY 46,452 835 504 8.1 11.7 14.0 (7.0) 43.8 20.0 11.3 7.9 6.6 6.3 4.8 4.1 1.4 1.2 1.0 0.5 0.7 0.9 15.6 19.0 19.1 110 19.4 4.9

Ashok Leyland 21 REDUCE 55,874 1,004 2,661 2.1 1.3 2.6 (10.6) (39.7) 105.3 9.9 16.4 8.0 6.8 8.6 5.9 1.2 1.2 1.1 4.8 4.8 4.8 17.7 10.3 20.3 23 9.5 3.2

Bajaj Auto 1,647 ADD 476,772 8,567 289 103.8 109.3 130.2 14.9 5.3 19.1 15.9 15.1 12.7 11.5 11.3 9.6 7.8 6.1 4.9 2.7 2.7 3.2 54.5 45.6 42.9 1,675 1.7 15.6

Bharat Forge 276 REDUCE 65,507 1,177 237 17.4 17.5 22.0 38.5 0.9 25.7 15.9 15.8 12.5 8.7 8.1 6.9 2.6 2.3 1.9 0.4 0.4 0.4 15.1 15.5 15.1 300 8.7 1.6

Exide Industries 143 SELL 121,635 2,186 850 5.4 7.1 8.1 (27.2) 30.1 15.5 26.4 20.3 17.6 17.7 13.2 11.8 4.0 3.5 3.1 1.0 1.3 1.5 15.9 18.4 18.6 115 (19.6) 2.7

Hero Motocorp 1,808 SELL 361,028 6,487 200 119.1 131.0 136.9 19.9 10.0 4.5 15.2 13.8 13.2 11.5 10.7 8.8 6.6 5.0 4.0 1.7 2.2 2.3 61.8 48.9 38.6 1,900 5.1 14.4

Mahindra & Mahindra 762 BUY 467,653 8,403 614 45.1 46.8 53.5 8.1 3.7 14.2 16.9 16.3 14.2 13.0 11.4 9.7 3.7 3.2 2.8 1.5 1.8 2.1 24.6 21.9 21.7 850 11.6 14.5

Maruti Suzuki 1,175 SELL 354,838 6,376 302 56.6 60.6 83.8 (28.6) 7.1 38.3 20.8 19.4 14.0 15.8 13.2 8.9 2.3 2.1 1.8 0.6 0.6 0.6 11.1 11.3 13.9 1,000 (14.9) 22.1

Tata Motors 235 BUY 755,711 13,578 3,218 44.6 36.8 49.4 58.7 (17.5) 34.4 5.3 6.4 4.8 4.7 4.3 3.4 2.3 1.7 1.3 1.7 2.3 2.5 53.2 31.1 31.9 275 17.1 52.6

Automobiles Cautious 2,780,401 49,958 26.1 (5.8) 27.7 10.6 11.2 8.8 7.8 7.0 5.6 3.1 2.6 2.1 1.7 2.0 2.2 29.7 23.2 24.0

Banks/Financial Institutions

Andhra Bank 93 ADD 51,845 932 560 24.0 21.4 24.3 6.1 (10.9) 13.8 3.9 4.3 3.8 — — — 0.7 0.7 0.6 5.9 5.3 6.0 19.2 15.1 15.4 120 29.5 1.3

Axis Bank 978 ADD 404,237 7,263 413 102.7 103.1 105.9 24.4 0.4 2.8 9.5 9.5 9.2 — — — 1.8 1.6 1.4 1.6 1.6 1.7 20.3 17.4 15.6 1,200 22.7 49.9

Bajaj Finserv 806 REDUCE 116,677 2,096 145 94.8 71.8 71.1 21.3 (24.3) (1.1) 8.5 11.2 11.3 — — — 2.3 2.0 1.7 1.9 1.9 1.9 32.2 19.0 16.1 680 (15.7) 2.6

Bank of Baroda 629 REDUCE 259,555 4,664 412 121.4 116.1 117.0 12.4 (4.3) 0.7 5.2 5.4 5.4 — — — 1.0 0.9 0.8 2.7 3.1 3.1 21.7 17.0 15.0 710 12.8 8.6

Bank of India 262 BUY 150,696 2,708 575 46.6 59.8 62.7 2.5 28.3 4.9 5.6 4.4 4.2 — — — 0.9 0.8 0.7 2.6 3.4 3.6 15.0 16.2 15.0 370 41.1 3.7

Canara Bank 321 REDUCE 142,159 2,554 443 74.1 68.6 82.8 (18.5) (7.4) 20.6 4.3 4.7 3.9 — — — 0.8 0.7 0.6 3.4 3.7 3.7 15.4 12.7 13.8 420 30.9 5.2

Corporation Bank 375 BUY 55,489 997 148 101.7 88.1 114.7 6.6 (13.3) 30.1 3.7 4.3 3.3 — — — 0.7 0.7 0.6 5.5 4.7 6.2 19.5 14.9 17.1 510 36.1 0.6

Federal Bank 407 BUY 69,565 1,250 171 45.4 43.3 47.0 32.3 (4.7) 8.5 9.0 9.4 8.7 — — — 1.2 1.2 1.1 2.2 2.1 2.3 14.4 12.4 12.2 500 22.9 2.9

HDFC 723 REDUCE 1,106,743 19,886 1,532 27.9 32.0 37.9 15.8 14.7 18.5 25.9 22.6 19.0 — — — 5.8 4.4 3.9 1.5 1.6 1.9 22.7 22.2 21.7 660 (8.7) 39.5

HDFC Bank 590 REDUCE 1,384,781 24,882 2,347 22.0 28.0 35.0 30.4 27.3 24.9 26.8 21.1 16.9 — — — 4.7 4.0 3.4 0.7 0.9 1.2 18.7 20.3 21.5 575 (2.6) 27.8

ICICI Bank 913 BUY 1,052,074 18,903 1,153 56.1 62.9 67.1 25.4 12.2 6.7 16.3 14.5 13.6 — — — 1.8 1.7 1.6 1.8 2.1 2.2 11.2 11.6 11.4 1,100 20.5 65.4

IDFC 130 ADD 195,851 3,519 1,512 10.3 12.4 14.8 17.2 20.6 19.1 12.6 10.4 8.8 — — — 1.6 1.4 1.3 — 1.9 2.2 13.7 14.5 15.4 155 19.7 14.5

India Infoline 54 REDUCE 17,484 314 327 4.5 5.8 7.0 (38.3) 28.3 20.6 11.8 9.2 7.6 — — — 1.0 0.9 0.8 2.5 3.7 2.2 7.7 10.0 10.8 60 12.0 0.4

Indian Bank 160 BUY 68,871 1,237 430 39.6 39.9 42.6 1.2 0.9 6.7 4.1 4.0 3.8 — — — 0.8 0.7 0.6 4.7 4.6 4.9 19.4 17.0 16.0 260 62.2 0.9

