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Union Budget 2012

19 March 2012

Research Team ([email protected]) / Dipankar Mitra ([email protected])

A tough balancing act

Union Budget 2012

219 March 2011

Contents

Page No.

A tough balancing act ......................................................................... 3-4

Budget at a glance ..................................................................................... 5

Trading economic risk to buy political peace ....................................... 6-10

Macro-economic indicators ..................................................................... 11

Sectoral impact .................................................................................. 12-42

1. Automobiles ......................................................................... 13-14

2. Capital Goods ....................................................................... 15-16

3. Cement ................................................................................. 17-18

4. Construction/Infrastructure ................................................. 19-20

5. Consumer ............................................................................. 21-23

6. Financials ............................................................................. 24-26

7. Healthcare ............................................................................ 27-28

8. Media ......................................................................................... 29

9. Metals .................................................................................. 30-31

10. Oil & Gas .............................................................................. 32-35

11. Real Estate ............................................................................ 36-37

12. Retail .................................................................................... 38-39

13. Technology ........................................................................... 40-41

14. Telecom ................................................................................ 42-43

15. Utilities ................................................................................. 44-45

Annual performance/Valuations - MOSL Universe .................................. 46

Valuation matrix (Sector-wise) .......................................................... 47-50

Union Budget 2012

319 March 2011

At first glance, Budget 2012 has delivered on the low expectations: 7.6% real GDP growth

with less than 6% inflation, fiscal deficit of 5.1% of GDP, inclusive growth, etc

These headline numbers, however, build in stretch assumptions which imply taking stiff

policy measures such as lower fuel and fertilizer subsidy.

There are some major negative earnings implication for Oil & Gas and select companies in

Healthcare.

Foreign investors will likely be jolted by a proposed retrospective change in tax laws.

There are also a few positives as well such as marginal relief in personal taxes and incentives

for investment in some key sectors like fertilizers, power and roads.

Overall, the Budget does not strengthen market's conviction of a meaningful rate cut

cycle on the back of easing inflation. With valuations at LPA of 14x one-year forward

P/E, expect markets to remain range-bound for the next few months.

Backdrop: Delivering on low expectationsThe Union Budget 2012 has been presented in a backdrop of slowing GDP growth

(6.1% in 3QFY12), high oil prices (under-recoveries of INR2t at current prices), fickle

political allies (e.g. Trinamool Congress), and the government's poor track record of

reforms in its current term to-date. Even now, most key bills have been kept out of

the Budget session (GST, DTC, Lokpal, etc). As a result, expectations from the budget

were running low. In this sense, the budget has lived up to expectation with at least

positive headline numbers, including lowering of fiscal deficit to GDP to 5.1% for FY13

from 5.9% for FY12.

Stretch assumptions and stiff measuresThe budget build in some stretch assumptions which imply corresponding stiff policy

measures as tabled below. Slippage on either or both fronts will have negative

implications for achieving the headline macroeconomic targets - 7.6% real GDP growth

with less than 6% inflation, fiscal deficit of 5.1% of GDP, inclusive growth, etc.

The tightrope act between stretch assumptions and stiff measures

Stretch assumptions Stiff measures taken / required to be taken

Controlling total subsidy bill Meaningful increase in fuel and fertilizer prices

at 2% of GDP Acceleration in UIDAI roll-out to enable targeted

subsidy via direct cash transfers to beneficiaries

20% increase in FY13 2% across-the-board hike in excise duty and service tax

tax revenue Widening of service tax net

Jump in non-tax revenue and Completion of telecom spectrum auction to raise

non-debt capital receipts INR400b (zero in FY12)

Successful PSU disinvestment to raise INR300b

(INR155b in FY12)

FY13 average inflation of <6% Preventing higher user charges and higher indirect

taxes from stoking inflation

FY13 real GDP growth of 7.6% Ensuring fiscal discipline to ensure no major

dis-saving by government, which would hurt

investment rate, and hence growth

Some unexpected big blowsThe budget has major negative implications for a few large cap stocks, mainly in Oil &

Gas and Healthcare sectors.

A tough balancing actStretch assumptions, stiff measures and stuck markets

Union Budget 2012

419 March 2011

Oil & Gas: The Budget raised cess on crude oil production from INR2,500/MT to

INR4,500/MT, leading to an 8-11% downgrade in earnings estimates and fair value

for ONGC and Cairn India.

