Transcript
India Strategy28th Nov 2009
Key Highlights
MONTHLY SNAPSHOT
For the month ending 28th Nov 09’, Nifty registered a rise of 4.02% and CNX 500 spiked 4.80%.
Markets registered sideway moment due to anticipation on rollbacks of stimulus packages (CRR and In-direct taxes) by Govt. of India looking at mixed signals of recovery in the economy. During the end of the month debt payment restructuring of Dubai World, the state sponsored holding company at the root of the UAE’s financial crisis, has made for very interesting market watching.
Sectoral comparison shows that Realty and Power sectors was negative compared to other sector peers out of which Metal and Auto sector outperformed all the major other sectors.
Monthly returns of major BSE Sectoral Indices: IT – 3.45%, Oil & Gas – 4.27%, Realty – (10.68)%, Auto – 9.33%, Bank – 2.49%, Metal – 9.48% and Power – (3.16)%.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
BSE Sectoral Performance
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
29-Oct 3-Nov 8-Nov 13-Nov 18-Nov 23-Nov
REALTY METAL POWER BANKOIL & GAS AUTO IT
Returns o f Nif ty and CNX5 0 0
-6%-4%-2%0%2%4%6%8%
10%
30-Sep 5-Oct 10-Oct 15-Oct 20-Oct 25-Oct 30-Oct
NIFTY CNX500
SMART MONEY – DOMESTIC AND FOREIGN INSTITUTION
FIIs were net buyers of INR5,160 cr in equity segment in the month of November (as on 30st Nov). For first eight months of FY10 they were the net buyers of INR80,648 cr whereas they were net sellers of INR49,181 cr for FY09. DIIs were net buyers of INR2.391 cr for the month of November 2009. For first eight months of FY10 they were the net buyers of INR15,730 cr whereas they were net buyers of INR58,757 cr for FY09.Despite equity markets gaining ~80% so far in current year the number of FII registered decline by 70% which touched 6 years low. 111 new FII got registered with SEBI till Nov 09’, against 375 in CY08 and 226 in CY07.
Source: NSE, SEBI, Bloomberg, Microsec Research
India Strategy28th Nov 2009
DII Flow (INR in Crs)
-50000
500010000150002000025000300003500040000
29.08.08
31.10.08
31.12.08
27.02.09
29.04.09
30.06.09
31.08.09
30.10.09
Buy Sell Net
FII Flow ( INR in Crs)
-20000
-10000
0
10000
20000
30000
40000
50000
60000
70000
80000
Buy Sell Net
FOREX RESERVES
Forex reserves slumped by USD1.032 billion to stand at USD285.344 billion as on Nov 20, 2009, mainly on account of sharp fall in foreign currency assets.
Statistical supplement of the Reserve Bank of India, foreign currency assets decreased by USD1.027 billion to stand at USD261.878 billion in the week ago.
During the same period, the reserve position in the International Monetary Fund decreased marginally by USD1 million to stand at USD700 million. However, gold reserves remained steady at USD17.50 billion.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Forex Reserves vs USD-INR
150170190210230250270290310330350
20-Nov16-Oct11-Sep7-Aug3-Jul29-May24-Apr20-Mar
Date
Fore
x R
eser
ve ($
bn)
3537394143454749515355
USD
-IN
R
Forex Reserve ($bn) USDINR
GLOBAL MARKETS RETURNS
