Morning meeting notes

9am with Emkay

6 May, 2011

Major indices movements Contents

Major indices Clsg 1d (%) 3m (%) 6m (%)
n Research Views
BSE Sensex 18,211 (1.4) 1.1 (13.3)
KSK Energy Q4FY11E Result Estimates
Nifty 5,460 (1.4) 1.2 (13.5)
Union Bank of India (UBI) Q4FY11 result estimates
Dow 12,584 (1.1) 4.1 10.0
Media reports indicate cancellation of 5 coal blocks of NTPC – Negative; Accumulate
Nikkei 9,823 (1.8) (5.8) 7.2
Hang Seng 23,144 (0.5) (3.2) (7.0) n Research Update included
Brasil Bov espa 63,407 (0.3) (2.9) (12.7) Canara Bank Q4FY11 Result Update; Disappointing results; Reduce
Mexico Bolsa 35,325 (0.6) (5.7) (2.7) Essel Propack Q4FY11 Result Update; Subdued Quarter, Retain BUY
Turnover Cipla Q4FY11 Result Update; Earnings Disappointed; Maintain Reduce
Value Traded 5 May % Chg 52 Wk 52 Wk
Bharti Airtel Q4FY11 Result Update; Depreciation cost depreciates PAT, Retain HOLD
(Rs bn) 2011 Hi Lo
n Technical Comments
Cash BSE 27.3 0.6 105.2 19.1
Cash NSE 107.3 (10.7) 298.5 42.2 n Results Today
Total 134.6
Del.(%) 39.9 News clippings
F&O 1148.9 (4.3) 2772.8 226.0
Total Trade 1283.5 n Nifty OI up 11.8 Lakh shares which is on the short side as it went into discount of
Fund Activity 5-6 point in late afternoon trade. Stop loss got triggered for many traders as Nifty
drifted below 5500 level added to the selling pressure.
Net Inflows
(Rs bn) Purch Sales Net YTD n Reverse arbitrage was happening in several stocks like PNB, LT, BHEL and Punj
Lloyd which was adding to pressure in the cash segment.
4 May 2011
FII's 24.5 (31.5) (7.0) 233.4 n Muthoot Fin listing today. The gray market premium of 18-20 suggests that the
stock may list in the range of 193-195 range. HNI segment got oversubscribed 61
Domestic Funds 4.8 (5.7) (0.9) 98.8
times with a borrowing cost of around Rs 30 per share. We expect stock to see
5 May 2011
selling pressure in the morning session.
Cash Provisional (1.3)
n Since there has been a selloff in the commodities including crude, we may see a
F&O - Index 97.8 (110.9) (13.1) (27.6)
relief rally today. However we may witness selling pressure at higher levels and
F&O - Stock 17.2 (14.4) 2.8 (11.6) markets may trade levels below current levels in the days to come.
Advances/declines BSECash
5 May 2011 A B1 B2 Total
Advance 168 1166 238 1,572
Decline 34 689 171 894

Commodity Prices
6 May 1d 3m 6m
Commodity 2011 (%) (%) (%)
Crude (USD/Bbl) 112.2 1.5 12.6 27.3
Copper(usd/t) 8,820 (3.3) (12.2) 1.9
Aluminum H.G.(usd/t) 2,635 (4.3) 3.7 7.5
Zinc(usd/t) 2,125 (3.0) (15.2) (15.9)

Debt/Forex Mkt Clsg 1d (%) 3m (%) 6m (%)

Re/USD 44.76 (0.6) 1.3 (1.2)
10 yr Gsec Yield 8.29 0.2 1.1 3.9

Emkay Global Financial Services Ltd. 1

 9am with Emkay

Research views
KSK Energy KSK Energy Q4FY11E Result Estimates
Reco CMP TP Expect revenues to grow by 81% yoy to Rs 3.3bn led by a strong volume growth of
321% yoy (due to commissioning and improved PLF of Wardha Warora plant).
Buy 108 110
Higher depreciation and interest cost (due to lower utilizations at Wardha Warora) to
lead to PAT decline of 36% yoy to Rs606mn. Numbers could surprise on the positive
side if (1) realizations for Wardha Warora is higher than Rs4/unit (our assumption)
Amit Golchha
and (2) KSK reports significant project development fees (our assumption - Nil). We
amit.golchha@emkayglobal.com
have built in improved PLF of 70% in Q411 (33% in Q311).
+91 22 66242408
Key things to watch – coal supply for Wardha Warora, PPA with reliance infra and
Nihag Shah, CFA supply status and status of projects.
nihag.shah@emkayglobal.com
+91 22 6624 2486 Expectations

In Rs Million Q4FY11E Q4FY10 Q3FY11 YoY Gr (%) QoQ Gr (%)

Net Sales 3,257 1,804 2,744 80.5 18.7
Operating Profit 2,082 1,255 1,265 65.8 64.6
Operating Margins (%) 63.9 69.6 46.1 -570 bps 1780 bps
Adjusted PAT 606 948 86 -36.1 607.9
EPS (Rs) 1.6 2.5 0.2 -36.1 607.9

Union Bank of India Union Bank of India (UBI) Q4FY11 result estimates
Reco CMP TP The bank is likely to report 18.5% growth in NII led by 18.9% growth in advances.
However lower trading gains and higher provisioning will offset some growth.
Hold 291 335
Provisioning costs to remain high as PCR has fallen to 55.4% Key things to watch 1)
Growth in fee income 2) Slippages and provisioning.
Financials
Y/e Mar FY10 FY11E FY12E Rs mn Q4FY11 Q4FY10 Q3FY11 % yoy change % qoq change
Net income (Rsm) 62,845 82,554 91,773 NII 16,538 13,961 16,158 18.5 2.4
PPP (Rsm) 37,767 48,232 56,860 Pre-provision profit 13,005 11,473 12,605 13.4 3.2
PAT (Rsm) 20,747 21,848 24,617
Net profit 6,860 5,936 5,789 15.6 18.5
FDPER (x) 7.5 7.1 6.3
NIM (%) 3.0 3.0 3.1 -3 -7
P/ABV (x) 1.9 1.5 1.3
RoE (%) 21.7 18.4 17.1

Kashyap Jhaveri
kashyap.jhaveri@emkayglobal.com
+91 22 6612 1249

Pradeep Agrawal
pradeep.agrawal@emkayglobal.com
+91 22 6612 1340

Home

Emkay Research 6 May, 2011 2

 9am with Emkay

Research views
Amit Golchha
Media reports indicate cancellation of 5 coal blocks of NTPC –
amit.golchha@emkayglobal.com Negative; Maintain Accumulate
+91 22 66242408
Media reports suggest that coal ministry has cancelled 5 coal blocks allotted to
NTPC - Chatti Bariatu, Chatti Bariatu (South), Kerandari, Brahmani and Chichiro
Nihag Shah, CFA
Patsimal. NTPC is in the process of inviting bids for development of Chatti Bariatu
nihag.shah@emkayglobal.com
mine. NTPC’s captive production target is about 50mn MT by FY17. If the mines
+91 22 6624 2486
stand cancelled than the peak production target by FY17E comes down to 15mn MT
(Pakri Barwadih). Though it won’t have any negative impact on near term earnings
(FY12-13E) but will definitely raise questions on long term fuel security and PAF
factor.

Current fuel procurement plan of NTPC – including 50mn Captive

In FY11, NTPC received 127mn MT of domestic coal (CIL, SCCL) and imported + e-
auction stood at 10.5mn MT (17mn MT equivalent). By FY17, the company is guiding
for a requirement of 290mn MT and it would be met from - 127mn MT (current
domestic supplies), 50mn MT captive coal production, 70% linkages for the
additional quantities which is about ~90mn MT, balance imports and e-auction.

Apart from 90mn MT additional domestic linkages, now the question is also on 50mn
MT captive production. That said, we believe that with significant domestic supplies,
it can resort to some blending and ensure decent PAF (though it might be lower than
current).

We await further clarity; Maintain Accumulate

At CMP of Rs174/Share, we believe valuations are reasonable at 1.8xFY13E Book

with a core ROE of ~25%. Further the likely earnings upgrade in FY12 numbers (on
full tax grossing up) remains a trigger. Plus we see possibility of NTPC emerging as
winner in a scenario of consolidation. Maintain Accumulate. However, (1) rising
interest rate scenario and (2) coal security, remains overhang.