Healthcare: The Budget extended MAT (minimum alternate tax) to non-corporate

entities as well such as partnership firms. Sun Pharma and Cadila were operating

partnership firms in tax exempt zones for their domestic business. They now

become liable to MAT, which can effectively cut their earnings by 13-15%.

The credibility concern for foreign investorsAgain in fine print, the Budget provides for an amendment to the Income Tax Act

which allows the government to tax overseas transfer of shares that are backed by

underlying assets in India. The government plans to enforce this amendment with

retrospective effect from 1962. The major target seems to be Vodafone Group Plc's

purchase of 67% stake from Hutchison, Hong Kong in 2007. The finance secretary, Mr

R S Gujral has said that the government expects to recover INR350-400b from similar

cases. If finally enacted and enforced, the credibility of India's legal system would be

a major concern for foreign investors. This is all the more critical given India's present

CAD (current account of deficit) of almost 4% of GDP.

The consolation positivesThe perceptibly "non-event" Budget had a few consolation positives at best -

Marginal relief in personal income tax

No special levy on diesel vehicles

Excise duty hike on cigarettes along expected lines

Tax rebate introduced for the first time on investment in a special equities scheme

20% cut in STT (securities transaction tax, from 0.125% to 0.1%).

Incentives for investment in some key sectors - fertilizers (exemption of customs

duty on equipment), power (zero import duty on natural gas and LNG), roads (no

import duty on road construction equipment), affordable housing (ECB funding

permitted), etc.

Bottomline: Expect range-bound marketsOver the last 1 month, Indian markets are down 5% and have underperformed several

global markets, despite strong FII inflows of USD9b in CY12 to date. The

underperformance is on the back of several uncertainties and build-up of headwinds.

As oil prices climb to over USD120/bbl, lack of political will prevents pass-through,

piles up under-recoveries and pent-up inflation, making RBI's task of inflation

management difficult. Election outcome in Uttar Pradesh has not helped the cause of

the Centre, and the posturing of some UPA allies makes the political scene rather

fragile.

Prior to Budget 2012, expected moderation in inflation was a key catalyst for markets,

as it would have most likely implied a rate cut cycle beginning RBI's April 2012

monetary policy. Now, any meaningful rate cut becomes highly debatable given

increased inflationary pressures on the back of higher indirect taxes and likely hikes

in administered prices. With a 15% rally in YTD CY12, markets are trading back at their

long-period average P/E of 14x. Expect markets to remain range-bound over the next

few months, with oil prices and political realignments as the only potential (yet

unlikely) triggers.