Indian Overseas Bank 68 REDUCE 53,837 967 797 13.2 17.4 21.1 (24.0) 32.1 21.2 5.1 3.9 3.2 — — — 0.6 0.6 0.5 6.6 7.7 9.3 9.9 11.2 12.5 80 18.4 1.7

IndusInd Bank 316 ADD 147,654 2,653 468 17.2 19.3 22.7 38.5 12.4 17.6 18.4 16.4 13.9 — — — 3.3 2.9 2.5 0.7 0.8 0.9 20.1 18.7 18.5 360 14.0 2.6

J&K Bank 814 ADD 39,473 709 48 165.6 173.8 174.0 30.6 4.9 0.1 4.9 4.7 4.7 — — — 1.0 0.8 0.7 4.1 4.3 4.3 21.2 19.1 16.7 1,000 22.9 0.8

LIC Housing Finance 241 ADD 121,592 2,185 505 18.1 22.1 28.4 (11.8) 22.2 28.6 13.3 10.9 8.5 — — — 2.2 1.9 1.6 1.5 1.8 2.3 18.6 18.3 20.2 270 12.1 7.5

Mahindra & Mahindra Financial 743 ADD 76,266 1,370 103 60.4 75.2 91.8 33.6 24.5 22.0 12.3 9.9 8.1 — — — 2.6 2.3 1.9 1.9 2.4 2.9 22.8 23.9 24.5 775 4.3 1.4

Muthoot Finance 130 BUY 48,341 869 372 24.0 21.4 22.6 52.4 (11.0) 5.5 5.4 6.1 5.8 — — — 1.7 1.3 1.1 3.1 — — 41.9 25.4 21.5 190 46.1 —

Oriental Bank of Commerce 225 BUY 65,734 1,181 292 39.1 55.1 57.0 (24.0) 40.9 3.4 5.8 4.1 4.0 — — — 0.7 0.6 0.6 3.5 4.9 5.1 9.9 12.8 12.1 310 37.6 1.6

PFC 161 ADD 212,940 3,826 1,319 23.0 27.7 30.6 0.9 20.3 10.3 7.0 5.8 5.3 — — — 1.1 1.0 1.0 3.7 4.5 4.9 16.9 16.6 16.4 205 27.0 8.5

Punjab National Bank 677 ADD 229,692 4,127 339 144.0 145.3 158.6 2.9 0.9 9.2 4.7 4.7 4.3 — — — 1.0 0.9 0.8 3.2 3.3 3.6 21.1 17.4 16.5 820 21.1 9.8

Reliance Capital 332 ADD 81,614 1,466 246 21.1 22.8 21.8 126.7 8.2 (4.5) 15.7 14.5 15.2 — — — 0.7 0.7 0.7 2.3 2.1 2.0 5.7 5.0 4.6 450 35.7 25.3

Rural Electrification Corp. 192 REDUCE 189,283 3,401 987 28.6 35.7 39.1 10.0 24.9 9.7 6.7 5.4 4.9 — — — 1.3 1.3 1.2 3.9 4.9 5.4 20.5 22.1 20.9 220 14.8 7.2

Shriram City Union Finance 766 BUY 42,394 762 55 65.4 81.2 97.5 34.7 24.1 20.1 11.7 9.4 7.9 — — — 2.4 1.9 1.5 0.8 1.4 1.7 23.3 22.6 22.3 850 10.9 0.2

Shriram Transport 625 ADD 139,373 2,504 223 56.4 61.9 71.7 2.3 9.8 15.9 11.1 10.1 8.7 — — — 2.4 2.1 1.8 1.1 2.0 2.3 23.1 21.2 20.9 650 4.1 2.4

SKS Microfinance 100 RS 7,346 132 73 (189.0) (32.2) 0.5 (1,304.4) (83.0) (101.4) (0.5) (3.1) 222.9 — — — 1.7 3.2 2.9 — — — (122.9) (70.7) 1.4 — — 7.0

State Bank of India 1,875 BUY 1,258,202 22,607 671 174.5 208.5 227.3 34.0 19.5 9.0 10.7 9.0 8.2 — — — 1.9 1.7 1.5 2.1 2.2 2.3 15.7 15.7 15.2 2,300 22.7 125.7

Union Bank 158 BUY 87,069 1,564 551 32.3 39.2 40.7 (18.2) 21.3 4.0 4.9 4.0 3.9 — — — 0.8 0.7 0.6 5.1 4.9 5.1 14.9 15.7 14.5 240 51.8 3.5

Yes Bank 333 ADD 117,545 2,112 353 27.7 31.7 38.3 32.1 14.4 21.0 12.0 10.5 8.7 — — — 2.5 2.1 1.8 1.2 1.4 1.7 23.1 21.7 21.9 385 15.6 17.2

Banks/Financial Institutions Neutral 7,994,381 143,642 14.6 13.4 11.6 11.1 9.8 8.8 — — — 1.8 1.6 1.5 1.9 2.1 2.4 16.5 16.9 16.7

Cement

ACC 1,303 SELL 244,779 4,398 188 57.1 71.6 78.6 7.8 25.4 9.7 22.8 18.2 16.6 13.0 9.6 8.2 3.2 2.8 2.5 2.5 1.8 1.8 16.9 17.9 17.4 1,160 (11.0) 8.9

Ambuja Cements 181 SELL 276,007 4,959 1,522 7.8 10.6 12.3 (1.2) 36.2 15.9 23.3 17.1 14.7 13.4 9.9 8.4 3.2 2.9 2.7 1.2 1.5 2.1 14.6 18.2 18.9 160 (11.7) 8.8

Grasim Industries 2,965 BUY 271,941 4,886 92 288.6 307.1 327.0 24.4 6.4 6.5 10.3 9.7 9.1 6.9 5.6 4.8 1.6 1.4 1.2 1.2 1.2 1.2 16.7 15.4 14.4 2,900 (2.2) 4.2

India Cements 84 ADD 25,818 464 307 9.0 10.5 13.4 373.8 17.2 27.3 9.4 8.0 6.3 5.1 4.4 3.5 0.6 0.6 0.5 2.5 3.8 3.8 6.9 7.8 9.2 100 19.0 2.3

Shree Cement 3,331 SELL 116,051 2,085 35 159.6 230.2 231.3 179.3 44.2 0.5 20.9 14.5 14.4 5.8 7.5 6.6 4.4 4.0 3.2 0.6 0.6 0.6 24.3 28.9 24.9 2,850 (14.4) 0.9

UltraTech Cement 1,670 SELL 457,724 8,224 274 89.3 95.7 109.4 99.0 7.2 14.3 18.7 17.5 15.3 11.5 10.1 8.4 3.1 2.7 2.3 0.6 0.6 0.6 20.8 18.7 18.1 1,360 (18.6) 3.7

Cement Cautious 1,392,321 25,017 40.8 16.4 10.9 17.0 14.6 13.2 9.3 8.0 6.8 2.5 2.2 2.0 1.2 1.1 1.3 14.9 15.3 14.9

Price/BV (X) Dividend yield (%)