Home

Emkay Research 6 May, 2011 3

 Canara Bank

Result Update
Disappointing results

May 5, 2011
¾ CBK’s NII at Rs19.7bn and net profit at Rs9bn were below
Reco Previous Reco
expectations driven by drop in NIMs. The NIMs dipped by
Reduce Reduce
10bps qoq to 2.8%
CMP Target Price
Rs559 Rs560 ¾ Highest ever recoveries of Rs3.3bn, dividends of Rs1.7bn and
EPS change FY11E/12E (%) NA some write backs helped the bank to offset Rs5.5bn of
Target Price change (%) NA pension provisions for retired employees
Nifty 5,460
18,211 ¾ The slippages were extreme negative surprise at Rs18.4bn
Sensex
(higher than M9 – Rs16.7bn). With lower provisions the PCR
Price Performance slipped by 3% to 73%
(%) 1M 3M 6M 12M
Absolute (13) (2) (27) 28 ¾ We believe that current valuations at 1.3x FY12E/1.1x FY13E
Rel. to Nifty (6) (2) (15) 20 ABV are not attractive looking at the high slippages and
Source: Bloomberg requirement of higher provisions

Relative Price Chart

850 Rs 60
NII down 7% qoq
%

750 46
CBK’s NII for Q4FY11 has declined by 7% qoq despite 11% qoq growth in advances.
The bank has reported just 10bps qoq drop in NIMs which we find inexplicable with such
650 32
sharp drop in NII. The company could have transferred some part of investments in
550 18
liquid mutual funds during the quarter which explains both, the drop in NII and a jump in
450 4
dividend income.
350 -10
May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11

Canara Bank (LHS) Rel to Nifty (RHS)

Yield analysis
Source: Bloomberg YoY QoQ
% Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11
(bps) (bps)
Stock Details
Sector Banks Yield on advances* 9.2 9.0 9.4 9.5 9.6 43 13
Bloomberg CBK@IN Yield on investments* 6.8 7.5 7.6 7.9 7.5 69 -36
Equity Capital (Rs mn) 4430 Yield on assets* 7.7 7.8 8.1 8.1 8.1 38 -4
Face Value(Rs) 10 Cost of funds* 5.1 5.2 5.2 5.2 5.6 46 39
No of shares o/s (mn) 443 NIM* 2.6 2.6 2.9 2.9 2.5 -8 -43
52 Week H/L 844/345
NIM (Reported) 2.8 3.0 3.2 3.2 3.1 32 -9
Market Cap (Rs bn/USD mn) 247/5,521
Source: Company, Emkay Research
Daily Avg Volume (No of sh) 194342
Daily Avg Turnover (US$mn) 2.6
Advances grow by a strong 7.8%qoq
Shareholding Pattern (%) CBK’s advances have grown by a robust 12%qoq to Rs2.1tn led by strong growth in
Mar -11 Dec-10 Sep-10 agri (9.6% qoq) and retail loans (9% qoq).
Promoters 67.7 73.2 73.2
FII/NRI 15.0 13.6 11.5
Institutions 11.5 7.4 9.7
Private Corp 0.9 0.8 0.8
Public 4.9 5.1 4.9
Source: Capitaline
Valuation table
Y/E March 31 Net Net EPS ABV RoA RoE PE P/ABV
income profit (Rs) (Rs) (%) (%) (x) (x)
Kashyap Jhaveri
kashyap.jhaveri@emkayglobal.com FY2010 86,814 30,214 73.7 261.9 1.2 26.8 8.2 2.1
+91 22 6612 1249 FY2011 105,266 40,260 90.9 353.1 1.3 26.4 6.2 1.6
FY2012E 112,405 42,686 96.4 426.0 1.2 21.5 5.8 1.3
FY2013E 130,364 51,792 116.9 513.0 1.3 21.7 4.8 1.1
Pradeep Agrawal
pradeep.agrawal@emkayglobal.com Source: Company, Emkay Research

+91 22 6612 1340

Emkay Global Financial Services Ltd 1

 Canara Bank Result Update

Key financials – Quarterly

Rs mn Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 YoY (%) QoQ (%) YTD'11 YTD'10 YoY (%)
Net Interest Income 15,976 17,271 20,033 21,192 19,729 23.5 -6.9 78,225 56,805 37.7
Other Income 7,100 7,340 4,996 5,376 9,330 31.4 73.5 27,042 28,580 -5.4
Fee Income 2,130 1,638 1,740 1,690 2,490 16.9 47.3 7,558 7,246 4.3
Net Income 23,076 24,610 25,029 26,568 29,059 25.9 9.4 105,266 85,385 23.3
Total Operating Expenses 8,772 9,785 10,872 11,428 12,109 38.0 6.0 44,193 34,775 27.1
As % Of Net Income 38.0 39.8 43.4 43.0 41.7 42.0 40.7
Employee Expenses 4,981 6,612 7,274 7,838 7,825 57.1 -0.2 29,548 21,937 34.7
As % Of Net Income 21.6 26.9 29.1 29.5 26.9 28.1 25.7
Other Expenses 3,792 3,173 3,597 3,591 4,284 13.0 19.3 14,645 12,838 14.1
As % Of Net Income 16.4 12.9 14.4 13.5 14.7 13.9 15.0
Operating Profit 14,304 14,826 14,157 15,140 16,950 18.5 12.0 61,073 50,610 20.7
As % Of Net Income 62.0 60.2 56.6 57.0 58.3 58.0 59.3
Provisions 7,270 2,200 1,579 1,573 5,460 -24.9 247.1 10,812 12,389 -12.7
Prov for NPA 5,780 1,388 1,990 1,300 5,460 -5.5 320.0 10,137 14,080 -28.0
PBT 7,034 12,626 12,578 13,567 11,491 63.4 -15.3 50,262 38,221 31.5
Total Tax 2,000 2,500 2,500 2,500 2,500 25.0 0.0 10,000 8,000 25.0
Adjusted PAT 5,034 10,126 10,078 11,067 8,991 78.6 -18.8 40,262 30,221 33.2
Extra Ordinary Items 0 0 0 0 0 0 0
Reported PAT 5,034 10,126 10,078 11,067 8,991 78.6 -18.8 40,262 30,221 33.2
Reported EPS 12.2 24.6 24.6 27.0 20.3 65.8 -24.8 96 73 31.3
Source: Company, Emkay Research

Advances mix
YoY QoQ % of
Rs bn Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11
(%) (%) total
SME 311 316 328 353 377 21.3 6.6 17.7
Agriculture 251 231 239 271 297 18.4 9.6 14.0
Retail 239 237 260 289 316 32.1 9.1 14.9
Mortgages 101 101 117 143 152 50.4 6.1 51.3
Others 824 954 934 985 1,136 37.9 15.3 53.4
Total 1,624 1,738 1,761 1,899 2,125 30.8 11.9 100.0
Source: Company, Emkay Research

CASA mix remains stable though largely driven by CA

Despite strong growth in advances the CASA mix remained stable at 28.3% as CASA
deposit grew by 8.7%qoq. However, the CASA growth was driven only by CA deposits as
the SA deposits have remained flat qoq.

Deposit mix
Rs bn Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 YoY (%) QoQ (%)
Current Deposits 187 158 177 179 245 31.0 36.6
Savings Deposits 503 536 543 586 586 16.6 0.1
CASA 690 694 720 765 831 20.5 8.7
Term deposits 1,557 1,695 1,772 1,870 2,109 35.4 12.8
Total Deposits 2,246 2,389 2,492 2,635 2,940 30.9 11.6
CASA (%) 30.7 29.0 28.9 29.0 28.3 -243 -76
Source: Company, Emkay Research

Emkay Research 5 May 2011 2

 Canara Bank Result Update

Dividends, recoveries offset pension expenses

Highest ever recoveries of Rs3.3bn and dividend income of Rs1.7bn have helped CBK to
offset Rs5.5bn of pension provisions on retired employees during the quarter. The
dividends could have come from liquid mutual funds.

We believe that CBK has also written back some staff provisions as the staff
expenses have remained flat sequentially despite such hefty provisions.
Fee income
Rs mn Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 YoY (%) QoQ (%) YTD'11 YTD'10 YoY (%)
Fee/Commission income 2,130 1,638 1,740 1,690 2,490 16.9 47.3 7,558 7,246 4.3
Trading gains/(losses) 1,140 2,240 16 290 -180 -115.8 -162.1 2,365 8,730 -72.9
Forex gains/(losses) 440 744 710 1,200 1,160 163.6 -3.3 3,814 2,154 77.0
Dividend income 320 354 400 360 1,720 437.5 377.8 2,834 1,044 171.4
Recovery 1,490 880 650 720 3,270 119.5 354.2 5,520 4,060 36.0
Other 1,580 1,485 1,480 1,116 870 -44.9 -22.0 4,951 5,346 -7.4
Total 7,100 7,340 4,996 5,376 9,330 31.4 73.5 27,042 28,580 -5.4
Source: Company, Emkay Research

Slippages up sharply; provision cover slips

As CBK moved on to the system based recognition of NPAs, the slippages have risen
sharply to Rs18.4bn for Q4FY11, higher than Rs16.6bn cumulative for M9FY11. The sharp
rise in slippages was driven by shift to the system based recognition of NPAs for accounts
with more than Rs1mn of outstanding. Driven by higher slippages and less than required
provisions, the PCR has also slipped by 300bps to 73%.
Asset quality
Rs mn Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 YoY (%) QoQ (%)
Gross NPAs 25,903 25,491 26,361 27,533 30,892 19.3 12.2
Net NPAs 17,997 17,294 18,597 19,910 23,473 30.4 17.9
Gross NPAs (%) 1.5 1.5 1.5 1.4 1.5
Net NPAs (%) 1.1 1.0 1.1 1.1 1.1
Net NPAs/Net worth (%) 11.9 10.9 11.1 11.4 11.7
Provision cover (%) 30.5 32.2 29.5 27.7 24.0 -651 -367
Source: Company, Emkay Research

Capital adequacy comfortable

During Q4FY11, CBK has raised Rs20bn via a QIP helping the bank to comfortably place
its tier I CAR at 10.9%.