Union Budget 2012

519 March 2011

Budget at a glance

INR billion FY10 FY11BE FY11RE FY11A FY12BE FY12RE FY13BE

Receipts 10,259 11,087 12,316 11,909 12,377 13,434 14,909

Revenue receipts 5,728 6,822 7,838 7,885 7,899 7,670 9,357

Net tax revenue 4,565 5,341 5,637 5,699 6,645 6,423 7,711

Gross tax revenue 6,245 7,467 7,869 7,931 9,324 9,017 10,776

Income tax receipt 1,323 1,281 1,491 1,466 1,720 1,719 1,958

Corporate tax receipt 2,447 3,013 2,964 2,987 3,600 3,277 3,732

Custom duties collection 833 1,150 1,318 1,358 1,517 1,530 1,867

Excise duties collection 1,036 1,320 1,378 1,383 1,641 1,507 1,944

Other tax revenue 605 703 719 737 846 984 1,276

Wealth tax receipt 5 6 6 7 6 11 12

Service tax receipt 584 680 694 710 820 950 1,240

Taxes of union territories 16 17 19 20 20 23 23

States' share in tax revenue 1,648 2,090 2,193 2,193 2,635 2,554 3,019

Contingency/disaster fund 32 36 39 39 45 40 46

Non-tax Revenue 1,163 1,481 2,201 2,186 1,254 1,247 1,646

Interest receipt 218 193 197 197 196 201 192

Dividend and profits receipts 502 513 487 480 426 501 502

Receipts of union territories 12 9 11 11 12 11 11

Other non-tax revenue 431 766 1506 1498 621 534 941

Capital receipts (net) 4,531 4,265 4,477 4,024 4,478 5,764 5,552

Net market borrowings 3,984 3,450 3,354 3,254 3,430 4,364 4,790

Gross market borrowings 4,510 4,571 4,470 4,370 4,171 5,100 5,696

Repayment of domestic mkt borrowings 526 1,121 1,116 182 741 999 244

Net external assistance 110 225 223 236 145 103 101

Recovery of loans and advances 86 51 90 124 150 143 117

Disinvestment of equity holding in PSUs 246 400 227 228 400 155 300

Expenditure 10,245 11,087 12,166 11,973 12,577 13,187 14,909

Non-plan expenditure 7,211 7,357 8,216 8,183 8,162 8,921 9,699

Non-plan revenue expenditure 6,579 6,436 7,267 7,265 7,336 8,157 8,656

Interest payments 2,131 2,487 2,408 2,340 2,680 2,756 3,198

Non-plan revenue exp on defence 907 873 907 921 952 1,048 1,138

Subsidies outgo 1,414 1,162 1,642 1,734 1,436 2,163 1,900

Other non-plan revenue 2,128 1,914 2,311 2,270 2,268 2,190 2,420

Grants to states and UTs 459 460 526 498 663 553 642

Grants to foreign government 16 17 21 23 23 21 31

Non-plan rev. exp. of UTs without legislature 33 32 37 38 36 37 39

Other non-plan revenue expenditure 1,620 1,405 1,727 1,712 1,546 1,579 1,708

Non-plan capital expenditure 632 921 948 918 826 764 1,043

Non-plan loans and advances 11 10 63 61 2 6 8

Capital non-plan capital exp on defence 511 600 608 621 692 661 796

Other non-plan capital 110 311 277 236 132 96 240

Plan expenditure 3,034 3,731 3,950 3,790 4,415 4,266 5,210

Plan revenue expenditure 2,539 3,151 3,269 3,142 3,636 3,462 4,205

Revenue expenditure on central plan 1,788 2,309 2,420 2,325 2,683 2,526 3,035

Assistance to states plan 751 842 849 818 953 936 1,170

Plan capital expenditure 495 580 681 648 779 804 1,005

Capital expenditure on central plan 401 497 566 535 672 688 875

Loan and advances to states plan 94 82 115 113 107 116 130

Gross fiscal deficit 4,185 3,814 4,010 3,736 4,128 5,220 5,136

Revenue deficit 3,390 2,765 2,698 2,523 3,073 3,950 3,504

Primary deficit 2,054 1,327 1,602 1,396 1,448 2,464 1,938

GDPmp 64,574 69,347 78,779 76,741 89,809 89,122 100,704

Fiscal deficit as % of GDP 6.5 5.5 5.1 4.9 4.6 5.9 5.1

Source: Budget Documents/MOSL

Union Budget 2012

619 March 2011

Trading economic risk to buy political peace

The Union Budget for FY13 seems to opt for a cautious political path trading for a riskier

growth strategy in the bargain. While contentious reform proposals were kept off the

table, unconventional measures were not attempted.

While elements of DTC and GST were implemented, tax efforts concentrated on indirect

taxes presumably to meet the higher expenditure targets set. This may have adverse

implications for both inflation as well as corporate profitability.

Ambitious increase in planned expenditure contrasts with under-provisioning of key

subsidies imparting lower credibility to fiscal corrective path envisaged. Thus a fiscal

deficit estimate of 5.1% of GDP for FY13 and a net borrowing figure of INR4.8t risks

slippage of 1% and INR1t, respectively.

Significant cuts in customs duty and preference for ECB route for easing financing

constraints for various sector points to complacency in the external sector too. The

inflationary and external sector consequences of the Budget would complicate monetary

policy making with dilution/delay in rate cuts as envisaged earlier.

Broader approach of the Union Budget 2012 Play it safe: The Union Budget seems to tread the relatively politically expedient

route of steering clear of any controversial or unconventional measures, given

the climate of uncertainties generated in the aftermath of State elections and

events surrounding the Railway Budget.

Contentious legislations deferred: To begin with many landmark economic

legislations, viz, DTC, GST, FDI in retail was kept off the table for Budget session of

the Parliament. Also the budget merely mentioned the efforts to "reach

broadbased consensus on FDI in multi-brand retail" without specifying a timeline.