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Consumer products

Asian Paints 3,693 SELL 354,251 6,365 96 99.9 115.9 137.8 23.6 16.0 18.9 37.0 31.9 26.8 25.8 21.4 17.7 13.8 10.9 8.5 1.1 0.9 0.9 42.9 39.3 36.4 3,000 (18.8) 6.1

Bajaj Corp. 186 BUY 27,479 494 148 8.1 9.6 11.4 16.5 18.4 18.5 22.9 19.3 16.3 23.6 18.4 15.1 6.4 5.6 4.9 2.1 2.5 3.0 29.9 31.0 32.1 200 7.4 0.6

Colgate-Palmolive (India) 1,217 SELL 165,462 2,973 136 32.8 39.5 45.7 10.9 20.2 15.8 37.1 30.8 26.6 31.7 25.8 22.0 38.0 31.1 27.2 2.1 2.3 2.8 109.0 110.9 108.9 1,150 (5.5) 1.6

Dabur India 128 ADD 224,253 4,029 1,753 3.7 4.4 5.1 12.6 18.5 16.4 34.8 29.4 25.2 27.5 22.7 19.3 12.8 10.2 8.3 1.0 1.2 1.4 41.4 39.4 36.6 125 (2.3) 2.8

GlaxoSmithkline Consumer 2,885 ADD 121,330 2,180 42 84.5 104.6 122.4 18.5 23.9 17.0 34.2 27.6 23.6 26.0 21.7 17.9 11.0 9.1 7.6 1.2 1.5 1.8 33.8 35.0 34.2 3,000 4.0 1.4

Godrej Consumer Products 679 ADD 219,847 3,950 324 17.7 23.6 26.2 18.7 33.7 11.1 38.5 28.8 25.9 26.7 20.6 17.9 7.8 6.1 5.4 0.7 0.7 0.8 25.2 24.8 25.3 660 (2.9) 2.8

Hindustan Unilever 521 ADD 1,125,174 20,217 2,159 11.9 14.3 16.8 23.9 20.4 17.2 43.7 36.3 31.0 37.3 29.4 24.4 32.0 27.7 23.9 1.7 2.3 2.7 83.4 81.8 83.6 490 (6.0) 21.8

ITC 267 ADD 2,070,959 37,211 7,771 7.9 9.1 10.3 23.7 15.3 12.9 33.6 29.1 25.8 23.7 19.9 17.4 10.5 9.4 8.4 1.7 2.0 2.2 35.5 35.6 35.6 265 (0.6) 24.4

Jubilant Foodworks 1,230 SELL 80,668 1,449 66 16.7 23.9 35.2 49.3 42.7 47.6 73.5 51.5 34.9 42.4 28.9 20.3 26.9 17.7 11.7 — — — 44.7 41.4 40.4 1,000 (18.7) 13.7

Jyothy Laboratories 151 ADD 24,759 445 164 5.5 4.6 6.9 (46.6) (17.3) 51.1 27.4 33.1 21.9 36.3 19.6 15.2 4.0 3.6 3.1 — — — 6.1 11.6 15.3 130 (14.1) 0.6

Marico 207 ADD 133,094 2,391 645 5.3 6.6 7.9 36.3 25.5 19.2 39.1 31.1 26.1 29.3 21.4 17.6 11.4 8.7 6.8 0.3 0.5 0.5 31.5 32.3 29.7 205 (0.7) 1.2

Nestle India 4,622 SELL 445,624 8,007 96 104.6 118.7 142.7 20.5 13.5 20.2 44.2 38.9 32.4 29.2 23.7 19.9 35.0 25.3 18.1 1.0 1.2 1.3 94.7 75.3 65.1 4,000 (13.5) 2.5

Tata Global Beverages 132 BUY 81,381 1,462 618 5.4 6.4 7.8 36.3 19.1 21.2 24.4 20.5 16.9 14.5 10.9 9.1 1.4 1.4 1.3 1.4 1.6 2.0 7.8 8.5 9.7 130 (1.2) 4.6

Titan Industries 226 ADD 200,329 3,599 888 6.7 7.8 9.3 36.5 16.5 19.4 33.6 28.9 24.2 22.9 19.4 15.6 13.9 10.7 7.7 1.0 1.3 0.4 47.9 41.8 37.1 255 13.0 9.3

United Spirits 1,010 ADD 126,793 2,278 126 16.6 33.5 38.2 (53.0) 102.2 13.9 60.9 30.1 26.4 18.7 13.5 12.3 2.7 2.5 2.3 0.1 0.2 0.3 4.7 8.7 9.1 770 (23.7) 52.0

Consumer products Attractive 5,401,406 97,052 19.8 19.7 16.1 37.4 31.2 26.9 26.5 21.5 18.3 11.4 9.8 8.5 1.4 1.7 1.9 30.5 31.6 31.6

Constructions

IVRCL 39 REDUCE 10,413 187 267 0.9 3.3 6.1 (84.7) 265.1 85.8 43.2 11.8 6.4 9.8 6.9 5.6 0.5 0.5 0.5 1.0 1.0 1.0 1.2 4.3 7.6 43 10.3 6.7

NCC 33 ADD 8,454 152 257 1.4 2.5 3.6 (78.0) 81.5 43.1 23.5 12.9 9.0 7.5 6.4 7.3 0.4 0.3 0.3 1.8 1.8 3.0 12.9 11.3 11.2 55 66.9 2.3

Punj Lloyd 46 REDUCE 15,554 279 340 3.3 3.9 7.6 (322.9) 18.7 94.5 13.8 11.7 6.0 9.5 6.4 5.5 0.5 0.5 0.5 0.3 0.8 1.5 3.8 4.5 8.2 60 31.0 2.6

Sadbhav Engineering 132 BUY 19,802 356 150 9.4 8.1 11.3 20.5 (13.4) 39.9 14.1 16.3 11.6 8.3 8.5 6.7 2.5 2.2 1.9 0.5 0.5 0.5 17.9 13.6 16.1 180 36.6 0.4

Construction Cautious 54,224 974 (19.2) 30.5 68.1 17.3 13.3 7.9 8.9 6.8 6.0 0.7 0.6 0.6 0.7 0.9 1.3 3.9 4.8 7.6

Energy

Aban Offshore 422 RS 18,380 330 44 68.3 66.5 79.6 (49.1) (2.6) 19.7 6.2 6.3 5.3 8.4 7.1 6.5 0.6 0.6 0.6 0.9 1.1 1.2 12.3 11.6 11.6 — — 6.4

Bharat Petroleum 347 ADD 250,873 4,508 723 18.1 22.8 23.8 (6.8) 25.5 4.6 19.1 15.2 14.6 10.3 8.4 9.1 1.5 1.4 1.3 1.6 2.0 2.1 7.9 9.3 9.1 410 18.2 6.5

Cairn india 340 ADD 648,705 11,656 1,907 41.6 58.3 52.0 25.0 40.0 (10.7) 8.2 5.8 6.5 6.1 4.1 4.1 1.3 1.2 1.1 — 3.4 4.6 17.7 21.3 17.2 360 5.9 27.6