Valuations and view

At the CMP, the stock is quoting at 1.3x FY12E and 1.1x FY13E ABV (1.2 x adjusted fully for
pension liabilities). We find valuations unattractive looking at higher slippages, low PCR and
low CASA. We maintain our REDUCE rating with TP of Rs560

Emkay Research 5 May 2011 3

 Canara Bank Result Update

Financials

Income Statement (Rs. Mn) Balance Sheet (Rs. Mn)

(Year Ending Mar 31) FY10 FY11 FY12E FY13E (Year Ending Mar 31) FY10 FY11 FY12E FY13E
Net interest income 56,805 78,224 86,691 101,324 Liabilities
Other income 30,008 27,042 25,714 29,040 Equity 4,100 4,430 4,430 4,430
Net income 86,814 105,266 112,405 130,364 Reserves 142,618 195,968 232,434 277,489
Operating expenses 34,776 44,193 45,760 51,799 Net worth 146,718 200,398 236,864 281,919
Pre provision profit 52,037 61,072 66,645 78,565 Deposits 2,346,514 2,939,726 3,348,813 4,018,182
PPP excl treasury 43,313 58,707 64,280 76,200 Borrowings 157,285 220,663 239,640 260,129
Provisions 13,823 10,812 12,657 13,060 Total liabilities 2,650,517 3,360,787 3,825,317 4,560,230
Profit before tax 38,214 50,260 53,988 65,505 Assets
Tax 8,000 10,000 11,302 13,713 Cash and bank 196,532 307,081 276,277 331,500
Tax rate 20.9% 20.9% 20.9% 20.9% Investments 676,074 816,304 885,196 1,052,539
Profit after tax 30,214 40,260 42,686 51,792 Customer assets 1,714,042 2,145,366 2,570,301 3,080,222
Others 63,869 92,035 93,543 95,969
Total assets 2,650,517 3,360,787 3,825,317 4,560,230

Key Ratios (%) Valuations Table

(Year En ding Mar 31) FY10 FY11 FY12E FY13E (Year Ending Mar 31) FY10 FY11 FY12E FY13E
NIM 2.3 2.6 2.4 2.4 Net profit (Rs mn) 30,214 40,260 42,686 51,792
Non-II/avg assets 1.2 0.9 0.7 0.7 Shares in issue (mn) 410 443 443 443
Fee income/avg assets 0.3 0.2 0.2 0.2 EPS (Rs) 73.7 90.9 96.4 116.9
Opex/avg assets 1.3 1.3 1.2 1.1 PER (x) 7.6 6.2 5.8 4.8
Provisions/avg assets 0.9 0.5 0.4 0.4 FDEPS(Rs) 68.2 90.9 96.4 116.9
PBT/avg assets 1.4 1.5 1.4 1.4 FDPER (x) 8.2 6.2 5.8 4.8
Tax/avg assets 0.3 0.3 0.3 0.3 Book value (Rs) 277.2 379.5 461.8 563.5
RoA 1.2 1.3 1.2 1.3 P/BV (x) 2.0 1.5 1.2 1.0
RoAE 26.8 26.4 21.5 21.7 Adj book value (Rs) 261.9 353.1 426.0 513.0
GNPA (%) 1.7 1.6 1.5 1.5 P/ABV (x) 2.1 1.6 1.3 1.1
NNPA (%) 1.1 1.1 1.1 1.1 P/PPP (x) 4.4 4.1 3.7 3.2
Dividend yield (%) 1.8 2.0 2.1 2.3

Emkay Research 5 May 2011 4

 Essel Propack

Result Update
Subdued Quarter, Retain BUY

May 5, 2011
¾ Essel Propack (EPL) Q4 FY11 was below expectations on all
Reco Previous Reco
counts - Revenues up 16.1% yoy at Rs 3.5bn, EBIDTA up
Buy Buy
15.9% at Rs 562 mn and APAT up 3.8% at Rs 97 mn
CMP Target Price
Rs46 Rs72 ¾ Revenues in FY11 grew 17% - led by 13% volume growth -
EPS change FY12E (%) -8.3 Performance in EAP and AMESA was below expectation
Target Price change (%) NA
¾ Management guides (1) 14% revenue growth led by recovery
Nifty 5,460
in Europe and Americas (2) 200 bps expansion in Ebidta
Sensex 18,211
margin
Price Performance
1M 3M 6M 12M ¾ Revise earnings by -8.3% for FY12E to Rs5.5/Share; Introduce
(%)
Absolute (7) (2) (16) (3) FY13E earnings of Rs7.5/Shar, Retain BUY with target price
Rel. to Nifty 1 (2) (4) (9) of Rs72/Share
Source: Bloomberg
EPL’s Q4FY11 performance muted; misses revenue & PAT estimates
Relative Price Chart
70 Rs % 10
Q4FY11 performance was muted, as EPL missed our revenue as well as PAT
estimates. EPL reported 16.1% yoy growth in revenue to Rs3.5 bn and APAT grew
62 2
3.2% yoy to Rs97.0 mn. Ebidta for the quarter grew 15.9% to Rs 562.8mn, but was
54 -6
below our expectations of Rs 644mn. The Ebidta margins were flat at 16.1% and
46 -14
remained below our estimates owing to margin contraction in EAP and AMESA.
38 -22

30 -30 FY11 revenues grew 17%, led by strong volume growth; non-oral care in
May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11

Essel Propack (LHS) Rel to Nifty (RHS)

India and China report robust growth
Source: Bloomberg EPL reported revenues of Rs 14.2bn in FY11, a growth of 17% mainly driven by 13%
volume growth. Oral Care reported steady growth in India and China, whereas Non-Oral
Stock Details saw strong traction. In India, the oral to non oral mix stood at 70:30, whereas in Europe
Sector Packaging
it remained at 50:50 and US, it stood at 90:10. Plastic tubes saw robust growth of 28%
Bloomberg ESEL@IN yoy, whereas PIPL grew 21% yoy for FY11. Laminate tube accounted for 75% of
Equity Capital (Rs mn) 313 revenues followed by PIPL, which contributed to 15% and plastic tubes accounted for
Face Value(Rs) 2 10% of revenues.
No of shares o/s (mn) 157
52 Week H/L 65/38 Management guides 14% revenue growth – Americas & Europe to post
Market Cap (Rs bn/US D mn) 7/156 recovery; rise in non-oral care share to also aid revenue growth
Daily Avg Volume (No of sh) 129673 Management guided 14% revenue growth for FY12E led by 1) recovery in Poland, and
Daily Avg Turnover (US$mn) 0.1 8-9% growth Germany & Russia – together constitute ‘Europe’, 2) 4-5% growth in USA,
Columbia and Mexico to grow at 8-10%- together constitute ‘Americas’ and 3) 12%
Shareholding Pattern (%) growth in India & China. On the product side, the management would continue to build
Mar -11 Dec-10 Sep-10 and increase business from non-oral care and pharma segment.
Promoters 59.1 59.1 58.9
FII/NRI 4.5 4.3 4.7 Eyeing Ebidta margin expansion of 200 bps - Quicker price pass through
Institutions 9.7 8.4 8.3 and Poland breakeven to be key drivers
Private Corp 10.0 10.7 9.8 Management is targeting 200 bps expansion in EBIDTA margin which would be driven
Public 16.6 17.5 18.3 by 1) 75bps rise due to price increase in Americas, 2) 75-100bps rise due to breakeven
Source: Capitaline in Poland and 3) 75 bps owing to quicker pass through of cost inflation and leverage in
operations. However, we have factored 200 bps expansion in FY11-13E period.

Financial Snapshot Rs Mn
Pritesh Chheda, CFA
YE- Net EBITDA EPS EPS RoE EV/
pritesh.chheda@emkayglobal.com
Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV
+91 22 6612 1273
FY10 16,822 2,965 17.6 255 1.6 -128.3 4.6 1.6 4.9 1.0
Prashant Kutty FY11P 14,155 2,409 17.0 473 3.0 85.4 6.3 3.0 5.6 0.9
prashant.kutty@emkayglobal.com FY12E 15,916 2,863 18.0 866 5.5 83.0 10.9 5.5 4.5 0.9
+91 22 6612 1341
FY13E 17,515 3,289 18.8 1,172 7.5 35.4 13.4 7.5 3.7 0.8

Emkay Global Financial Services Ltd 1

 Essel Propack Result Update

Debt de-leveraging program on track; working capital management has been

prudent
EPL’s strategy of continuous reduction in debt has been going as planned. In FY11, EPL
repaid debt of 400mn, FY11 debt at Rs 8bn. Cashflow in business is very strong (thanks to
robust growth and prudent working capital management), thus EPL is eyeing regular
repayment of debt and de-leveraging balance sheet. Management is planning to rais e
offshore debt, which would reduce interest cost and thereby boos t profitability.

Earnings revised by -8.3% to Rs 5.5per share for FY12E; Introduced FY13E

estimates with earnings at Rs 7.5 per share
We have revised our estimates for FY12E, to factor (1) negative surprise in FY11 and (2)
management outlook. Subsequently, we have upgraded FY12E revenues by 0.7% and
revised EBIDTA margins from 19.5% to 18.0%. We have revised earnings by -8.3% for
FY12E to Rs 5.5 per share. We introduce FY13E estimates of Rs 7.5 per share. We retain
our BUY rating on EPL with price target of Rs 72/Share, which discounts FY13E EBIDTA at
4.9X.