Treading the conventional route: Further, the unconventional routes for resource

mobilization, such as increased tax for diesel cars, simplification of merit/non-

merit categories of taxation in the direction of GST implementation, timeline for

rationalization of petroleum/fertilizer product prices.

The best bargain? In the current political milieu, however, this may be seen as the

best available course of action.

Tax efforts increased but regressive push towards indirect tax Tax mobilization efforts increased: The government has sought to give a push to it

tax mobilization effort to meet its expenditure commitment and fiscal

consolidation plan. Thus, net tax revenue is sought to be increased to 7.7% of GDP

in FY13 (from 7.4% in FY12).

Components of DTC/GST implemented: Also the government sought to implement

certain elements of the proposed tax regime ahead of their parliamentary

approval.

Foreign taxation strengthened but with retrospective effect: The government

also tightened the area of taxation related to foreign taxation in accordance with

the DTC principals by providing and explanations for the definition of "property"

and "transfer" in the finance bill, with retrospective effect. While the explanation

plugs a loophole, its retrospective application is sure to be viewed as having

negative implications for attractiveness of FDI.

Union Budget 2012

719 March 2011

Service tax net widened: Again service tax net has been widened by adopting a

negative list for exclusion as envisaged in GST.

Mean excise & service tax raised by 2%: However, along with this, the mean tax

rates for both excise and services taxes have been increased from 10% to 12%.

This somewhat conflicts with the proposed GST rates suggested by various

committees and experts that places it in the range of 12-20% with equal share

between the centre and the states. Thus, if this has been done only for the

exigencies for meeting near term revenue target only to be rolled back eventually,

it also points to reduced urgency for meeting an early timeline for implementation

of GST.

Can indirect taxes feed inflation and also reduce corporate profitability: The

significant increase in indirect tax is likely to feed inflation. As the corporate

profitability trend shows limited pricing power at the present juncture this would

allow only incomplete pass through of higher taxes to prices. The reduced

profitability would impact corporation tax collection assumed to grow at 13.9%.

Significant revenue gain from indirect tax proposals: Direct tax proposals are

estimated to result in a net revenue loss of INR45b for FY13 while that for indirect

taxes are estimated to result in a net revenue gain of INR459b.

Tax structure turns regressive: Thus the share of indirect taxes in total taxes that

had shown secular decline from 66% in FY00 to only 41% in FY10 has gone back to

47% in FY13, a level last seen in FY09. The minimal change in direct taxation while

increasing reliance on indirect taxes to meet revenue target is purportedly

regressive and as mentioned could impact both inflation and profitability.

Significant reduction in customs duty: Somewhat as a surprise, significant reduction

in customs duty was effected on various capital goods items. This points to a more

import-led industrial growth strategy with adverse consequence for domestic

capital goods players. On the other hand, customs duty on gold was increased to

discourage ballooning gold imports.

Jump in tax kitty envisaged: Given all of the above, fairly robust revenue growth

is built into budget calculation. Gross and net tax revenue is expected to grow by

19.5% and 20.5%, respectively, way above 13.8% nominal GDP growth assumed.

However, excluding the impact of changes in tax proposals in the current budget,

gross tax revenue is assumed to grow at 14.9%, i.e., 1% higher than the nominal

GDP growth.

Wild cards of spectrum auction and disinvestment: While tax collection targets

appear achievable, significant increase in non-tax revenue has been budgeted

for e.g. (1) implied revenue of INR392b from telecom spectrum auction, and (2)

doubling of PSU disinvestment targets to INR300b from INR155b achieved in FY12.

Needless to add, underachievement on these targets poses a risk to the fiscal

deficit estimate.

Union Budget 2012

819 March 2011

Government plans to increase expenditure and improve its quality; under-provisioning of subsidies continues Expenditure drives revenue effort: Government has budgeted for 13.1% growth

in expenditure in FY13 over FY12 against only 10.1% expenditure growth in FY12.

Thus, the government seems to have set its expenditure targets first, before

proceeding to explore options for revenue mobilization to fund the expenditure

while containing the fiscal deficit.

Surprise jump in planned expenditure: Most notably, the government has provided

for a whopping 22.1% increase in Plan expenditure in FY13 on top of 12.6% growth

in FY12. This comes as a surprise given that FY13 is the first year of 12th Five-year

Plan and the Plan document is not yet ready.