Castrol India 284 SELL 140,455 2,524 495 9.5 10.1 11.0 (4.4) 7.0 8.5 30.0 28.1 25.9 20.5 19.3 17.5 25.6 23.4 21.6 2.6 2.7 3.0 87.9 87.2 86.7 215 (24.3) 1.8

GAIL (India) 359 ADD 454,814 8,172 1,268 28.8 30.9 31.6 2.3 7.4 2.2 12.4 11.6 11.3 8.1 7.2 6.8 1.9 1.7 1.5 2.4 2.6 2.8 15.7 15.0 13.6 410 14.3 6.5

GSPL 79 BUY 44,255 795 563 9.3 7.9 7.4 4.2 (14.9) (5.9) 8.5 10.0 10.6 5.4 5.9 6.0 1.6 1.4 1.2 1.3 1.3 1.3 20.6 14.8 12.1 85 8.1 1.7

Hindustan Petroleum 301 REDUCE 101,889 1,831 339 26.9 23.4 28.3 (34.2) (13.1) 21.2 11.2 12.9 10.6 2.5 2.7 2.6 0.6 0.6 0.6 2.8 2.4 2.9 5.4 4.6 5.3 330 9.8 5.9

Indian Oil Corporation 244 ADD 592,298 10,642 2,428 32.7 22.7 27.0 0.8 (30.5) 19.1 7.5 10.7 9.0 5.6 7.0 6.6 1.0 0.9 0.9 2.0 2.0 3.1 12.9 8.4 9.3 300 23.0 2.2

Oil India 489 BUY 294,070 5,284 601 57.3 62.7 65.3 19.5 9.4 4.1 8.5 7.8 7.5 3.4 2.6 2.1 1.5 1.4 1.2 3.9 4.3 4.7 17.2 16.5 15.4 590 20.6 1.2

Oil & Natural Gas Corporation 272 ADD 2,324,106 41,759 8,556 32.8 32.8 34.5 33.1 (0.1) 5.2 8.3 8.3 7.9 3.5 3.2 2.7 1.4 1.2 1.1 3.6 3.7 4.2 17.0 15.0 14.1 310 14.1 13.6

Petronet LNG 158 ADD 118,838 2,135 750 14.1 13.8 13.3 70.7 (1.8) (4.0) 11.2 11.4 11.9 7.7 8.0 7.0 3.1 2.4 2.0 1.6 1.6 1.6 29.7 23.1 18.1 155 (2.2) 3.9

Reliance Industries 780 REDUCE 2,323,988 41,757 2,981 61.3 64.0 63.0 (1.1) 4.5 (1.6) 12.7 12.2 12.4 7.5 7.9 7.2 1.3 1.2 1.1 1.1 1.1 1.1 11.7 11.2 10.1 750 (3.8) 43.9

Energy Neutral 7,312,672 131,393 12.9 2.7 1.9 9.6 9.4 9.2 5.4 5.2 4.7 1.4 1.2 1.1 2.1 2.5 2.9 14.0 13.1 12.2

Industrials

ABB 723 SELL 153,220 2,753 212 8.7 19.9 23.7 192.0 128.7 19.1 83.0 36.3 30.5 53.0 22.3 18.9 6.0 5.3 4.6 0.4 0.5 0.5 7.4 15.6 16.3 500 (30.8) 0.7

BGR Energy Systems 262 REDUCE 18,902 340 72 31.1 27.9 33.9 (30.7) (10.1) 21.5 8.4 9.4 7.7 5.8 5.2 4.8 1.7 1.5 1.3 2.7 2.1 2.6 21.7 16.9 18.0 280 6.9 3.8

Bharat Electronics 1,241 REDUCE 99,280 1,784 80 89.3 109.7 125.5 (16.8) 22.9 14.3 13.9 11.3 9.9 7.7 5.0 3.5 1.8 1.6 1.4 2.0 2.0 2.0 13.2 14.7 15.0 1,375 10.8 0.8

Bharat Heavy Electricals 219 SELL 535,657 9,625 2,448 28.8 29.0 25.0 17.1 0.7 (13.7) 7.6 7.6 8.8 5.1 5.3 5.5 2.1 1.7 1.5 2.8 2.8 2.4 30.9 25.3 18.5 215 (1.8) 16.1

Crompton Greaves 106 ADD 67,742 1,217 642 5.7 7.0 10.4 (60.0) 21.4 49.4 18.4 15.2 10.2 8.1 8.2 5.9 1.9 1.7 1.5 1.3 1.3 1.5 10.6 11.8 15.7 145 37.3 3.8

Cummins India 459 REDUCE 127,138 2,284 277 22.0 25.1 29.0 (0.9) 13.8 15.7 20.8 18.3 15.8 19.0 15.2 13.0 6.2 5.5 4.9 2.4 2.7 3.1 30.7 30.6 31.0 480 4.7 2.2

KEC International 55 BUY 14,191 255 257 6.9 7.9 8.9 (14.1) 14.3 13.8 8.0 7.0 6.2 5.3 5.4 4.9 1.2 1.1 0.9 2.2 2.1 2.4 16.4 16.3 16.2 75 35.9 0.2

Larsen & Toubro 1,366 REDUCE 836,447 15,029 612 76.1 83.7 90.4 12.4 10.0 8.0 17.9 16.3 15.1 14.6 12.8 11.4 2.7 2.3 2.0 1.0 1.0 1.0 16.1 14.9 13.8 1,450 6.2 49.4

Maharashtra Seamless 330 BUY 23,257 418 71 45.0 42.1 47.4 (6.6) (6.5) 12.6 7.3 7.8 7.0 4.5 3.9 3.1 0.8 0.8 0.7 2.7 2.6 2.9 11.8 10.3 10.8 430 30.4 0.1

Siemens 670 REDUCE 228,015 4,097 340 18.0 26.6 31.7 (29.3) 47.8 19.2 37.2 25.2 21.1 22.9 15.4 12.8 5.2 4.5 3.9 0.5 0.8 1.0 14.9 19.3 19.8 640 (4.5) 2.5

Suzlon Energy 15 REDUCE 27,105 487 1,777 (4.0) (3.7) (0.4) (34.1) (6.0) (88.1) (3.8) (4.1) (34.4) 7.7 7.9 6.4 0.5 0.6 0.7 — 1.3 1.3 (11.7) (13.7) (1.8) 15 (1.6) 6.5

Tecpro Systems 160 ADD 8,071 145 50 24.4 24.1 25.9 (9.6) (1.2) 7.5 6.6 6.6 6.2 5.0 4.9 4.6 1.0 0.9 0.8 — — — 17.1 14.7 14.0 200 25.1 0.0

Thermax 489 REDUCE 58,276 1,047 119 32.9 26.4 30.9 4.0 (19.9) 17.2 14.9 18.5 15.8 9.7 11.5 9.3 3.6 3.2 2.8 1.4 1.7 1.8 26.6 18.2 18.9 430 (12.1) 0.6