Quarterly Results
Q5FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 YoY Gr (%) QoQ Gr (%) YTD’11 YTD’10* YoY (%)
Net Sales 3013 3323 3687 3649 3497 16.1 -4.2 14155 16822 -15.9
Expenditure 2527 2760 3004 3048 2934 16.1 -3.7 11745 14032 -16.3
Material Cost 1408 1574 1746 1764 1688 19.9 -4.3 6772 7377 -8.2
% of Sales 46.7 47.4 47.4 48.3 48.3 150 bps -10 bps 47.8 43.9 400 bps
Employee Expenses 492 542 544 549 526 7.0 -4.1 2161 3157 -31.6
% of Sales 16.3 16.3 14.7 15.0 15.0 -130 bps 0 bps 15.3 18.8 -350 bps
Other Expenses 628 644 714 735 720 14.7 -2.1 2813 3498 -19.6
% of Sales 20.8 19.4 19.4 20.2 20.6 -30 bps 40 bps 19.9 20.8 -90 bps
EBIDTA 486 563 683 601 563 15.9 -6.4 2410 2791 -13.6
Depreciation 256 267 269 267 260 1.8 -2.4 1062 1329 -20.1
EBIT 230 296 415 334 303 31.6 -9.5 1348 1462 -7.8
Other Income 51 -8 -10 67 8 -84.0 -87.7 58 112 -48.4
Interest 132 140 155 144 145 10.2 0.7 585 841 -30.5
PBT 150 148 250 257 166 10.8 -35.6 821 732 12.1
Tax -49 -59 -116 -95 -62 25.4 -35.0 -332 -386 -13.9
Adjusted PAT 100 89 134 162 104 3.7 -35.9 489 347 41.0
(Profit/Loss) from JV's/Ass/MI 7 14 8 6 7 2.9 20.0 -15 -49 -69.6
APAT After MI 93 74 126 156 97 3.8 -38.0 474 298 59.2
Extra-Ordinary Items -7 0 0 0 -13 94.0 - -13 302 -104.3
Reported PAT 87 74 126 156 84 -3.8 -46.3 461 599 -23.1
Reported EPS 0.6 0.5 0.8 1.0 0.5 -10.9 -46.3 2.9 3.8 -23.1

Margins (%) (bps) (bps) (bps)

EBIDTA 16.1 16.9 18.5 16.5 16.1 0 -40 17.0 16.6 40
EBIT 9.3 8.7 11.0 11.0 8.9 -40 -210 9.9 9.4 60
EBT 5.0 4.5 6.8 7.0 4.7 -20 -230 5.8 4.4 140
PAT 3.1 2.2 3.4 4.3 2.8 -30 -150 3.3 1.8 160
Effective Tax rate -33.0 -39.9 -46.5 -37.0 -37.3 -430 -30 -40.5 -52.7 1220
* - Numbers are for 15M period

Emkay Research 5 May 2011 2

 Essel Propack Result Update

Earnings Change and Introduction of FY13E estimates

FY12E FY13E
Y/E, Mar (Rs. mn) Earlier Revised % Change Introducing % YoY
Revenues 15807 15916 0.7 17515 10.0
EBITDA 3085 2863 -7.2 3289 14.9
EBITDA Margin (%) 19.5 18.0 150bps 18.8 80bps
APAT 941 866 -8.0 1172 35.3
EPS 6.0 5.5 -8.3 7.5 36.4

Emkay Research 5 May 2011 3

 Essel Propack Result Update

Financials
Income Statement Balance Sheet
Y/E, Dec (Rs. Mn) FY10 FY11P FY12E FY13E Y/E, Dec (Rs. Mn) FY10 FY11P FY12E FY13E
Net Sales 16,822 14,155 15,916 17,515 Equity Share Capital 313 313 313 313
Growth (%) 30.3 -15.9 12.4 10.0 Reserves 7,215 7,582 8,260 9,203
Expenses 13,857 11,746 13,053 14,226 Networth 7,528 7,895 8,573 9,516
Growth (%) 24.7 -15.2 11.1 9.0 Secured Loans 5,151 4,851 4,351 3,851
Raw Materials 7,377 6,772 7,816 8,731 Unsecured Loans 3,247 3,247 3,247 3,247
% Of Sales 43.9 47.8 49.1 49.8 Loan Funds 8,398 8,098 7,598 7,098
Employee Cost 3,158 2,160 2,268 2,382 Net Deferred Tax 37 37 37 37
% Of Sales 18.8 15.3 14.3 13.6 Minority interest 83 98 126 164
Manufacturing Exps 1,764 1,513 1,578 1,633 Capital Employed 16,046 16,127 16,333 16,814
% Of Sales 10.5 10.7 9.9 9.3
Admin Expenses 1,149 957 1,005 1,055 Gross Block 18,473 19,323 20,173 21,023
% Of Sales 6.8 6.8 6.3 6.0 Less: Depreciation 8,742 9,804 10,954 12,145
Selling & Distribn Exp 409 344 387 426 Net Block 9,730 9,518 9,219 8,878
% Of Sales 2.4 2.4 2.4 2.4 Capital Work In Progress 580 580 580 580
Ebidta 2,965 2,409 2,863 3,289 Goodwill 0 0 0 0
Growth (%) 64.6 -18.7 18.8 14.9 Investments 477 477 477 477
Ebidta% 17.6 17.0 18.0 18.8 Current Assets 7,153 7,243 7,946 8,945
Other Income 62 58 58 58 Inventories 1,643 1,566 1,761 1,938
Interest 947 585 539 487 Debtors 2,021 1,700 1,912 2,104
Depreciation 1,329 1,062 1,150 1,191 Cash & Bank 944 1,782 1,805 2,187
PBT 717 820 1,233 1,669 Loans & Advances 2,545 2,195 2,468 2,716
Tax 386 332 339 459 Current Liabilities & Prov 1,974 1,771 1,968 2,145
PAT (Before EO Item) 331 488 894 1,210 Net Current Assets 5,179 5,473 5,978 6,800
Growth (%) -139.3 47.3 83.1 35.4 Miscellaneous Expenditure 80 80 80 80
Net Margin% 2.0 3.4 5.6 6.9 Capital Deployed 16,046 16,127 16,333 16,814
E/O Item 344 -13 0 0
Minority Interest 76 15 28 38
PAT (Bef. EO-after min int) 255 473 866 1,172
Reported PAT 599 460 866 1,172

Cash Flow Key Ratios

Y/E, Dec (Rs. Mn) FY10 FY11P FY12E FY13E Y/E, Dec FY10 FY11P FY12E FY13E
Pre-Tax Profit 732 820 1,233 1,669 Profitability %
Depreciation 1,329 1,062 1,150 1,191 Ebidta Mgn 17.6 17.0 18.0 18.8
Non Cash -6 -13 0 0 PAT Mgn 2.0 3.4 5.6 6.9
Chg in Working Cap 64 545 -482 -440 ROCE 9.9 8.7 10.9 13.0
Tax Paid -534 -332 -339 -459 ROE 4.6 6.3 10.9 13.4
Operating Cash Flow 1,585 2,082 1,561 1,961 Per Share Data
Capex -847 -850 -850 -850 EPS 1.6 3.0 5.5 7.5
Free Cash Flow 738 1,232 711 1,111 BVPS 46.8 49.2 53.5 59.5
Investments 1,292 0 0 0 DPS 0.4 0.6 1.2 1.5
Equity Capital 0 0 0 0 Valuations (X)
Loans -1,796 -300 -500 -500 PER 28.2 15.2 8.3 6.2
Dividend -108 -94 -188 -229 P/BV 1.0 0.9 0.9 0.8
Others 0 0 0 0 Ev/Sales 0.9 1.0 0.8 0.7
Net Change in Cash 126 838 23 382 Ev/Ebidta 4.9 5.6 4.5 3.7
Opening Cash Position 817 944 1,782 1,805 Dividend Yield (%) 0.8 1.3 2.6 3.2
Closing Cash Position 944 1,782 1,805 2,187 Turnover (X Days)
Debtor TO Days 43.8 43.8 43.8 43.8
Inventory TO Days 40.4 40.4 40.4 40.4
Gearing Ratio
Net Debt/Equity (X) 1.0 0.8 0.7 0.5
Total D/E (X) 1.1 1.0 0.9 0.7

Emkay Research 5 May 2011 4

 Cipla Ltd

Result Update
Earnings Disappointed; Maintain Reduce

May 5, 2011
n Cipla’s Q4FY11 result were disappointing with a) Revenues
Reco Previous Reco up 21% to Rs.16.7bn (est. 15.4bn) b) EBITDA up 17% at
Reduce Reduce Rs3.0bn (est. 3.1bn) & c) APAT down 1% at Rs2.1bn (est. 2.3bn)
CMP Target Price
n 21% growth in revenues was mainly due to 28% growth in
Rs303 Rs255
Exports which was led by low margin ARV tender sales
EPS change FY11E/12E (%) NA / -11
Target Price change (%) -11 n OPM contracted to 15.4%, led by 30% increase in overheads,

Nifty 5,460 largely due to the commissioning of the Indore SEZ plant
Sensex 18,211 n With non sustainable and low margin growth and

Price Performance deteriorating margins we cut our EPS estimate for FY12 by
(%) 1M 3M 6M 12M 9% with reduce rating and target price of Rs 255
Absolute (5) (7) (13) (10)
Rel. to Nifty 2 (7) (0) (15) Non sustainable growth in revenues without translating to profits
Source: Bloomberg ¾ 21% growth in Revenue mainly driven by

Relative Price Chart • 21% growth in Export formulation business (contributes 46%) mainly due to
400 Rs % 10 low margins non sustainable ARVs, otherwise it was flat
370 2
• 15% growth in Domestic business (contributes 40%) in line with industry
340 -6
growth
•
310 -14
59% growth in low margins API business (contributes 14%)
280 -22

¾ Profitability skewed due to

•
250 -30
May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11
low margins ARV tender business, which was 15% of Exports
Cipla (LHS) Rel to Nifty (RHS)