Tight leash on non-Plan expenditure: Non-Plan expenditure growth is only 8.7%,

in continuation with the tight leash kept on it in FY12 (growth of 9.0%).

Expenditure quality improves: As a pointer to substantial improvement in the

quality of expenditure the share of Plan expenditure in total expenditure is now

ruling at its decadal high of 35% in FY13 (a significant jump from 32% a year back).

Huge jump in capital expenditure: Another pointer for improving quality of

expenditure is 25% jump in the capital component of Plan expenditure, restricting

the revenue component to 21.5%. Similarly, within non-Plan expenditure too,

there is a significant jump in the capital component (36.6%) while revenue

component has been suppressed (6.1%).

Subsidy underprovided by INR520b: The question, however, arises whether the

non-Plan revenue expenditure and within that particularly subsidies have been

under-provisioned. Our analysis shows this indeed is the case! Illustratively, in

the case of oil subsidies, government for the past few years seems to be only

providing for the arrears of the previous year as the subsidy for the current year.

Thus, as per our calculations, oil subsidy bill alone would stand at INR957b in place

of INR437b provided in FY13 budget, i.e. an underprovisioning of a whopping

INR520b. Accounting for the possibility of similar slippages in food and fertilizer

subsidy, our estimate for subsidy is placed at INR2,571b, i.e. 2.5% of GDP.

2% of GDP subsidy target unachievable without reform: This brings us to the point

that restricting the total subsidies to 2% of GDP as envisaged in the budget (and

further reduction to 1.75% of GDP over next three years) is well-nigh impossible

…but at the cost of regression towards pre-crisis level ofTax efforts are sought to be increased… indirect tax share

Source: Budget docs/MOSL

Union Budget 2012

919 March 2011

if serious reform for rationalization of subsidy regime is not undertaken soon.

Illustratively, again for the oil sector, if the actual provisioning would need to

come down to zero (implying zero under-recovery) either the oil price has to rule

below USD78/bbl or prices of petroleum prices would need to be enhanced

significantly (INR12/ltr in diesel, INR28.5/ltr in PDS kerosene and INR439/cylinder

in LPG). Both are unachievable under the current global and domestic inflationary

environment. While limited rationalization of petroleum prices, nutrient based

subsidy for urea, etc. could be attempted later, i.e., after the budget session of

Parliament, they would need to overcome considerable political roadblock,

whenever implemented.

Expenditure priorities in place: Focus on basic sectors continues, viz, agriculture,

water and irrigation, food processing, rural development (including measures to

strengthen RRBs), SMEs and infrastructure. The social sectors, viz, education,

women and child welfare, etc receive much higher allocation. A push to the health

sector is given with the launch of National Urban Health Mission.

ECB allowed in several sectors: The budget also attempts to ease financing

conditions by permitting/liberalizing ECBs for certain sectors including airlines,

housing, power and roads. While these do not have budgetary implications, it has

somewhat concerning implications for external sector balance.

Government seeks a spike in expenditure and plannedrevenue mobilization accordingly Surprise thrust to planned expenditure needs to be funded

Source: Budget docs/MOSL

Fiscal deficit and borrowing estimate risks slipping again Fiscal deficit at 5.1% of GDP: With somewhat optimistic revenue assumptions

(especially on non-tax revenue and disinvestments) and plans to curtail subsidies,

fiscal deficit is targeted at 5.1% of GDP. While this would mean a substantial

correction in the headline number (v/s 5.9% in FY12RE), the estimate is suspect

again. First, this implies a negative growth in absolute amount of fiscal deficit by

-1.6% vis-à-vis 40% increase in FY12RE over FY11 (Actual) and 27% increase in

FY12RE over FY12BE. Second, if the optimistic assumptions don't hold, it would

still lead to a slippage of more than INR1t, nearly half of it accounted for by subsidies

alone. This can push up the fiscal deficit closer to 6% of GDP, indicating no fiscal

correction.