Voltas 110 ADD 36,283 652 331 9.4 8.3 9.1 (3.4) (11.7) 8.7 11.6 13.2 12.1 9.5 9.4 7.9 2.4 2.2 1.9 1.5 2.3 2.5 21.7 17.4 16.9 125 13.9 4.3

Industrials Cautious 2,233,584 40,133 6.4 8.5 5.6 14.9 13.7 13.0 10.4 9.6 8.9 2.5 2.2 1.9 1.5 1.6 1.6 16.8 15.8 14.7

Infrastructure

Adani Port and SEZ 117 BUY 235,235 4,227 2,017 5.5 6.8 10.7 20.0 25.2 56.8 21.3 17.0 10.9 19.8 12.5 9.3 4.7 3.7 2.9 0.9 1.1 1.6 23.8 24.5 30.0 150 28.6 2.4

Container Corporation 927 ADD 120,449 2,164 130 65.6 82.4 93.6 (3.0) 25.7 13.6 14.1 11.2 9.9 9.1 7.4 6.1 2.1 1.9 1.7 1.7 2.1 2.3 16.1 17.9 17.8 1,050 13.3 0.7

GMR Infrastructure 19 RS 73,956 1,329 3,892 (1.1) 0.1 1.1 236.7 (113.0) 645.0 (16.8) 129.0 17.3 18.2 7.5 4.8 0.8 0.6 0.6 — — — (5.8) 0.8 5.5 — — 3.2

Gujarat Pipavav Port 50 ADD 24,341 437 483 1.4 2.1 3.0 (212.6) 55.9 44.6 37.2 23.9 16.5 15.8 12.0 10.5 3.1 2.0 1.7 — — — 10.4 10.3 13.5 63 25.1 0.4

GVK Power & Infrastructure 11 RS 17,450 314 1,579 0.4 1.0 3.5 (60.3) 165.6 243.1 28.4 10.7 3.1 25.6 11.6 6.6 0.5 0.4 0.3 2.7 3.2 7.2 1.8 3.9 11.1 — — 3.5

IRB Infrastructure 127 BUY 42,177 758 332 14.9 13.0 10.4 9.5 (13.1) (19.5) 8.5 9.8 12.2 6.8 7.0 6.2 1.3 1.1 1.0 — — — 16.9 11.7 8.3 175 37.9 7.5

Dividend yield (%)


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Media

DB Corp 190 BUY 34,893 627 183 11.0 11.6 14.3 (14.5) 4.9 24.1 17.3 16.5 13.3 10.0 9.2 7.5 3.8 3.4 3.2 2.6 3.1 4.2 23.0 21.9 24.9 260 36.6 0.6

DishTV 70 ADD 74,665 1,342 1,064 (1.0) 0.3 1.2 (45.3) (130.3) 306.3 (69.2) 228.3 56.2 17.0 12.7 10.3 (79.6) (122.2) 104.0 — — — 694.0 (42.2) 2,497 80 14.0 4.3

Eros International 168 BUY 15,325 275 91 15.8 18.7 21.0 26.8 18.3 12.0 10.6 8.9 8.0 7.1 5.9 5.2 1.9 1.5 1.3 — — — 19.3 18.8 17.4 260 55.1 0.6

Hindustan Media Ventures 113 BUY 8,308 149 73 8.9 10.4 12.5 22.3 16.0 20.6 12.7 10.9 9.1 6.5 5.3 4.1 1.9 1.7 1.5 0.9 1.8 3.5 15.9 16.2 17.3 190 67.8 0.0

HT Media 90 ADD 21,203 381 235 7.0 7.5 10.9 (8.4) 5.8 46.7 12.8 12.1 8.2 5.3 4.4 2.7 1.3 1.2 1.1 0.4 2.2 4.4 11.0 10.6 14.3 130 44.2 0.4

Jagran Prakashan 91 BUY 28,700 516 316 5.6 6.0 7.0 (17.4) 6.7 16.8 16.1 15.1 12.9 8.9 8.3 7.2 3.8 3.5 3.2 3.9 3.9 3.9 24.5 24.3 25.8 130 43.3 0.3

Sun TV Network 295 ADD 116,372 2,091 394 17.6 18.2 19.1 (10.0) 3.4 5.3 16.8 16.3 15.4 10.2 9.6 9.1 4.4 4.0 3.7 3.2 3.4 4.1 28.6 26.6 25.8 330 11.8 7.4

Zee Entertainment Enterprises 169 BUY 162,240 2,915 960 6.0 7.2 8.7 (0.5) 20.1 21.8 28.3 23.6 19.4 19.9 15.9 12.7 3.5 3.4 3.2 0.8 0.9 1.1 13.0 14.8 17.2 170 0.6 6.2

Media Attractive 461,705 8,296 (1.8) 18.1 21.6 24.1 20.4 16.8 12.4 10.6 8.9 4.0 3.6 3.3 1.6 1.8 2.2 16.4 17.8 19.7

Metals & Mining

Coal India 361 BUY 2,277,997 40,931 6,316 23.2 25.8 31.1 34.4 11.0 20.7 15.5 14.0 11.6 9.9 8.7 6.7 5.4 4.3 3.4 2.8 2.1 2.6 38.0 34.1 32.8 390 8.1 11.6

Hindalco Industries 104 REDUCE 198,479 3,566 1,915 17.7 14.9 14.5 38.9 (15.9) (2.7) 5.8 6.9 7.1 6.6 7.0 7.0 0.6 0.6 0.5 1.4 1.4 1.4 11.1 8.6 7.8 115 11.0 14.3

Hindustan Zinc 128 ADD 541,434 9,728 4,225 13.2 13.1 13.3 13.2 (1.0) 1.7 9.7 9.8 9.7 6.0 5.6 4.8 2.0 1.7 1.5 1.9 1.9 1.9 22.6 19.0 16.8 135 5.3 1.9

Jindal Steel and Power 353 ADD 329,938 5,928 935 42.4 34.4 45.2 5.6 (18.9) 31.3 8.3 10.3 7.8 7.3 7.4 6.6 1.8 1.6 1.3 0.5 0.5 0.5 24.8 16.5 18.3 445 26.1 18.5

JSW Steel 677 SELL 150,985 2,713 223 24.1 46.7 64.3 (69.3) 93.8 37.7 28.1 14.5 10.5 5.3 5.9 6.1 0.9 0.9 0.8 1.1 1.5 1.5 8.2 9.5 7.9 583 (13.8) 23.5

National Aluminium Co. 50 SELL 129,249 2,322 2,577 3.4 3.1 3.2 (19.7) (6.5) 2.3 14.9 15.9 15.6 7.0 6.1 5.1 1.1 1.1 1.0 2.0 2.0 2.0 7.6 6.8 6.6 50 (0.3) 0.2

Sesa Goa 170 ADD 147,704 2,654 869 31.0 43.9 38.2 (36.2) 41.7 (13.2) 5.5 3.9 4.5 5.3 5.4 7.2 1.0 0.8 0.7 2.7 2.7 2.7 11.1 9.5 7.2 210 23.6 8.5