Source: Bloomberg • Increase in over heads due to commissioning of Indore SEZ

Stock Details Low visibility in Growth with guidance of 10 -12% and 18-20% EBITDA
Sector Pharmaceuticals margins for FY12
Bloomberg CIPLA@IN
¾ Company has launched Seroflo inhalers in Russia and South Africa and set to
Equity Capital (Rs mn) 1606
launch in some other countries in EU and ROW.
Face Value(Rs) 2
¾ Indore SEZ is expected to generate Rs.6bn revenue in FY 12 and as a result
No of shares o/s (mn) 803
margins will improve going forward
52 Week H/L 381/286
Market Cap (Rs bn/USD mn) 244/5,454 ¾ In domestic business company will increase the field force from 6000 and as a
Daily Avg Volume (No of sh) 405418 result the margins will remain under pressure
Daily Avg Turnover (US$mn) 2.8 ¾ DEPB income of Rs.600 million per year can be impacted if govt. export promotion
policy discontinued
Shareholding Pattern (%)
Mar -11 Dec-10 Sep-10 Valuation
Promoters 36.8 36.8 36.8 We expect Cipla to report 13% revenue growth in FY12 and 16% in FY13. We expect
FII/NRI 19.1 19.3 19.3 company’s base EBITDA margins to improve from 18.7% in FY11 to 19.4% in FY12
Institutions 18.6 18.7 18.3 and 20.5% in FY13 as utilization of recently created manufacturing capacities increases.
Private Corp 4.4 4.1 3.9 With consistent decline in performance over the last 4Quarters and low visibility of
Public growth going forward, we value the company at 18XFY12 EPS of Rs.14.2 to arrive at a
21.1 21.1 21.8
target price of Rs.255 and maintain the reduce rating. At CMP of Rs. 303, the stock is
Source: Capitaline
trading at 21X of FY12E and 17X of FY13E.
Deepak Malik
Financials Rs mn
deepak.malik@emkayglobal.com
+91 22 6612 1257 YE- Net EBITDA EPS EPS RoE EV/
Ashish Thavkar Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV
ashish.thavkar@emkayglobal.com FY10 56,057 13,742 24.5 10,686 13.3 9.9 21.1 24.7 17.7 4.1
+91 22 6612 1254 FY11E 63,180 13,375 21.2 9,671 12.0 (9.5) 15.4 26.9 18.3 3.6
Rashmi Sancheti
FY12E 70,885 15,501 21.9 11,437 14.2 18.3 16.0 21.3 15.7 3.2
rashmi.sancheti@emkayglobal.com
FY13E 82,479 18,786 22.8 14,198 17.7 24.1 17.5 17.1 13.0 2.8
+91 22 6612 1238

Emkay Global Financial Services Ltd 1

 Cipla Ltd Result Update

Key Financials – Quarterly

Rs mn Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 YoY (%) QoQ (%) FY11 FY10 YoY (%)
Revenue 13,747 15,361 16,154 15,537 16,692 21.4 7.4 63,180 56,249 12.3
Expenditure 11,167 11,837 12,488 12,355 13,671 22.4 10.7 49,805 42,718 16.6
as % of sales 81.2 77.1 77.3 79.5 81.9 78.8 75.9
Consumption of RM 6,108 6,862 7,487 6,958 7,998 30.9 14.9 29,146 24,706 18.0
as % of sales 44.4 44.7 46.3 44.8 47.9 46.1 43.9
Employee Cost 999 1,055 1,376 1,351 1,308 30.9 (3.2) 5,410 3,711 45.8
as % of sales 7.3 6.9 8.5 8.7 7.8 8.6 6.6
Other expenditure 4,060 3,920 3,625 4,046 4,365 7.5 7.9 15,250 14,301 6.6
as % of sales 29.5 25.5 22.4 26.0 26.2 24.1 25.4
EBITDA 2,580 3,524 3,666 3,182 3,021 17.1 (5.1) 13,375 13,532 (1.2)
Depreciation 495 500 639 653 697 40.8 6.7 2,536 1,878 35.0
EBIT 2,085 3,024 3,027 2,529 2,325 11.5 (8.1) 10,838 11,653 (7.0)
Other Income 451 160 166 257 204 (54.9) (20.8) 794 883 (10.1)
Interest 5 0 3 29 18 293.5 (38.2) 51 237 (78.3)
PBT 2,531 3,184 3,190 2,757 2,510 (0.8) (9.0) 11,581 12,300 (5.8)
Total Tax 726 550 560 430 370 (49.0) (14.0) 1,910 2,435 (21.6)
Adjusted PAT 2,119 2,794 2,486 2,327 2,140 1.0 (8.0) 9,671 9,865 (2.0)
(Profit)/loss from JV's/Ass/MI 0 0 0 0 - - -
APAT after MI 2,119 2,794 2,486 2,327 2,140 1.0 (8.0) 9,671 9,865 (2.0)
Extra ordinary items 637 0 0 950
Reported PAT 2,755 2,634 2,630 2,327 2,140 (22.3) (8.0) 9,671 10,815 (10.6)
AEPS 2.6 3.5 3.1 2.9 2.7 1.0 (8.0) 12.1 13.7 (12.0)

Margins (%) (bps) (bps) (bps)

EBIDTA 18.8 22.9 22.7 20.5 18.1 (67) (238) 21.2 24.1 (289)
EBIT 15.2 19.7 18.7 16.3 13.9 (124) (235) 17.2 20.7 (356)
EBT 18.4 20.7 19.7 17.7 15.0 (338) (271) 18.3 21.9 (354)
PAT 15.4 18.2 15.4 15.0 12.8 (259) (216) 15.3 17.5 (223)
Effective Tax rate 28.7 17.3 17.6 15.6 14.7 (1,394) (86) 16.5 19.8 (330)

Revenue breakup
Rs mn Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 YoY Gr. QoQ Gr. FY11 FY10 YoY (%)
Domestic 5688 7171 7564 7340 6522 14.7% -11.1% 28178 25111 12.2%
Total Exports 7602 7645 8322 7818 9750 28.2% 24.7% 33548 29006 15.7%
Export Formulation 6139 6128 6639 6432 7428 21.0% 15.5% 26756 23205 15.3%
API 1463 1516 1683 1386 2322 58.7% 67.5% 6792 5801 17.1%
Total Sales 13290 14815 15886 15158 16272 22.4% 7.4% 61726 54117 14.1%
Technology Fees 136 257 120 151 160 18.1% 5.7% 637 1538 -58.6%
Other operating income 437 289 235 372 380 -12.9% 2.2% 1304 1116 16.9%
Total Income 13862 15361 16241 15681 16812 21.3% 7.2% 63667 56771 12.1%

Emkay Research 5 May 2011 2

 Cipla Ltd Result Update

Non sustainable Revenue growth of 21% in Q4 FY11

¾ Revenue growth of 15% in Domestic market in line with the industry growth.
• Company has total field force of 6000 people with 500 people added in last 6
months
• Chronic segment contributes ~40% of its total domestic sales and main growth is
coming from Respiratory, Anti-infectives and Gynecology. Going forward company
is focusing on Oncology and Nuro to launch new products

¾ Revenue grew by 28% in Exports formulation mainly due to

• Low margin and non sustainable ARV tender business which contributed 15% of the
Exports revenue
• Launched Seroflo inhalers in Russia and South Africa one month back. Good
uptake expected going forward
• Revenue grew by 67% in API business, which company believes this performance
will continue in future.

Revenue breakup Exports breakup

12000
9750
10000 21%
8322 7818
7525 7602 7645
8000 6876 6987 40%
Rs mn

6000 7171 7564 7340

6519 6314 6592 6522
4000 5688

2000 10%

0
13%
Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

16%

Africa EU North America Latin America Others

Domestic Exports

Declining EBITDA margins

¾ EBITDA increased by 17% to Rs. 3021 million and margins were at 18.1% but if we
exclude the other operating and tech. Income then margins declined by 140bps YoY to
15.4% mainly due to

• low margins ARV tender business, which was 15% of Exports

• Increase in over heads due to commissioning of Indore SEZ

¾ Company expects the margins to improve to 18-20% in FY12 as the capacity utilization
improves

Quarterly trend

18,000 30.0%
16,000 24.0%
22.0% 23.0% 21.5% 25.0%
14,000
19.8%
12,000 16.8% 20.0%
17.7%
19.2% 21.5% 15.4%
Rs mn

10,000 18.7% 18.2% 15.0%

8,000 15.4% 15.4% 15.0%
6,000 12.8%10.0%

4,000
13,253 13,712 13,442 13,175 14,815 15,799 15,014 16,152 5.0%
2,000
0 0.0%
Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11

Sales EBITDA % PAT %

Emkay Research 5 May 2011 3

 Cipla Ltd Result Update

Financial snapshot
FY10 FY11 Gr% FY12 Gr% FY13 Gr%
Domestic 25111 28178 12% 32122 14% 36620 14%
Export 29006 33548 16% 37627 12% 44290 18%
Formulation 23205 26756 15% 30020 12% 35770 19%
API 5801 6792 17% 7607 12% 8520 12%
Total gross sales 54117 61726 14% 69750 13% 80910 16%
EBITDA 11280 11433 1% 13331 17% 16374 23%
EBITDA margin 21.0% 18.7% 19.4% 20.5%
Other Operating Income 2462 1941 -21% 2170 12% 2413 11%
EBITDA incl Operating Income 13742 13375 -3% 15501 16% 18786 21%
EBITDA margin incl Operating Income 24.5% 21.2% 21.9% 22.8%
PAT 10540 9671 -8% 11437 18% 14198 24%
EPS 13.3 12.0 -9% 14.2 18% 17.7 24%