Union Budget 2012

1019 March 2011

Medium term fiscal consolidation plan derailed: The fiscal deficit to GDP ratio for

FY12 was revised upwards from 4.6% to 5.9%; i.e. a slippage of 1.3% of GDP and

1.1% over what is mandated as per the medium term fiscal (MTF) consolidation

plan laid down by the Government. Similarly, the FY13 fiscal deficit of 5.1% is still

1% higher than what is predicated as per the MTF plan. MTF rolling targets for FY14

and FY15 have now been reset at 4.5% and 3.9%.

FRBM amendment made part of Finance Bill: In another indication of rather weak

conviction for fiscal correction, amendment to FRBM now warranted in view of

fiscal slippage in FY12 has been made a part of Finance Bill itself.

Gross and net borrowing figures within estimates to begin with: The gross and

net market borrowing estimates have been placed at INR5.7t and INR4.8t,

respectively. These levels are likely to have a smooth passage in the market

without any major concern of crowding out, provided (i) there is no further fiscal

slippage mentioned above, and (ii) RBI ensures money supply close to 15% target

level.

Implications for the economy and the monetary policy Political de-risking entails higher economic risk: While the budget attempts to

dabble on a surer political footing, this entails a choice towards riskier growth

strategies. First of all, the inflationary consequences of indirect tax proposals

have been ignored. Second, the significant risk of higher international oil prices

creating inflationary overhang have been glossed over. Third, the drive for

industrialization and growth smacks an import-led strategy that invokes memories

of BoP crisis of early 1990s. Fourth, significant recourse to ECB to address sectoral

financing problem too have its consequences for BoP and somewhat bypasses

the domestic monetary policy. In sum, both the levers of inflation and external

gap seem to have been resorted to, to try and achieve growth amidst a relatively

weak fiscal situation.

Complicates monetary policy making: The invitation for higher inflation and

external sector risk is a source of worry for RBI. With government and RBI choosing

their own course of policy action in focusing on growth and inflation, respectively,

they also risk acting at cross-purposes nullifying each other's action later on.

Rate cuts may be of lower magnitude now: The inflationary consequences of the

budget makes the rate cut actions as envisaged earlier less of a certainty. Although

we continue to hold the first rate cut in Apr-12, subsequent rounds of rate cut are

less of a certainty and may be watered down or delayed.

Union Budget 2012

1119 March 2011

Macro-economic indicators

AnnualFY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12E FY13E

Growth Rate (%)

Gross Domestic Product 5.5 4.0 8.1 7.0 9.5 9.6 9.3 6.7 8.4 8.4 6.9 7.0

Agriculture 6.0 -6.6 9.1 0.2 5.1 4.2 5.8 0.1 1.0 7.0 2.5 3.6

Industry 2.6 7.2 7.3 9.8 9.7 12.2 9.7 4.4 8.4 7.2 3.9 6.1

Services 6.9 7.0 8.1 8.1 10.9 10.1 10.3 10.0 10.5 9.4 9.4 8.1

Foodgrains (M Ton) 212.9 174.8 213.2 198.4 208.6 217.3 230.8 234.5 218.1 244.8 250.4 255.0

Manufacturing 2.5 6.8 6.6 8.7 10.3 15.0 18.4 2.5 4.8 9.0 3.9 6.1

Prices

WPI (Annual Averages)

All commodities 3.6 3.4 5.5 6.5 4.4 6.5 4.8 8.0 3.6 9.9 8.8 6.0

Primary articles 3.6 3.3 4.3 3.7 4.3 9.6 8.3 11.1 12.7 17.8 9.6 5.4

Fuel & power 9.0 5.5 6.4 10.1 13.6 6.5 0.0 11.6 -2.1 12.3 13.4 7.6

Manufactured products 1.9 2.7 5.6 6.3 2.3 5.6 4.9 6.1 1.8 6.3 7.2 5.5

CPI (Annual Averages)

IW - General index 4.3 4.0 3.9 3.8 4.4 6.7 6.2 9.1 12.4 10.5 8.0 6.0

AL - General index 1.1 3.2 3.9 2.4 4.0 7.9 7.5 10.2 13.9 10.0 8.0 6.0

Money and Banking

Money Supply (M3) Growth (%) 14.1 14.7 16.7 12.3 21.2 21.3 21.4 19.3 16.8 16.0 14.5 15.0

Non-food credit Growth (%) 9.4 30.1 18.9 26.7 39.6 28.5 23.0 17.8 17.1 21.3 16.0 16.0