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Particulars 1M % 3M % 6M % 1YR %
BRAZIL BOVESPA STOCK IDX 9.00 18.75 26.10 83.31
MEXICO BOLSA INDEX 7.43 9.40 26.48 49.87
DOW JONES INDUS. AVG 6.15 8.57 21.29 16.77
S&P 500 INDEX 5.34 6.94 18.75 21.79
DAX INDEX 5.00 4.04 15.07 21.76
NSE S&P CNX NIFTY INDEX 4.88 6.00 11.08 79.37
PSEi - PHILIPPINE SE IDX 4.69 5.57 27.44 54.44
BSE SENSEX 30 INDEX 4.63 6.16 13.72 82.92
NASDAQ COMPOSITE INDEX 4.56 6.44 20.52 39.26
FTSE 100 INDEX 3.99 6.86 18.74 22.33
SHANGHAI SE COMPOSITE IX 3.35 16.06 17.60 65.47
CAC 40 INDEX 3.15 1.86 13.54 14.06
HANG SENG INDEX (2.84) 7.15 16.31 52.18
KOSPI INDEX (3.55) (4.23) 9.21 41.67
NIKKEI 225 (9.50) (13.45) (4.63) 6.69
GLOBAL MARKETS VALUATION
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Current EPS PE ratio Est EPS Est PE
Current BV PB EST BV EST PB
INDIAN M ARKETSSENSEX 818.86 20.31 842.24 19.75 5,053.86 3.29 5,401.13 3.08 NIFTY 239.89 20.60 251.94 19.61 1,515.75 3.26 1,660.36 2.98 U .S. M ARKETSDOW JONES 641.88 16.06 645.02 15.98 3,770.56 2.73 3,970.88 2.60 NASDAQ 56.62 37.77 85.76 24.93 880.70 2.43 807.81 2.65 S&P 500 49.58 21.93 62.92 17.28 492.65 2.21 513.29 2.12 MEXICO 1,641.31 18.75 1,814.55 16.96 12,104.01 2.54 12,454.88 2.47 BRAZIL 3,286.01 20.41 4,015.41 16.71 32,704.78 2.05 31,209.54 2.15 EU ROPEAN M ARKETSFTSE 85.96 NA 353.94 14.82 2,683.50 1.95 2,808.71 1.87 CAC 234.86 15.85 287.56 12.94 2,788.50 1.33 2,823.33 1.32 DAX 90.60 NA 358.29 15.87 3,901.54 1.46 3,882.74 1.46 ASIAN M ARKETSNIKKEI NA NA 248.53 36.54 7,468.83 1.22 7,602.28 1.19 HANG SENG 956.49 22.10 1,268.47 16.66 10,505.97 2.01 10,857.61 1.95 SINGAPORE 124.75 22.14 163.26 16.92 1,630.36 1.69 1,638.78 1.69 SHANGHAI 94.31 32.83 136.09 22.75 944.30 3.28 1,056.10 2.93 KOSPI 73.66 20.70 120.05 12.70 1,338.98 1.14 1,193.57 1.28 PHILIPPINE SE 197.68 15.40 203.64 14.95 1,413.49 2.15 1,486.92 2.05
Note: FTSE & DAX index current P/E data has discrepancies, Global markets EPS are based on Calendar year
MSCI INDIA PERFORMANCE AGAINST OTHER EMERGING MARKETS
Over last 3 years, MSCI India P/E commanded premium over MSCI Emerging Markets. Since December 2008, Indian markets were at par with the Emerging Markets and is gaining momentum post May 2009. By end of November again the MSCI India P/E is ahead with the MSCI Emerging market.
On a yearly basis, returns of MSCI India has outperformed MSCI Emerging Markets. While MSCI India and EM increased by 93.82% and 78.57% respectively in absolute terms over the last one year period.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Relative Returns (%)
-20
0
20
40
60
80
100
120
28-Nov-08 28-Jan-09 28-Mar-09 28-May-09 28-Jul-09 28-Sep-09
MSCI EM MSCI IN
India Premium to MSCI EM
05
1015202530
Apr-06
Aug-06
Dec-06
Apr-07
Aug-07
Dec-07
Apr-08
Aug-08
Dec-08
Apr-09
Aug-09
MSCI EM MSCI IN
MSCI SECTORAL PERFORMANCE
MSCI India Finance and HealthCare sector outperformed the US and Global peers on both monthly and quarterly basis. On quarterly basis, USA sectoral indices were relatively the best performer.