Sterlite Industries 96 ADD 323,516 5,813 3,361 15.8 13.8 14.0 3.9 (12.4) 1.4 6.1 7.0 6.9 3.7 3.3 2.9 0.7 0.6 0.6 2.1 2.1 2.1 12.1 9.7 9.1 117 21.6 14.9

Tata Steel 364 ADD 353,302 6,348 971 17.2 34.8 49.9 (72.3) 102.1 43.2 21.1 10.4 7.3 7.5 6.3 5.6 0.8 0.8 0.7 3.3 3.3 3.3 6.4 7.7 10.4 390 7.2 32.4

Metals & Mining Cautious 4,452,602 80,004 (1.5) 8.6 10.3 11.2 10.4 9.4 7.0 6.5 5.8 1.8 1.6 1.4 2.3 2.0 2.3 15.7 15.2 14.8

Pharmaceutical

Apollo Hospitals 630 ADD 87,648 1,575 139 15.8 21.5 27.1 19.3 35.9 26.1 39.9 29.3 23.3 17.1 14.8 12.4 3.5 3.1 2.8 — — — 9.6 11.2 12.7 700 11.1 1.5

Biocon 268 ADD 53,680 965 200 16.9 19.9 21.5 (8.0) 17.7 8.2 15.9 13.5 12.5 8.5 6.9 6.2 2.4 2.1 1.9 — — — 15.7 16.5 16.0 265 (1.3) 1.8

Cipla 380 REDUCE 304,909 5,479 803 14.0 19.7 19.7 13.5 40.9 (0.1) 27.1 19.3 19.3 18.4 13.4 12.6 4.0 3.4 2.9 0.5 0.5 0.5 15.7 16.5 16.3 400 5.3 9.1

Cadila Healthcare 903 ADD 184,796 3,320 205 31.9 39.6 49.0 (8.2) 24.2 23.7 28.3 22.8 18.4 21.7 16.7 13.4 7.2 5.9 4.8 0.8 1.1 1.4 27.8 28.3 28.7 980 8.6 1.8

Dishman Pharma & chemicals 103 REDUCE 8,369 150 81 7.0 9.7 12.0 (29.0) 38.7 23.7 14.7 10.6 8.6 8.0 6.6 5.8 0.9 0.9 0.8 — — — 4.6 7.2 8.4 50 (51.4) 2.1

Divi's Laboratories 1,113 ADD 147,711 2,654 133 40.2 52.1 59.9 24.0 29.7 14.8 27.7 21.4 18.6 20.9 16.1 13.3 6.9 5.8 4.8 1.2 1.5 1.7 27.1 29.5 28.2 1,197 7.5 4.2

Dr Reddy's Laboratories 1,681 REDUCE 286,103 5,141 170 83.8 93.4 98.9 29.0 11.4 5.9 20.1 18.0 17.0 13.3 11.5 10.8 5.0 4.1 3.4 0.8 1.0 1.1 27.6 24.9 21.8 1,740 3.5 10.0

GlaxoSmithkline Pharmaceuticals 2,100 SELL 178,023 3,199 85 74.3 83.2 91.1 8.8 12.0 9.6 28.3 25.3 23.0 20.2 18.6 16.7 9.2 8.7 8.1 2.1 2.5 3.0 32.4 35.3 36.4 2,035 (3.1) 1.2

Glenmark Pharmaceuticals 431 REDUCE 116,768 2,098 271 21.9 22.1 28.5 31.1 1.2 29.0 19.7 19.5 15.1 23.0 13.9 11.3 4.9 4.0 3.3 — 0.6 0.8 26.7 22.5 23.8 400 (7.3) 3.4

Jubilant Life Sciences 180 REDUCE 28,602 514 159 22.9 31.0 37.4 58.7 35.4 20.7 7.8 5.8 4.8 7.7 5.9 5.0 1.2 1.0 0.8 1.1 1.7 2.2 16.2 19.4 19.7 185 3.0 0.3

Lupin 595 ADD 265,719 4,774 447 19.5 28.2 30.3 1.2 45.1 7.3 30.5 21.1 19.6 21.5 13.5 12.4 6.5 5.2 4.3 0.5 0.8 0.9 23.9 27.9 24.3 600 0.9 7.2

Ranbaxy Laboratories 570 SELL 240,453 4,320 422 (18.5) 22.0 25.2 (145.7) 218.4 14.8 (30.7) 26.0 22.6 16.7 13.6 15.5 8.4 6.4 5.1 — — — (68.5) 28.0 25.3 436 (23.5) 9.0

Sun Pharmaceuticals 662 REDUCE 685,238 12,312 1,036 25.0 34.6 33.0 42.5 38.4 (4.6) 26.5 19.1 20.0 19.5 12.3 12.2 5.6 4.5 3.8 0.7 0.8 0.9 23.0 26.3 20.8 664 0.3 8.7

Pharmaceuticals Attractive 2,588,020 46,501 (8.2) 50.9 7.1 30.0 19.9 18.5 17.4 12.8 11.9 5.2 4.3 3.7 0.7 0.9 1.0 17.4 21.7 19.8

Property

DLF 197 NR 338,114 6,075 1,715 7.1 12.7 16.9 (22.1) 79.7 33.1 27.9 15.5 11.7 14.8 11.2 8.6 1.2 1.2 1.1 1.3 1.5 1.8 4.5 7.6 9.5 — — 20.6

Housing Development & Infrastructure 70 NR 29,393 528 419 22.0 28.8 28.8 11.3 30.5 0.2 3.2 2.4 2.4 4.5 4.1 3.7 0.3 0.2 0.2 — 2.1 2.9 8.3 10.8 9.6 — — 30.4 Mahindra Life Space Developer 344 NR 14,020 252 41 29.4 29.8 34.3 18.0 1.3 15.1 11.7 11.5 10.0 11.4 8.9 8.6 1.3 1.2 1.1 1.3 1.5 1.6 11.2 10.4 11.0 — — 0.1

Oberoi Realty 229 NR 75,347 1,354 330 14.1 14.3 22.4 (10.5) 1.4 57.3 16.3 16.0 10.2 12.9 10.1 6.4 2.0 1.9 1.6 0.9 1.1 1.3 13.1 12.0 16.9 — — 0.3

Phoenix Mills 176 NR 25,449 457 145 7.3 10.7 11.5 14.9 46.9 7.9 24.2 16.4 15.2 18.4 12.8 12.2 1.5 1.4 1.3 1.1 1.1 1.1 6.4 8.9 9.0 — — 0.2 Sobha Developers 335 NR 32,851 590 98 21.4 25.1 37.4 13.8 17.1 49.2 15.6 13.4 9.0 9.5 8.5 5.9 1.6 1.5 1.3 1.5 1.5 1.5 10.9 11.7 15.6 — — 0.9