Deposit Growth (%) 11.5 18.9 17.6 10.8 23.4 23.8 22.4 19.9 17.2 15.9 16.0 17.0

Yield on 10-yr G-sec (%) 7.4 6.2 5.2 6.7 7.5 8.0 8.0 7.0 7.8 8.0 8.3 7.8

External Sector

Exports (USD b) 44 53 64 84 103 126 163 183 178 252 305 351

Change (%) -0.4 20.2 20.9 30.7 23.4 22.5 29.1 12.3 -2.6 41.3 21.8 15.0

Imports (USD b) 52 62 78 111 149 185 250 299 288 352 470 541

Change (%) 3.0 19.3 27.1 42.5 33.8 24.1 35.0 19.8 -3.9 22.5 23.4 15.0

Trade Deficit (USD b) -8 -9 -14 -28 -46 -59 -87 -116 -109 -100 -165 -190

Invisible Surplus (USD b) 15 17 28 31 42 52 76 92 80 85 100 120

Current A/c deficit (USD b) 7 8 13 3 -4 -7 -11 -25 -29 -16 -65 -70

As % of GDP

Exports 8.9 10.1 10.3 11.4 12.4 13.3 13.2 15.0 13.1 15.0 16.4 17.4

Imports 10.4 11.7 12.7 15.2 17.9 19.5 20.2 24.4 21.1 20.9 25.3 26.9

Trade Deficit -1.5 -1.7 -2.3 -3.8 -5.5 -6.2 -7.0 -9.5 -8.0 -6.0 -8.9 -9.4

Invisible Surplus 3.0 3.3 4.5 4.3 5.0 5.5 6.1 7.5 5.9 5.0 5.4 6.0

Current A/c deficit 1.5 1.6 2.2 0.4 -0.5 -0.7 -0.9 -2.0 -2.1 -0.9 -3.5 -3.5

Forex Reserves (USD b) 54.2 74.8 110.3 140.9 151.6 199.2 309.2 252.3 277.0 303.5 295.0 295.0

Avg. Exchange Rate (INR/USD1) 47.6 48.3 45.9 44.3 44.3 45.3 40.2 46.0 47.4 45.6 48.0 50.0

MonthlyApr-11 May-11 Jun-11 July-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12E Feb-12E Mar-12E

IIP Growth (%) 5.3 6.2 9.5 3.7 3.4 2.5 -5.0 5.9 2.5 6.8 6.5 1.2

Non-food Credit Growth (%) 21.7 21.6 19.3 18.4 20.2 23.1 17.5 17.6 15.7 16.1 15.4

Deposit Growth (%) 17.3 16.4 17.7 17.2 17.9 21.1 13.5 18.0 16.9 15.7 14.3

Forex Reserves (USD b) 313.5 310.2 309.0 319.1 319.2 311.5 320.4 304.4 296.7 293.9 295.0 295.0

Exchange Rate (INR/USD1) 44.4 44.9 44.9 44.4 45.3 47.6 49.3 50.9 52.7 51.3 49.2 49.9

Exports (USD b) 24 28 27 29 25 24 22 22 25 25 25 29

Imports (USD b) 36 45 39 41 39 35 41 39 38 40 40 37

Wholesale Price Index (% chg) 9.7 9.6 9.5 9.4 9.8 10.0 9.9 9.5 7.7 6.6 7.0 6.5

Yield on 10-year G-sec (%) 8.1 8.4 8.3 8.5 8.3 8.4 8.9 8.7 8.6 8.3 8.2 8.3

Note Forex Reserve is (Incl. gold and SDRs)

Union Budget 2012

1219 March 2012

Sectoral impact

Sector Budget Impact PAGE

Automobiles Neutral 13

Capital Goods Negative 15

Cement Positive 17

Construction/Infrastructure Positive 19

Consumer Negative 21

Financials Neutral 24

Healthcare Neutral 27

Media Neutral 29

Metals Neutral 30

Oil & Gas Negative 32

Real Estate Neutral 36

Retail Negative 38

Technology Neutral 40

Telecom Neutral 42

Utilities Positive 44

Union Budget 2012

1319 March 2012

Jinesh K Gandhi ([email protected]); Tel +91 22 39825416

Mansi Varma ([email protected]) + 91 22 3982 5418

Key budget proposals and impactThe budget was Neutral for the automobile industry. As expected, the excise duty was increased by 2% across all

categories. However, no additional duty on diesel powered cars coupled with reduction in tax incidence and

increase in disposable incomes would boost demand.