In MSCI India on a monthly basis all the sectors have given positive returns except Telecom sector, due to increasing tariff war between the peers. MSCI India HealthCare and Material sectors witnessed stupendous growth and outperformed the other sectors on a quarterly basis.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
1 M (%) 3 M (%) 1 M (%) 3 M (%) 1 M (%) 3 M (%)
Consumer Staple 2.31 12.48 4.31 8.56 3.42 9.16
Energy 7.25 3.48 2.58 10.61 2.50 10.00
Finance 4.14 7.39 1.35 -2.78 0.27 -1.14
HealthCare 9.45 26.50 9.06 7.72 6.77 7.53
Industrial 2.23 0.10 8.41 10.25 4.41 5.91
IT 4.93 11.14 4.94 9.12 3.07 5.66
Material 9.85 21.98 10.43 10.20 9.38 12.50
Telecom -5.42 -36.88 7.33 5.90 4.47 6.54
Utility 3.33 0.43 3.36 0.81 3.74 1.15
India USA Global
MSCI INDIA SECTORAL P/E
MSCI India Consumer Staple, Energy, Finance, Industrial, Healthcare, Material and Utility indices are currently trading at a premium over estimated earnings on a Price/Earning basis.
On 12-month forward P/E basis, these indices, except IT and Telecom are commanding a premium over MSCI India Index in future as well.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Current P/E Estimated P/E Expected Earnings Variation
MSCI India 22.79 20.59 10.68%
Consumer Staple 36.82 26.69 37.95%
Energy 18.47 17.09 8.10%
Finance 24.06 23.87 0.78%
HealthCare 70.05 25.47 175.08%
Industrial 111.81 31.88 250.77%
IT 19.63 21.53 -8.82%
Material 16.35 15.50 5.47%
Telecom 7.52 10.07 -25.30%
Utility 22.82 19.44 17.40%
TWIN PILLARS OF EMERGING MARKETS
India and China registered PMI (Purchasing Managers Index) index value of 53 and 55.2 respectively for the month of Nov 09’. Manufacturing activities in both India and China continued to improve Since Feb 2009, India started registering a lower PMI than China in last two months.
India’s PMI has outperformed China in 11 out of 18 months. India’s PMI decreased from 54.5 to 53 on a sequential basis, while during the same period, China’s PMI remained flat.
China’s HSCEI increased 61.21% and domestic market (Shanghai composite) spiked by 65.47% in last one year. In comparison, Nifty gave a stupendous return of 92.53% during the same period.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Relat ive Perf o rmance (%)
-20
0
20
40
60
80
100
120
28-Nov-08 27-Jan-09 28-Mar-09 27-May-09 26-Jul-09 24-Sep-09 23-Nov-09
NIFTY HSCEI SHANGHAI
PMIINDIA CHINA
Nov-09 53 55.2Oct-09 54.5 55.2Sep-09 55 54.3Aug-09 53.2 54Jul-09 55.3 53.3Jun-09 55.3 53.2May-09 55.7 53.1Apr-09 53.3 53.5Mar-09 49.5 52.4Feb-09 47.0 49.0Jan-09 46.7 45.3Dec-08 44.4 41.2Nov-08 45.8 38.8Oct-08 52.2 44.6Sep-08 57.3 51.2Aug-08 57.9 48.4Jul-08 57.8 48.4Jun-08 58.6 52.0
INDIAN KEY ECONOMIC DATA INDICATORS
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
IIP Trend (y-o-y %)
-2%0%2%4%6%8%
10%12%14%16%18%
Jan-06
Mar-
06M
ay-06
Jul-0
6Se
p-06Nov-0
6Jan
-07M
ar-07
May
-07Ju
l-07
Sep-07
Nov-07
Jan-08
Mar-
08M
ay-08
Jul-0
8Se
p-08Nov-0
8Jan
-09M
ar-09
May
-09Ju
l-09
Sep-09
Impor t Trend (y-o-y %)
-60%
-40%
-20%
0%
20%
40%
60%
80%
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Export Trend (y-o-y %)
-40%-30%-20%-10%
0%10%20%30%40%
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Pr imary Ar ticle s Inflation Tre nd (y-o-y %)
0%200%400%600%800%
1000%1200%1400%
14-F
eb-0
614
-May
-0614
-Aug
-06
14-N
ov-0
614
-Feb
-07
14-M
ay-07
14-A
ug-0
714
-Nov
-07
14-F
eb-0
814
-May
-0814
-Aug
-08
14-N
ov-0
814
-Feb
-09
14-M
ay-09
14-A
ug-0
914
-Nov
-09
contd…
Sales of commercial vehicles for the month of October 2009 grew by a massive 51.90% to 42,562 units over 28,019 units in the corresponding month of last year. However, on monthly basis, this segment reported 6.36% decline in sales.