Unitech 19 NR 48,794 877 2,616 0.9 1.8 2.3 (56.1) 84.8 32.7 19.6 10.6 8.0 24.0 13.1 10.0 0.4 0.4 0.4 0.5 0.5 0.5 2.1 3.7 4.7 — — 6.1

Property Cautious 563,969 10,133 (17.4) 52.1 26.7 17.8 11.7 9.2 12.6 9.7 7.6 1.0 0.9 0.8 1.3 1.6 1.8 5.4 7.7 9.0

Dividend yield (%)


KO

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Technology

HCL Technologies 562 REDUCE 401,473 7,214 715 34.6 43.9 45.5 51.2 27.1 3.6 16.2 12.8 12.3 10.0 8.1 7.6 4.1 3.2 2.7 1.4 1.4 1.4 25.1 27.3 24.1 530 (5.6) 11.2

Hexaware Technologies 126 REDUCE 37,113 667 294 9.1 12.2 12.2 207.9 34.1 0.3 13.9 10.4 10.3 12.4 7.5 7.1 3.7 3.2 2.8 2.4 4.8 4.8 26.9 32.8 29.0 120 (5.1) 3.0

Infosys 2,361 REDUCE 1,355,099 24,348 574 144.9 166.0 172.8 21.0 14.6 4.1 16.3 14.2 13.7 10.7 8.9 8.3 4.3 3.6 3.1 1.9 2.2 2.3 29.0 27.7 24.4 2,350 (0.5) 47.5

Mahindra Satyam 95 ADD 111,838 2,009 1,176 10.2 10.2 10.2 142.3 0.6 (0.7) 9.3 9.3 9.3 8.2 5.1 4.6 3.7 2.7 2.2 — — 2.1 50.4 34.0 26.1 95 (0.1) 6.8

Mindtree 665 ADD 27,381 492 41 53.1 77.6 74.7 115.1 46.2 (3.8) 12.5 8.6 8.9 9.3 5.4 5.4 2.9 2.3 2.0 0.8 2.3 3.4 25.2 29.6 23.6 710 6.7 1.8

Mphasis 380 SELL 80,043 1,438 211 39.0 38.0 39.3 (24.6) (2.7) 3.5 9.7 10.0 9.7 8.1 6.9 6.1 2.1 1.7 1.5 1.2 1.3 1.4 22.8 18.9 16.8 375 (1.3) 1.4

Polaris Financial Technology 122 REDUCE 12,133 218 100 20.8 21.1 20.0 7.4 1.7 (5.2) 5.9 5.8 6.1 3.3 3.0 2.6 1.0 0.9 0.8 3.2 3.4 3.5 18.1 15.8 13.4 120 (1.4) 1.6

TCS 1,341 REDUCE 2,624,312 47,153 1,957 54.4 68.1 70.6 22.0 25.3 3.7 24.7 19.7 19.0 17.5 14.2 13.5 8.1 6.6 5.6 1.9 2.0 2.1 36.8 36.9 31.9 1,125 (16.1) 27.9

Tech Mahindra 821 ADD 104,688 1,881 127 80.2 89.4 91.5 66.9 11.6 2.4 10.2 9.2 9.0 13.1 9.0 9.3 2.6 2.3 2.0 0.5 1.2 1.3 28.4 27.0 24.5 800 (2.6) 8.0

Wipro 363 REDUCE 891,651 16,021 2,456 22.7 25.9 27.1 5.2 14.3 4.6 16.0 14.0 13.4 11.0 9.1 8.3 3.1 2.7 2.3 1.3 1.6 1.7 21.2 20.5 18.5 350 (3.6) 9.6

Technology Cautious 5,645,730 101,442 21.2 18.5 3.7 18.1 15.3 14.8 12.8 10.3 9.7 4.7 3.9 3.4 1.7 1.9 2.1 26.0 25.5 22.7

Telecom

Bharti Airtel 250 NR 948,451 17,042 3,798 11.2 8.6 12.9 (29.6) (23.7) 50.2 22.3 29.2 19.4 6.8 6.4 5.4 1.9 1.8 1.6 — 0.6 0.5 8.6 6.2 8.8 — — 31.6

IDEA 75 ADD 249,069 4,475 3,303 2.2 3.6 6.2 (19.6) 62.8 74.8 34.5 21.2 12.1 7.6 6.3 4.9 1.9 1.8 1.5 — — — 5.7 8.6 13.5 90 19.4 3.3

MTNL 38 RS 23,751 427 630 (9.1) (8.4) (8.3) (11.9) (8.1) (1.7) (4.1) (4.5) (4.6) (1.0) (1.3) (1.4) 0.2 0.3 0.3 — — — (5.7) (5.5) (5.8) — — 4.5

Reliance Communications 50 SELL 103,510 1,860 2,064 4.5 3.3 4.6 (31.0) (26.0) 38.2 11.2 15.1 10.9 8.2 6.8 5.8 0.3 0.3 0.3 — — — 2.4 1.9 2.5 45 (10.3) 12.2

Tata Communications 226 REDUCE 64,353 1,156 285 (27.9) (27.5) (21.2) 12.0 (1.5) (23.0) (8.1) (8.2) (10.7) 9.6 7.4 6.7 2.8 3.9 6.0 — — — (27.0) (39.7) (44.2) 215 (4.8) 1.1

Telecom Attractive 1,389,133 24,960 (34.4) (16.3) 77.9 30.6 36.5 20.5 7.4 6.6 5.5 1.2 1.2 1.1 — — 0.4 4.0 3.3 5.5

Utilities

Adani Power 41 SELL 90,361 1,624 2,180 (0.4) (3.8) 2.5 (118.0) 786.4 (165.8) (97.8) (11.0) 16.8 33.9 22.4 9.9 1.5 1.9 1.7 — — — (1.5) (15.2) 10.7 33 (20.4) 2.1

CESC 303 BUY 37,812 679 125 21.7 25.2 35.2 (9.3) 16.0 39.7 13.9 12.0 8.6 8.5 8.9 5.8 0.6 0.6 0.6 — 1.6 1.8 4.5 5.1 6.7 350 15.6 0.9

JSW Energy 47 SELL 77,080 1,385 1,640 2.0 4.1 4.2 (60.6) 100.8 4.3 23.3 11.6 11.1 12.7 7.3 5.6 1.4 1.2 1.1 — — — 5.8 11.0 10.3 50 6.4 2.3

Lanco Infratech 11 RS 24,564 441 2,223 (0.5) (0.7) 1.0 (131.8) 39.2 (233.2) (21.1) (15.2) 11.4 10.4 10.2 6.8 0.5 0.6 0.5 — — — (2.5) (3.6) 4.8 — — 7.6

NHPC 18 BUY 218,953 3,934 12,301 2.4 2.0 2.2 79.5 (18.5) 9.9 7.3 9.0 8.2 6.9 7.7 6.5 0.8 0.7 0.7 3.8 3.1 3.5 10.8 8.3 8.6 26 46.1 1.2