APAT increased by 1% to Rs. 2,140 million and RPAT declined by 22% to

Rs. 2,140 million YoY in Q4 FY11 mainly due to
¾ There was a one time income of Rs. 950 million from the sale of iPill in Q4 FY10

¾ Depreciation increased by 41% due to commissioning of Indore SEZ

¾ Decline in other Income by 55%

Introduce FY13 EPS of Rs 17.7 with reduce rating

We expect Cipla to report 13% revenue growth in FY12 and 16% in FY13. We expect
company’s base EBITDA margins to improve from 18.7% in FY11 to 19.4% in FY12 and
20.5% in FY13 as utilization of recently created manufacturing capacities increases. With
consistent decline in performance over the last 4Quarters and low visibility of growth going
forward, we value the company at 18XFY12 EPS of Rs.14.2 to arrive at a target price of
Rs.255 and maintain the reduce rating. At CMP of Rs. 303, the stock is trading at 21X of
FY12E and 17X of FY13E

Key risk to our call

¾ Higher traction of products tied-up with Dr. Reddy and Teva

¾ Higher traction from inhaler launch in CIS and South African markets and earlier than
expected launch of combination inhalers in ROW

¾ Faster ramp-up in the domestic business

¾ New s upply agreements with MNC’s and faster approval for pipeline products

Emkay Research 5 May 2011 4

 Cipla Ltd Result Update

Financials

Income Statement Balance Sheet

Y/E, Mar (Rs. mn) FY10 FY11E FY12E FY13E Y/E, Mar (Rs. mn) FY10 FY11E FY12E FY13E
Net Sales 56,057 63,180 70,885 82,479 Equity share capital 1,606 1,606 1,606 1,606
Growth (%) 7.1 12.7 12.2 16.4 Reserves & surplus 57,500 65,457 74,219 85,095
Expenditure 42,315 49,805 55,384 63,693 Net worth 59,105 67,063 75,825 86,700
Raw Materials 24,530 29,146 32,227 36,670 Minority Interest 0 0 0 0
SGA 10,975 15,250 13,125 15,453 Secured Loans 4 4 4 4
Employee Cost 3,191 5,410 5,360 6,005 Unsecured Loans 47 3,547 3,547 3,547
Other Exp 3,620 0 4,673 5,565 Loan Funds 51 3,551 3,551 3,551
EBITDA 13,742 13,375 15,501 18,786 Net deferred tax liability 1,792 1,792 1,792 1,792
Growth (%) 12.5 -2.7 15.9 21.2 Total Liabilities 60,948 72,405 81,167 92,043
EBITDA margin (%) 24.5 21.2 21.9 22.8
Depreciation 1,671 2,536 2,725 2,926 Gross Block 28,973 39,790 43,787 50,783
EBIT 12,071 10,838 12,776 15,860 Less: Depreciation 8,861 11,428 14,234 17,510
EBIT margin (%) 21.5 17.2 18.0 19.2 Net block 20,112 28,362 29,554 33,273
Other Income 1,075 794 1,217 1,459 Capital work in progress 6,842 3,000 4,000 2,000
Interest expenses 230 51 213 213 Investment 2,464 2,464 3,906 6,590
PBT 13,263 11,581 13,780 17,106 Current Assets 43,673 52,807 60,059 68,938
Tax 2,435 1,910 2,343 2,908 Inventories 15,126 17,637 19,171 22,338
Effective tax rate (%) 18.4 16.5 17.0 17.0 Sundry debtors 15,666 18,586 22,009 24,774
Adjusted PAT 10,686 9,671 11,437 14,198 Cash & bank balance 621 2,500 3,074 3,411
(Profit)/loss from JV's/Ass/MI 0 0 0 0 Loans & advances 12,260 14,085 15,804 18,415
Adjusted PAT after MI 10,686 9,671 11,437 14,198 Other current assets 0 0 0 0
Growth (%) 9.9 -9.5 18.3 24.1 Current lia & Prov 12,143 14,229 16,352 18,760
Net Margin (%) 19.1 15.3 16.1 17.2 Current liabilities 9,980 10,324 11,038 12,199
E/O items 346 0 0 0 Provisions 2,164 3,905 5,314 6,561
Reported PAT 10,828 9,671 11,437 14,198 Net current assets 31,530 38,579 43,707 50,179
Growth (%) 40.4 -10.7 18.3 24.1 Misc. exp & Def. Assets 0 0 0 0
Total Assets 60,948 72,405 81,167 92,042

Cash Flow Key Ratios

Y/E, Mar (Rs. mn) FY10 FY11E FY12E FY13E Y/E, Mar FY10 FY11E FY12E FY13E
PBT (Ex-Other income) 12,188 10,787 12,563 15,647 Profitability (%)
Depreciation 1,671 2,536 2,725 2,926 EBITDA Margin 24.5 21.2 21.9 22.8
Interest Provided 230 51 213 213 Net Margin 19.1 15.3 16.1 17.2
Other Non-Cash items 0 0 0 0 ROCE 22.8 17.5 18.2 20.0
Chg in working cap -1,310 -5,170 -4,554 -6,135 ROE 21.1 15.4 16.0 17.5
Tax paid -2,285 -1,910 -2,343 -2,908 RoIC 24.1 18.8 19.0 21.1
Operating Cashflow 10,493 6,295 8,604 9,743 Per Share Data (Rs)
Capital expenditure -5,037 -7,000 -5,000 -5,000 EPS 13.3 12.0 14.2 17.7
Free Cash Flow 5,456 -705 3,604 4,743 CEPS 15.0 15.2 17.6 21.3
Other income 1,075 794 1,217 1,459 BVPS 73.5 83.4 94.3 107.9
Investments -1,664 0 -1,442 -2,684 DPS 2.3 2.1 3.3 4.1
Investing Cashflow -5,625 -6,206 -5,225 -6,225 Valuations (x)
Equity Capital Raised 6,656 0 0 1 PER 24.7 26.9 21.3 17.1
Loans Taken / (Repaid) -9,352 3,500 0 0 P/CEPS 20.3 19.9 17.2 14.2
Interest Paid -230 -51 -213 -213 P/BV 4.1 3.6 3.2 2.8
Dividend paid (incl tax) -1,855 -1,697 -2,676 -3,322 EV / Sales 4.3 3.9 3.4 3.0
Income from investments 0 0 0 0 EV / EBITDA 17.7 18.3 15.7 13.0
Others 0 0 0 0 Dividend payout(%) 17.3 15.0 20.0 20.0
Financing Cashflow -4,781 1,751 -2,889 -3,534 Gearing Ratio (x)
Net chg in cash 88 1,840 490 -17 Net Debt/ Equity -1.0 1.6 0.6 0.2
Opening cash position 533 621 2,500 3,074 Net Debt/EBIDTA 0.0 0.1 0.0 0.0
Closing cash position 621 2,461 2,990 3,057 Working Cap Cycle (days) 215 231 237 236

Emkay Research 5 May 2011 5

 Bharti Airtel

Result Update
Depreciation cost depreciates PAT, Retain HOLD

May 5, 2011
¾ Q4FY11 PAT at Rs14.0bn below estimate of Rs16.0bn due to
Reco Previous Reco higher depreciation cost and tax outgo
Hold Hold ¾ KPI’s on expected lines remained stable qoq, led by
CMP Target Price stabilization in price war. APRU at Rs194 down 2.0% qoq,
Rs358 Rs406 MoU was flat at 449 while ARPM wad down 2.3% to Rs0.43

EPS change FY12E/13E (%) -12 / -8.2 ¾ Cons. EBITDA margin improved to 33.5% (lower than our est.
Target Price change (%) 17.7 of 34%) from 31.6%. EBITDA margin from African operation
Nifty 5,460 stood at 26.8% v/s 25.1% (ex re-branding cost) in Q3FY11
Sensex 18,211 ¾ Cut our EPS by 12.0% & 8.2% for FY11E/12E due to higher
depreciation cost going forward. Valuations at 6.1x
Price Performance EV/EBIDTA. Retain HOLD rating with revised TP of Rs406
(%) 1M 3M 6M 12M
Absolute (1) 11 10 20 Revenues & EBITDA in line, while PAT was below estimate
Rel. to Nifty 8 10 26 13 Bharti reported revenues of Rs 162.6bn up 3.2% v/s our estimates of Rs 162.9bn,
Source: Bloomberg driven by 3.8% rise in mobility revenues. Cons. profit of Rs14.0bn was below our
estimate of Rs16.0bn, due to higher deprecation and tax outgo. EBITDA was improved
Relative Price Chart 9.3% qoq. Cons. EBITDA margin remained flat at 33.5% v/s 33.8% ex re-branding cost.
400 Rs % 20