In the month of Oct 09’ the sector showed phenomenal jump to 13.93% from 0.71% in the month of Aug 09’.Tourism sector registered negative growth from Oct 08’ till Jan 09’. However since Feb 09’ it showed signs of revival.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Tour ism re ve nue growth (y-o-y%)
-40%-30%-20%-10%
0%10%20%30%40%
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Commercial vehicle sales (y-o-y%)
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
Contd…
The Organization for Economic Cooperation and Development (OECD) increased its growth forecast for the world economy. The economy of the group’s 30 member countries will expand 1.9 percent next year and 2.5 percent in 2011. For India, OECD boosted its growth forecast to 6.1 percent in 2009 and 7.3 percent in 2010, rising to 7.6 percent the following year. OECD also hiked its growth forecast for China to 8.3 percent in 2009 and 10.2 percent in 2010.
U.S. economy expanded less than initially reported in the third quarter of 2009. Gross domestic product grew at a 2.8 percent annual pace compared with its prior reported growth of 3.5 percent for the quarter ended September 2009.
Unemployment rate in the U.S. jumped to 10.2 percent in October 2009, the highest level since 1983. The jobless rate rose from 9.8 percent in September 2009.
The U.K. economy shrank less than previously reported decline in the third quarter of 2009. Gross domestic product fell 0.3 percent for the quarter ended September, 2009 from the previous three months, compared with a prior measurement of a 0.4 percent drop.
Sales of existing U.S. homes jumped 10 percent in October 2009 to the highest level since February 2007. Purchases rose more than forecast to a 6.1 million annual rate from a 5.54 million pace in September 2009.
India Strategy28th Nov 2009
TRADE BALANCE & CURRENCY
India’s trade deficit for the month of September 2009 was at USD7.77 billion against USD8.37 billion reported in August 2009. It was lower than the trade deficit of USD15.35 billion in September 2008. In INR terms, trade deficit was INR376,300 million for September 2009 against INR404,670 million in August 2009.
Indian Rupee appreciated by 1.53 percent from 47.365 to 46.638 during the previous month ended Nov 28, 2009 led by strong equity markets and increased FII flows. Added to this, announcement of IIP numbers also helped rupee to appreciate.
India’s Industrial Production increased more than expected in September 2009, reflecting the positive effect of interest rate cuts and government stimulus measures to revive demand. Index of Industrial Production (IIP) increased by 9.1 percent in September 2009 vis-à-vis 11.0 percent in August 2009. IIP growth rate was 6.0 percent during the same month last year. On m-o-m basis, it increased by 2.6 percent in September 2009, after an increase of 1.0 percent previous month. Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Trade Balance
-16-14-12-10
-8-6-4-20
Jan-06
Mar-
06M
ay-06
Jul-0
6Se
p-06
Nov-0
6Jan
-07M
ar-07
May
-07Ju
l-07
Sep-
07Nov
-07
Jan-08
Mar-
08M
ay-08
Jul-0
8Se
p-08
Nov-0
8Jan
-09M
ar-09
May
-09Ju
l-09
Sep-
09
USD-INR vs Dollar Index
45
46
46
47
47
48
48
49
49
50
50
27-Nov12-Nov28-Oct13-Oct28-Sep11-Sep27-Aug12-Aug
USD
-INR
74
75
76
77
78
79
80
Dolla
r In
dex
USD-INR Dollar Index
GOVERNMENT BOND YIELDS
India 10-year government bond yield fell by 10 basis points during the month ended Nov 28, 2009 from 7.30 percent to 7.20 percent as reduced government debt sales bolstered demand for existing notes. Bonds also rose on speculation increased inflows of overseas capital will boost cash in the financial system, bolstering demand for debt.