NTPC 170 REDUCE 1,404,615 25,238 8,245 11.2 12.0 15.3 2.4 6.9 27.6 15.2 14.2 11.2 13.2 12.0 9.1 1.9 1.7 1.6 2.0 2.1 2.7 12.8 12.6 14.7 160 (6.1) 7.2

Power Grid 124 ADD 573,855 10,311 4,630 7.1 8.2 9.2 23.0 16.0 11.6 17.5 15.1 13.5 13.0 11.0 9.8 2.4 2.2 2.0 1.7 2.0 2.2 14.6 15.4 15.5 125 0.8 6.1

Reliance Infrastructure 446 BUY 117,338 2,108 263 60.3 66.7 73.6 4.0 10.6 10.3 7.4 6.7 6.1 9.7 8.5 7.2 0.5 0.5 0.4 2.3 2.5 2.5 8.9 9.8 10.2 890 99.5 25.9

Reliance Power 78 SELL 219,782 3,949 2,805 3.1 3.2 3.1 14.0 3.0 (2.7) 25.4 24.6 25.3 41.5 24.1 15.3 1.2 1.2 1.1 — — — 5.0 4.9 4.6 76 (3.0) 10.2

Tata Power 96 ADD 237,948 4,275 2,468 4.6 5.9 6.5 (40.6) 29.0 9.8 20.9 16.2 14.8 10.9 8.1 6.9 1.8 1.7 1.5 1.6 1.8 1.8 8.1 10.6 10.8 109 13.1 5.4

Utilities Attractive 3,002,308 53,945 (0.6) 3.8 27.7 15.4 14.9 11.6 12.8 11.1 8.7 1.5 1.4 1.3 1.7 1.9 2.2 9.5 9.3 10.9

Others

Carborundum Universal 147 REDUCE 27,555 495 187 11.6 10.9 12.8 27.0 (5.7) 17.3 12.7 13.5 11.5 7.8 7.8 6.5 2.7 2.3 2.0 1.7 1.6 1.8 26.0 20.7 20.6 150 1.8 0.2

Coromandel International 293 SELL 82,849 1,489 283 22.5 22.7 24.6 (8.5) 0.9 8.5 13.1 12.9 11.9 10.6 9.2 8.5 3.5 3.0 2.6 2.5 2.6 2.8 27.5 23.3 21.9 260 (11.3) 0.6

Havells India 556 ADD 69,362 1,246 125 31.5 33.0 39.7 61.6 4.8 20.5 17.7 16.9 14.0 11.3 9.8 8.2 6.9 5.3 4.1 1.2 1.3 1.4 45.6 35.3 32.9 600 7.9 2.8

Jaiprakash Associates 65 BUY 139,176 2,501 2,126 2.9 6.5 10.8 (51.5) 123.0 65.6 22.4 10.0 6.1 11.0 8.3 6.3 1.2 1.1 1.0 — — — 5.6 11.6 16.9 86 31.4 22.0

Jet Airways 338 SELL 29,154 524 86 (184.6) (34.2) 21.5 1,735.6 (81) (162.9) (1.8) (9.9) 15.7 (589.8) 10.6 7.0 22.3 (17.7) 137.5 — — — 6.0 6.0 6.0 312 (7.6) 15.8

Rallis India 137 BUY 26,584 478 194 5.1 7.6 8.8 (21.6) 48 15.8 26.8 18.1 15.6 13.7 10.4 8.7 4.8 4.1 3.4 2— 2— 2— 20.4 23.6 24.0 150 9.7 0.9

SpiceJet 30 BUY 13,417 241 441 (13.7) 0.2 2.4 (650.1) (101.4) 1,103.7 (2.2) 154.9 12.9 (4.0) 18.0 6.7 (8.5) (8.9) (29.3) — — — (746) (5.6) (106.5) 45 48.0 2.8

Tata Chemicals 305 REDUCE 77,675 1,396 255 32.9 38.8 42.3 25.4 17.9 9.0 9.3 7.9 7.2 5.0 4.3 3.6 1.3 1.1 1.0 3.9 4.9 5.6 18.6 19.5 19.4 365 19.7 2.1

United Phosphorus 120 REDUCE 55,393 995 462 12.0 15.8 17.5 (0.4) 31.5 10.5 10.0 7.6 6.9 5.5 4.7 4.1 1.3 1.2 1.0 2.1 2.1 2.1 0.1 0.2 — 130 8.4 2.2

Others 521,167 9,364 (67.4) 262.4 43.8 44.7 12.3 8.6 11.2 7.7 6.1 2.0 1.7 1.5 1.5 1.7 1.9 4.4 14.1 17.3

KS universe (b) 46,307,230 832,041 9.2 10.9 12.1 14.3 12.9 11.5 9.3 8.3 7.2 2.2 1.9 1.7 1.7 1.9 2.1 15.2 15.1 15.1

KS universe (b) ex-Energy 38,994,559 700,648 8.1 13.5 14.9 15.7 13.9 12.1 11.1 9.5 8.1 2.5 2.2 1.9 1.6 1.8 1.9 15.6 15.8 16.1

KS universe (d) ex-Energy & ex-Commodities 33,149,635 595,627 9.2 14.3 15.9 16.5 14.5 12.5 12.3 10.3 8.7 2.6 2.3 2.0 1.5 1.7 1.9 15.6 15.9 16.4

Notes:

(a) For banks we have used adjusted book values.

(b) 2012 means calendar year 2011, similarly for 2013 and 2014 for these particular companies.

(c) EV/Sales & EV/EBITDA for KS universe excludes Banking Sector.

(d) Rupee-US Dollar exchange rate (Rs/US$)= 55.66

Dividend yield (%)



Disclosures

Kotak Institutional Equities Research coverage universeDistribution of ratings/investment banking relationships

Source: Kotak Institutional Equities As of June 30, 2012

Percentage of companies covered by Kotak Institutional Equities, within the specified category.

Percentage of companies within each category for which Kotak Institutional Equities and or its affiliates has provided investment banking services within the previous 12 months.

* The above categories are defined as follows: Buy = We expect this stock to deliver more than 15% returns over the next 12 months; Add = We expect this stock to deliver 5-15% returns over the next 12 months; Reduce = We expect this stock to deliver -5-+5% returns over the next 12 months; Sell = We expect this stock to deliver less than -5% returns over the next 12 months. Our target prices are also on a 12-month horizon basis. These ratings are used illustratively to comply with applicable regulations. As of 30/06/2012 Kotak Institutional Equities Investment Research had investment ratings on 167 equity securities.

18.0%

32.3% 33.5%

16.2%

4.2%0.6% 0.6% 1.2%

0%

10%

20%

30%

40%

50%

60%

70%

BUY ADD REDUCE SELL

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.

ADD. We expect this stock to deliver 5-15% returns over the next 12 months.

REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.

SELL. We expect this stock to deliver <-5% returns over the next 12 months.

Our target prices are also on a 12-month horizon basis.

Other definitions

Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following designations: Attractive, Neutral, Cautious.

Other ratings/identifiers

NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s) and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

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