370 12
KPI’s show sign of stabilization
340 4 Revenue growth post festive season clearly signifies stabilization in tariff war in the
310 -4 domestic market. Mobility revenue in Q4FY11 was up 3.4%, in line with estimates.
280 -12
ARPU fell marginally by 2.0% to Rs 194 lower than our expectation of Rs 192. MoU
remained flat qoq at 449, while ARPM declined 2.3% to Rs0.43. Nevertheless, traffic on
250 -20
May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11
network grew by 6.4% to 211bn minutes, better than expected. Subscriber addition
Bharti Airtel (LHS) Rel to Nifty (RHS)
remained strong with total net adds at 9.7mn in Q4FY11 taking total domestic sub base
Source: Bloomberg
at >162mn. High churn rate at 7.6% remains a concern.
Stock Details
Sector Telecom
African safari on stable mode
African revenues grew just 2.4% qoq v/s 4.2% in last quarter. The decline is attributable
Bloomberg BHARTI@IN
to reduction in MoU leading to slower traffic growth on the network. ARPU declined
Equity Capital (Rs mn) 18988
marginally by 1.4% qoq to $7.2 while MoU declined 4.2% qoq to 115. Stringent KYC
Face Value(Rs) 5
norms in the African market led to slower growth. EBITDA margin improved to 26.3%
No of shares o/s (mn) 3798
v/s 25.1% (ex re-branding cost) in the last quarter.
52 Week H/L 390/254
Market Cap (Rs bn/USD mn) 1,358/30,354 Other businesses remain flat QoQ
Daily Avg Volume (No of sh) 711463 Other segments (Telemedia and Passive infra) reported flat revenues qoq. However,
Daily Avg Turnover (US$mn) 5.5 enterprise revenue declined 3.1% qoq. Cons. Passive infrastructure revenue at
22010mn remained flat qoq but tenancy improved to 1.68x and 1.83x for Bharti infra and
Shareholding Pattern (%) Indus towers, respectively. Nevertheless, EBITDA margins for Telemedia & Enterprise
Mar -11 Dec-10 Sep-10 improved to 45.2% and 25.7% in Q4FY11 v/s 44.6% and 21.5% in Q3FY11,
Promoters 68.3 68.2 67.9 respectively.
FII/NRI 17.5 17.6 17.9
Institutions 8.7 8.7 9.0 Valuation at 14.0x EPS & 6.1x EV/EBIDTA – Retain HOLD
Private Corp 3.7 3.6 3.3 We maintain our cautious view on the stock due following risks 1.) regulatory uncertainty
Public 1.8 1.9 2.0 in domestic market 2.) risk of margin pressure from domestic operations owing to 3G
launch and 3.) slower than expected growth from African operations. We retain HOLD
Source: Capitaline
rating with revised target price Rs406 (earlier Rs345). At CMP of Rs358, stock trades at
7.6x and 6.1x EV/EBIDTA for FY12E and FY13E respectively.

Financial Snapshot Rs Mn
Y/E Net EBITDA PAT EPS EPS ROE P/E EV/ P/BV
Mar Sales (Core) (%) (Rs) (Rs) %chg (x) EBITDA
FY10 396150 160266 40.5 91025 24.0 7.5 24.5 14.9 8.9 2.5
Naval Seth FY11E 594672 199610 33.6 60473 15.9 -33.6 13.2 22.5 9.7 2.3
naval.seth@emkayglobal.com FY12E 713082 248971 34.9 72654 19.1 20.1 14.1 18.7 7.6 2.0
+91 22 6624 2414 FY13E 819029 293641 35.9 96889 25.5 33.4 16.4 14.0 6.1 1.7

Emkay Global Financial Services Ltd 1

 Bharti Airtel Result Update

Domestic revenue improves

Driven by 6.4% growth in traffic on network and strong subscriber addition, the domestic
revenue grew 3.8% qoq. EBITDA margin stood at 36.6% v/s 35.9% (ex re-branding cost).

Comparable financial performance (excl Zain Africa & related costs)

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 QoQ
Revenues 103,053 107,491 112,725 113,312 117,213 121195 3.4%
opex 62,230 66,662 70,301 71,090 75,124 76852 2.3%
EBIDTA 40,823 40,829 42,424 42,222 42,089 44343 5.4%
Depr 15,883 16,953 17,483 18,239 19,063 21153 11.0%
EBIT 24,940 23,876 24,941 23,983 23,026 23,190 0.7%
Int (266) (356) 2,191 (257) 1,514 1685 11.3%
PBT 25,206 24,232 22,750 24,240 21,512 21505 0.0%
Tax 2,980 3,415 3,687 3,802 3,145 3,363 6.9%
PAT 21,949 20,443 19,063 20,438 18,367 18,142 -1.2%

Domestic v/s African revenue and EBIDTA break-up

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 QoQ
Revenues
India& SA mobile 80,898 83,174 88,237 88,045 91,459 94948 3.8%
India & Asia 103,053 107,491 112,725 113,312 117,213 121195 3.4%
Africa 9,583 38,906 40,530 41815 3.2%
Cons. Rev 103,053 107,491 122,308 152,150 157,560 162654 3.2%

EBIDTA
India 40,823 40,829 42,424 42,222 42,089 44343 5.4%
Africa 2,635 9,311 8,435 10995 30.3%
Cons. EBIDTA 40,823 40,829 45,059 51,533 49,816 54500 9.4%
Cons. EBIDTA ex re-
- - - - 53,211
Branding cost
EBIDTA %
India 39.6% 38.0% 37.6% 37.3% 35.9% 36.6%
Africa 27.5% 23.9% 20.8% 26.3%
Cons. EBIDTA % 39.6% 38.0% 36.8% 33.9% 31.6% 33.5%
Cons. EBIDTA % ex re-
- - - - 33.8%
Branding cost

Domestic mobile business performance

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 QoQ
ARPU (Rs) 230 220 215 202 198 194 -2.0%
MOU (mins) 446 468 480 454 449 449 0.0%
RPM (Rs) 0.52 0.47 0.45 0.44 0.44 0.43 -2.3%
Traffic (mn mins) 153,241 172,797 190,396 190,767 199,146 211,822 6.4%
Subscribers ('000) 118,864 127,619 136,620 143,292 152,495 162,203 6.4%

Emkay Research 5 May 2011 2

 Bharti Airtel Result Update

EPS Estimates cut by 12.0% /8.2% for FY12E /13E

Increase in depreciation charge in Q4FY11 and higher capex guidance for FY12E has led
to increase in overall depreciation cost due to which we have cut down our EPS estimates
by 12.0% and 8.2% to Rs 19.1 and 25.5 for FY12E/13E, respectively.

FY12E FY13E
Old New Chg % Old New Chg %
Revenue 72,0937 713082 (1.1) 82,8421 819029 (1.1)
EBIDTA 25,3940 248971 (2.0) 29,7433 293641 (1.3)
EBIDTA % 35.2 34.9 -31 bps 35.9 35.9 -5 bps
PAT 82551 72654 (12.0) 105516 96889 (8.2)
EPS 21.7 19.1 (12.0) 27.8 25.5 (8.2)

Emkay Research 5 May 2011 3

 Bharti Airtel Result Update

Quarterly financials
Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 YoY (%) QoQ (%) FY11P FY10 YoY (%)
Mobile 81,975 97,820 126,951 132,281 136,764 66.8 3.4 493,816 324,872 52.0
Broadband 8,510 8,960 9,118 9,068 9,178 7.8 1.2 36,324 34,154 6.4
Enterprise Total 20,738 10,186 10,424 10,503 10,179 (50.9) (3.1) 41,292 83,948 (50.8)
Others 2,094 1,949 2,260 2,793 3,314 58.3 18.7 10,316 5,825 77.1
Passive Infrastructure 9,552 20,412 21,161 21,972 22,010 130.4 0.2 85555.0 35425.0 141.5
Total gross Sales 122,869 139,327 169,914 176,617 181,445 47.7 2.7 667,303 484,224 37.8
Intersegmental elimination 22312.0 17019.0 17764.0 19056.9 18791.0 (15.8) (1.4) 72,631 88,074 (17.5)
Net Sales 100,557 122,308 152,150 157,560 162,654 61.8 3.2 594,672 396,150 50.1
Access charge 11571.0 14227.0 18885.0 20273.0 21379.0 84.8 5.5 74,764 44,807 66.9
as % of sales 11.5 11.6 12.4 12.9 13.1 12.6 11.3
Network Operating 19780.0 27268.0 33096.0 32896.0 34644.0 75.1 5.3 127,904 76,396 67.4
as % of sal es 19.7 22.3 21.8 20.9 21.3 21.5 19.3
Employee Expenses 4024.0 5601.0 8835.0 8833.0 9534.0 136.9 7.9 32,803 16,925 93.8
as % of sales 4.0 4.6 5.8 5.6 5.9 5.5 4.3
Marketing Expenses 16369.4 19330.0 27582.0 32181.0 28768.0 75.7 (10.6) 107,861 56,881 89.6
as % of sales 16.3 15.8 18.1 20.4 17.7 18.1 14.4
License Fee 10592.8 11742.0 12540.0 13561.0 13887.0 31.1 2.4 51,730 40,875 26.6
as % of sales 10.5 9.6 8.2 8.6 8.5 8.7 10.3
Total operating expenditure 62337 78168 100938 107744 108212 73.6 0.4 395062 235884 67.5
EBITDA 38220 44140 51212 49816 54442 42.4 9.3 199,610 160,266 24.5
Depreciation 15928 19467 25790 27107 29702 86.5 9.6 102,066 60,457 68.8
EBIT 22292 24673 25422 22709 24740 11.0 8.9 97544 99809 (2.3)
Other Income 5487 548 169 258 388 (92.9) 50.4 1,363 19,491 (93.0)
Interest 3193 4198 3319 7470 6826 113.8 (8.6) 21,813 12,434 75.4
Non operating expenses 0.3 233.0 3.0 2.0 0.0 238 178 33.5
PBT 24586 20790 22269 15495 18302 (25.6) 18.1 76856 106687 (28.0)
Tax 3452 3750 5678 3366 4996 44.7 48.4 17,790 13,959 27.4
PAT before MI 21134 17040 16591 12129 13306 (37.0) 9.7 59066 92729 (36.3)
Minority interest 583 153 -23 -904 -701 (220.2) (22.5) -1,475 1,994 (174.0)
PAT MI 20551 16887 16614 13033 14007 (31.8) 7.5 60541 90735 (33.3)
share of associates 0 -72 -2 0 0 -74 290 (125.3)
PAT 20551 16816 16612 13033 14007 (31.8) 7.5 60468 91025 (33.6)