During the last week of the month yields on the benchmark 10 year note declined to near seven weeks low to 7.17 percent on speculation the central bank will refrain from raising interest rates and inflation will slow due to a drop in crude oil prices. Crude oil fell by 1.81 percent during the previous month ended Nov 28, 2009.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
G ove rnme nt Bond Yie ld Curve
3
4
5
6
7
8
9
3m 6m 1 2 3 4 5 7 8 9 10 15 20 25 30
(%)
11/28/2009 10/28/2009
Government Bond Yie lds
4.5
5.5
6.5
7.5
8.5
2-Feb-09 17-Apr-09 30-Jun-09 12-Sep-09 25-Nov-09
(%)
GIND5YR Index GIND10YR Index GIND30YR Index
OUTLOOK
Festive season sales in Dec quarter and low base effect to show up the tick further in earnings.
Indian market is likely to be coupled with global cues. The indices reacted positively to higher-than-expected GDP data, we expect this could lead to a hike in the Cash reserve ratio or in interest rates by RBI sooner than expected.
Indian markets seems to be in a range of 18.5-21x price to earnings in a medium term perspective. Sectors that are likely to do good going forward would be Auto Ancillary, Capital Goods and Power Equipment.
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Forward PE Band
0.00
1000.00
2000.00
3000.00
4000.00
5000.00
6000.00
7000.00
31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10Price 21x 18x 15x 12x 9X 6x
PROJECTED STOCK VALUATIONS
Source: Bloomberg, Microsec Research
India Strategy28th Nov 2009
Automobile
FY10 FY11 FY10 FY11 FY10 FY11Hero Honda Motors 17.58 15.78 6.84 5.28 NA NAMahindra & Mahindra 14.27 12.73 3.21 2.71 8.33 7.52Maruti Suzuki India 19.86 16.93 3.92 3.23 12.86 11.08Tata Motors NA 24.31 3.68 3.36 14.74 9.66
Average 17.24 17.44 4.41 3.65 11.98 9.42
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Cement
FY10 FY11 FY10 FY11 FY10 FY11ACC* 9.16 11.05 2.45 2.14 5.58 6.35Ambuja Cements* 10.88 11.55 2.09 1.9 6.55 6.69Ultratech Cement 8.49 10.4 2.14 1.8 5.06 5.52
Average 9.51 11.00 2.23 1.95 5.73 6.19
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Engineering & Capital Goods
FY10 FY11 FY10 FY11 FY10 FY11L&T 26.98 21.89 5.06 4.35 18.25 14.45BHEL 23.51 18.66 6.92 5.48 16.09 12.31Crompton Greaves Ltd. 20.81 18.08 5.86 4.56 12.71 11.12Siemens Ltd. 24.73 22.03 5.14 4.32 14.11 12.41
Average 24.01 20.17 5.75 4.68 15.29 12.57
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
GLANCE 2…
India Strategy28th Nov 2009
Financials
FY10 FY11 FY10 FY11 FY10 FY11SBI 13.66 11.6 2.2 1.93 15.64 16.22ICICI Bank 23.4 19.74 1.87 1.76 7.96 8.98Axis Bank 16.75 13.83 2.54 2.24 17.69 17.45PNB 8.09 7 1.79 1.49 23.64 22.91HDFC Bank 27 21.01` 3.84 3.35 16.08 16.88
Average 17.78 13.04 2.45 2.15 16.20 16.49
CompanyP/E (x) P/BV (x) ROE (%)
FMCG
FY10 FY11 FY10 FY11 FY10 FY11HUL 26.93 23.7 26.93 22.54 21.34 18.99ITC 24.38 20.85 6 5.19 15.5 13.33Dabur India 28.8 23.82 12.89 9.95 22.34 18.82
Average 26.70 22.79 15.27 12.56 19.73 17.05
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
IT
FY10 FY11 FY10 FY11 FY10 FY11Infosys Tech. 22.39 20.19 5.92 4.92 16.33 14.54TCS 20.94 18.67 6.53 5.29 15.38 13.82Wipro 20.83 18.55 5.04 4.14 15.7 14.23
Average 21.39 19.14 5.83 4.78 15.80 14.20
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Source: Bloomberg, Microsec Research
GLANCE 3…
India Strategy28th Nov 2009
Infrastructure & Construction
FY10 FY11 FY10 FY11 FY10 FY11IVRCL Infra 18.83 15.02 2.41 2.09 12.97 12.91HCC 31.58 24.62 2.7 2.37 14.51 12.38Punj Lloyd 15.79 12.51 1.93 1.68 NA NAGammon India 18.41 16.23 1.61 1.51 8.37 6.89 GMR Infra 97.38 66.99 3.3 3.12 22.42 15.93
Average 36.40 27.07 2.39 2.15 14.57 12.03
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Metals
FY10 FY11 FY10 FY11 FY10 FY11Hindalco Industries 15.28 11.28 1.3 1.22 8.03 6.95JSW Steel 13.53 9.37 1.97 1.63 9.29 7.2Tata Steel 24.67 8.29 1.93 1.68 NA NANALCO 26.98 18.26 2.28 2.1 NA NASAIL 13.98 12.35 2.39 2.07 7.56 6.68Sterlite Industries 18.69 12.03 1.88 1.62 14.37 8.75
Average 18.86 11.93 1.96 1.72 9.81 7.40
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Source: Bloomberg, Microsec Research
GLANCE 4…
India Strategy28th Nov 2009
Oil & Gas
FY10 FY11 FY10 FY11 FY10 FY11BPCL 10.93 10.67 1.43 1.29 10.47 9.72Cairn India 39.7 9.66 1.51 1.33 24.2 6.55GAIL 17.17 15.54 3.08 2.72 11.03 9.3ONGC 11.48 10.85 2.41 2.13 5.35 5.12Reliance Industries 18.88 13.95 2.59 2.41 12.2 9.3HPCL 7.81 8.05 0.99 0.9 7.77 8.05IOC 8.47 8.74 1.36 1.22 7.39 6.87
Average 16.35 11.07 1.91 1.71 11.20 7.84
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Power
FY10 FY11 FY10 FY11 FY10 FY11NTPC 19.24 17.57 2.73 2.51 15.45 13.2NHPC 24.37 20.78 1.61 1.51 13.78 11.98Tata Power 18.27 16.67 2.67 2.34 10.99 9.63Power Grid Corp. 20.58 17.27 2.67 2.37 10.86 9.07
Average 20.62 18.07 2.42 2.18 12.77 10.97
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Pharma
FY10 FY11 FY10 FY11 FY10 FY11Sun Pharmaceuticals 22.22 19.47 3.76 3.24 20.31 17.51Dr. Reddy's 22.92 18.82 4.05 3.41 14.24 12.49Cipla 23.81 20,65 4.65 3.93 18.88 16.72Ranbaxy* - 37.7 4.24 4.18 42.19 19.1
Average 22.98 25.33 4.18 3.69 23.91 16.46
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
GLANCE 5…
India Strategy28th Nov 2009
Realty
FY10 FY11 FY10 FY11 FY10 FY11DLF 29.18 20.88 2.31 2.11 22.62 18.73Unitech 20.72 16.24 1.89 1.66 19.25 15.29
Average 24.95 18.56 2.10 1.89 20.94 17.01
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Telecom
FY10 FY11 FY10 FY11 FY10 FY11Bharti Airtel Ltd. 11.94 12.3 2.76 2.25 7.07 6.84R.Com 8.87 9.43 0.83 0.75 8.17 7.36Idea 18.56 23.01 1.04 1 6.41 5.78
Average 13.12 14.91 1.54 1.33 7.22 6.66
CompanyP/E (x) P/BV (x) EV/EBITDA (x)
Source: Bloomberg, Microsec Research
PERFORMANCE OF MICROSEC RESEARCH
Name of the Company M kt Cap CM P CM P Target Price U pside Potential % U pside Potential % Valuations
(in mn) as on 27/11/2009 as on report date (From report date) (From CM P)
LIC Housing Finance* 81,262.64 856.00 278.00 389.00 39.93 NA Awating Rerating
Cummins India* 75,240.00 380.00 228.00 298.00 31.00 NA Awating Rerating
REC * 201,785.10 235.00 91.00 144.00 58.20 NA Awating Rerating
Onmobile Global* 20,648.57 355.55 229.25 312.20 36.18 NA Awating Rerating
Reliance Communications 344,486.11 166.90 393.95 541.90 37.56 224.69 DCF & Comparables
Idea Cellular 151,749.65 48.95 104.85 145.60 38.87 197.45 DCF & Comparables
Emami Limited* 35,325.80 489.65 278.45 466.70 67.61 NA Awating Rerating
Dolphin Offchore 4,529.70 315.00 258.00 440.00 70.54 39.60 Comparables
Himadri Chemical 10,663.50 330.55 334.00 519.00 55.40 57.01 Comparables
Bharat E lectronics 141,496.00 1768.70 1427.85 1937.00 36.00 10.00 Comparables