Margins (%) Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 (bps) (bps) YTD’11 YTD’10 (bps
EBIDTA 38.0 36.1 33.7 31.6 33.5 (454) 185 33.6 40.5 (689)
EBIT 22.2 20.2 16.7 14.4 15.2 (696) 80 16.4 25.2 (879)
EBT 24.4 17.0 14.6 9.8 11.3 (1,320) 142 12.9 26.9 (1,401)
PAT 20.4 13.7 10.9 8.3 8.6 (1,183) 34 10.2 23.0 (1,281)
Effective Tax rate 14.0 18.0 25.5 21.7 27.3 1,326 557 23.1 13.1 1,006

Emkay Research 5 May 2011 4

 Bharti Airtel Result Update

Financials

Income Statement Balance Sheet

Y/E, Mar (Rs. mn) FY10 FY11E FY12E FY13E Y/E, Mar (Rs. mn) FY10 FY11E FY12E FY13E
Net Sales 396,150 594,672 713,082 819,029 Equity share capital 18,988 18,988 18,988 18,988
Growth (%) 7.2 50.1 19.9 14.9 Reserves & surplus 386,024 437,613 501,383 589,389
Employee cost 3 2 , 8 0 3 4 1 , 6 4 7 4 6 , 7 3 6 Net worth 405,012 456,601 520,371 608,376
Marketing expenses 56,881 107,861 119,567 137,060 Minority Interest 28,489 27,014 24,898 25,385
Access charge 44,807 74,764 94,990 109,262 Loan funds 64,618 571,618 533,618 446,618
Network opt. charge 76,396 127,904 147,639 163,398 Net deferred tax liability -9,442 -9,442 -9,442 -9,442
License fee 40,875 51,730 60,269 68,932 Other non current liab. 8,448 8,448 8,448 8,448
Total operating
235,884 395,062 464,111 525,388 Total Liabilities 497,125 1,054,239 1,077,893 1,079,385
expenditure
EBITDA 160,266 199,610 248,971 293,641 Gross Block 621,717 1,431,349 1,567,349 1,667,349
Growth (%) 5.7 24.5 24.7 17.9 Less: Depreciation 213,101 315,162 445,951 591,867
Depreciation 6 0 , 4 5 7 1 0 2 , 0 6 1 1 3 0 , 7 8 9 1 4 5 , 9 1 6 Net block 408,616 1,116,187 1,121,399 1,075,483
Other non-operating
1 7 8 2 3 8 0 0 CWIP 51,097 73,097 72,097 72,097
Exp.
EBIT 99,630 97,311 118,182 147,725 Investment 100,074 55,074 55,074 55,074
EBIT margin (%) 25.1 16.4 16.6 18.0 Current Assets 57,504 99,320 121,579 184,782
Other Income 19,491 1,363 1,600 1,680 Inventories 484 657 711 860
Interest expenses 12,434 21,813 29,349 24,564 Sundry debtors 13,757 51,412 57,992 63,179
PBT 106,687 76,862 90,433 124,841 Cash & bank balance 5,410 1,849 8,446 60,509
Tax 13,959 17,790 19,895 27,465 Loans & advances 10,578 13,209 15,314 17,447
Effective tax rate (%) 13.1 23.1 22.0 22.0 Other current assets 27,275 32,193 39,115 42,787
PAT before MI 92,729 59,072 70,538 97,376 Current lia & Prov 130,279 306,295 307,739 329,712
Minority interest 1,994 -1,475 -2,116 487 Current liabilities 129,325 304,053 305,486 327,298
Adj. PAT after MI 90,735 60,547 72,654 96,889 Provisions 954 2,243 2,253 2,414
Profit from associates -290.2 73.5 0.0 0.0 Net current assets -72,775 -206,975 -186,160 -144,930
PAT 91024.7 60473.0 72653.7 96889.2 Other non curr. assets 10,114 16,857 15,484 21,662
Total Assets 497,125 1,054,239 1,077,893 1,079,385

Cash Flow Statement Key Ratios

Y/E, Mar (Rs. mn) FY10 FY11E FY12E FY13E Y/E, Mar FY10 FY11E FY12E FY13E
PBT 87,487 75,425 88,833 123,161 Profitability (%)
Depreciation 60,457 102,061 130,789 145,916 Core EBITDA Margin 40.4 33.5 34.9 35.9
Interest 12,434 21,813 29,349 24,564 Net Margin 21.9 12.6 12.9 14.1
Other Non-Cash items 19,792 -15,553 -7,511 -15,062 ROCE 26.0 12.9 11.3 14.0
Chg in working cap 11,922 130,639 -14,218 10,832 ROE 24.5 13.2 14.1 16.4
Tax paid -13,959 -17,790 -19,895 -27,465 RoIC 28.1 14.7 12.3 15.6
Operating Cashflow 178,132 296,594 207,346 261,947 Per Share Data (Rs)
Capital expenditure -97,724 -831,633 -135,000 -100,000 EPS (adjusted) 24.0 15.9 19.1 25.5
Free Cash Flow 80,408 -535,038 72,346 161,947 CEPS 39.9 42.8 53.6 64.0
Other income 19,491 1,363 1,600 1,680 BVPS 114.2 127.4 143.6 166.9
Investments -34,676 44,927 0 0 DPS 1.0 1.0 1.0 1.0
Investing Cashflow -112,910 -785,343 -133,400 -98,320 Valuations (x)
Equity Capital Raised 5 0 0 0 PER 14.9 22.5 18.7 14.0
Loans Taken / (Repaid) -54,183 507,000 -38,000 -87,000 P/CEPS 9.0 8.4 6.7 5.6
Interest Paid -12,434 -21,813 -29,349 -24,564 P/BV 2.5 2.3 2.0 1.7
Dividend paid (incl tax) 0 0 0 0 EV / Sales 3.6 3.2 2.7 2.2
Financing Cashflow -66,611 485,187 -67,349 -111,564 EV / EBITDA 8.9 9.7 7.6 6.1
Net chg in cash -1,389 -3,561 6,597 52,063 Gearing Ratio (x)
Opening cash position 6,799 5,410 1,849 8,446 Net Debt/ Equity 0.1 1.2 1.0 0.6
Closing cash position 5 , 4 1 0 1 , 8 4 9 8 , 4 4 6 6 0 , 5 0 9 Net Debt/EBIDTA 0.4 2.9 2.1 1.5

Emkay Research 5 May 2011 5

 9am with Emkay

Indices TechCheck
Indices Today’s close % chg
Nifty
Sensex 18,210.58 -1.40
For the ninth consecutive session Nifty has ended on a negative note and has seen a
Nifty 5,459.85 -1.40
decline of nearly 500 points since last positive close. This itself indicates that
S&P CNX 500 4,390.60 -1.30
currently Nifty is in a much oversold state, but still lacking the upside confirmation in
BSE 500 7,073.78 -1.33
price itself. Moreover, the daily MACD (12,26,9) has slipped below the zero line and
BSE Mid-Cap 6,800.66 -0.95 is still in the bearish mode. On the other hand daily Stochastic indicator (5,3,3)
BSE Small-Cap 8,287.07 -1.23 reading has reached another extreme on the downside, which clearly says that a
short term bounce cannot be ruled out. But as mentioned, upside confirmation for the
BSE Auto 8,938.98 -0.55
bounce will come only above 5579.
BSE Health 6,017.07 -1.68
BSE FMCG 3,615.53 -1.82
- NSE50 [NIFTY] (5,531.60, 5,560.30, 5,443.65, 5,444.70, -93.8496)
6400 6400
BSE IT 5,947.43 -1.12 6350 6350
6300 6300
6250 6250
BSE PSU 8,729.66 -1.07 6200 6200
6150 6150

BSE Bankex 12,217.28 -1.66 6100

6050
6100
6050
6000 6000

BSE Oil & Gas 9,783.34 0.01 5950

5900
5950
5900
5850 5850
BSE Metal 15,283.49 -1.61 5800 5800
5750 5750

BSE Cons Dur 6,159.39 0.22 5700

5650
5700
5650
5600 5600

BSE Cap Good 12,605.52 -1.09 5550

5500
5550
5500

BSE Realty 2,065.07 -2.89 5450 5450

5400 5400
5350 5350

BSE Power 2,563.08 -2.40 5300 5300

5250 5250
5200 5200
5150 5150

Levels to watch 5100 5100

90 90

Sensex Nifty 80
70
80
70
60 60
50 50
Day’s High 18,569 5,560 40
30
40
30
20 20
10 10
Day’s Low 18,160 5,443 0
November December 2011 February March April May
0

20 DSMA 19,334 5,780

50 DSMA 18,768 5,630

Nifty Intraday levels to watch

Support Resistance
Nifty 5348/5400 5500/5579

Sarvendra Srivastava
Technical Strategist
sarvendra.srivastava@emkayglobal.com
+91 22 66121243

Dharmesh Patel
Associate Technical Analyst
dharmesh.patel@emkayglobal.com
+91 22 66121242

Home

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 9am with Emkay

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Emkay Research 6 May, 2011 5