Adhunik M etaliks Limited 10,729.96 92.50 96.15 183.15 90.48 98.00 Comparables
* Targe t Achieved - Awaiting Rerating
India Strategy28th Nov 2009
PERFORMANCE OF MICROSEC RESEARCH
Name of the Company Recommended Price CM P Return (%)
as on 19/08/2009 as on 27/11/09Hawkins Cooker 367.00 671.95 83.09%TTK Prestige 157.40 394.05 150.35%Greenply 120.40 113.90 -5.40%Pidilite 139.55 196.20 40.59%Emami 391.20 489.65 25.17%Castro l 457.70 528.00 15.36%Bajaj Electricals 556.25 774.50 39.24%Bata India 162.00 175.90 8.58%Blue Star 345.15 339.75 -1.56%Zodiac 295.30 376.95 27.65%Navneet 34.88 37.80 8.37%
Returns 35.59%CNX500 3665.75 4069.05 11.00%Nifty 4458.90 4941.75 10.83%
BRAND DOSSIER
India Strategy28th Nov 2009
PERFORMANCE OF MICROSEC RESEARCH
PSU PICKS
Name of the Company Recommended Price CM P Return (%)
as on 22/09/2009 as on 27/11/09BEL 1434.95 1770.05 23.35%Engineers India Ltd 1126.50 1354.05 20.20%CONCOR 1134.15 1152.10 1.58%Balmer Lawrie 480.00 492.00 2.50%BEM L 1100.60 989.95 -10.05%GM DC 114.15 125.70 10.12%REC 199.05 235.20 18.16%Indian Bank 161.00 160.50 -0.31%
Returns 8.19%BSE PSU 8796.38 9003.81 2.36%Nifty 5020.20 4941.75 -1.56%
India Strategy28th Nov 2009
PERFORMANCE OF MICROSEC RESEARCH
DIWALI PICKS 2009
Name of the Company Recommended Price CM P Return (%)
as on 16/10/2009 as on 27/11/09BEL 1525.55 1770.05 16.03%Bharat Forge 294.40 260.70 -11.45%Blue Star 394.90 339.75 -13.97%Cairn India 280.60 268.30 -4.38%Crompton Greaves 355.95 388.10 9.03%ESAB India 436.00 488.25 11.98%Exide Industries 106.10 106.15 0.05%Indian Bank 182.00 160.50 -11.81%KSB Pumps 375.50 360.40 -4.02%
REC 212.10 235.20 10.89%
TTK Prestige 295.25 394.05 33.46%
U nited Spirits 987.10 1218.40 23.43%
Returns 4.94%CNX500 4165.45 4069.05 -2.31%Nifty 5108.85 4941.75 -3.27%
India Strategy28th Nov 2009
DISCLAIMER
FOR PRIVATE CIRCULATION ONLY
DisclaimerThe investments discussed or recommended in this report may not be suitable for all investors. Investors should use this research as one input into formulating an investment opinion. Additional inputs should include, but are not limited to, the review of other. This is not an offer (or solicitation of an offer) to buy/sell the securities/instruments mentioned or an official confirmation. Microsec Capital Limited is not responsible for any error or inaccuracy or for any losses suffered on account of information contained in this report. This report does not purport to be offer for purchase and sale of share/ units. We and our affiliates,officers, directors, and employees, including persons involved in the preparation or issuance of this material may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation discussed herein or act as advisor or lender I borrower to such company (ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. The same persons may have acted upon the information contained here. No part of this material may be duplicated in any form and/or redistributed without Microsec Capital Limited’ prior written consent.
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Team Microsec ResearchContact
Analyst – Siddharth SedaniVasundhara Karwa
Email – ssedani@microsec.invkarwa@microsec.in
India Strategy28th Nov 2009
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India Strategy28th Nov 2009
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