Excise duty increased by 2%; change in excise regime for large carsThe finance minister has increased the excise duty on automobiles by 2%, and substituted the specific component

of INR15,000-20,000 on large cars with 3% duty ad valorem. While two-wheelers, small cars and buses would now

attract 12% excise duty, trucks would attract 12-15%. Large cars and UVs would attract 24% excise duty (for over 4

meters in length and engine capacity up to 1,500cc) or 27% for engine capacity above 1,500cc.

Automobiles Budget Impact: Neutral Sector Stance: Overweight

Valuation Matrix

CMP (INR) Rating EPS (INR) P/E (x) EV/EBITDA (x) RoE (%)

16.03.12 FY11 FY12E FY13E FY11 FY12E FY13E FY11 FY12E FY13E FY11 FY12E FY13E

Automobiles

Bajaj Auto 1,722 Buy 90.4 108.5 123.0 19.1 15.9 14.0 13.2 10.8 8.8 66.7 54.9 47.7

Hero Motocorp 1,955 Buy 100.5 119.0 142.7 19.4 16.4 13.7 15.5 13.4 9.9 62.5 60.5 54.2

Mahindra & Mah. 677 Buy 48.2 42.1 55.9 14.1 16.1 12.1 5.4 4.8 3.8 25.0 20.7 19.5

Maruti Suzuki 1,374 Buy 82.4 54.0 93.6 16.7 25.4 14.7 9.0 12.7 7.4 16.5 9.8 14.9

Tata Motors 287 Buy 27.1 35.2 38.1 10.6 8.1 7.5 6.5 4.5 3.8 47.3 40.7 31.9

Sector Aggregate 14.0 12.4 10.5 7.9 6.3 5.1 37.0 32.1 29.7

Budget Changes (2011)

Maintained excise duty rate at

current levels (10%-22%), as against

expectation of increase in excise up

to 2%

No differential taxation for diesel-

passenger vehicles

Extending refund-based concession

of excise duty for taxis having

seating capacity of up to 13 persons

At a glance FlashbackMajor proposals

Increase in general excise rate by 2% (in-line). Substitution

of additional INR15,000/INR20,000 excise on large cars with

ad-valorem rate of 3%.

No levy of additional excise on diesel-powered passenger

vehicles.

CV chassis: A specific rate duty of INR10,000 to be replaced

with an ad valorem rate of 3%, increasing total excise duty

on CV chassis to 15% (effective increase of 4%).

Increase in customs duty by 2.5% on non-alloy flat rolled

steel

Reductions in excise duty by 4% on parts of hybrid vehicle

Impact

Negative

Positive

Negative

Negative

Positive

Overall budget impact, sector outlook and recommendations Budget has been neutral for the sector as the 2% increase in excise duty would not impact demand

meaningfully. However, no diesel tax is positive for passenger vehicles (PVs). Increase in excise on CV

chassis is short-term negative for the CV industry.

Post-budget, we are upgrading our FY13 earnings estimates for Maruti Suzuki by ~9% to INR93.6 on account

of better visibility on volumes and no additional levy on diesel-powered cars.

We are also upgrading Hero MotoCorp earnings by ~2% to INR142.7 for FY13, to factor in the excise-exemption

benefit for its Haridwar plant under the backdrop of higher excise duty.

Our top picks are Maruti, Tata Motors and Hero MotoCorp.

Union Budget 2012

1419 March 2012

Automobiles (Contd.)

Sunset clause for claiming Sec 80IA tax holiday extended till March 2013

Impact: Neutral Most of the OEMs have clarified their intent to pass through the increase in excise duty to

consumers. Apart from this, the impact of change in excise regime for large cars resulting in

3% additional duty (v/s INR15,000-INR20,000 earlier) will be beneficial for M&M. Hence, we

don't expect meaningful impact on volumes of excise increase and regime change.

Proposal

Excise duty Equivalent ad-valorem excise duty rate

Bolero Scorpio XUV-5OO Xylo SX4

Existing 22% + specific duty 28 26 25 26 25

No regime change 24% + specific (for 2% increase in general excise) 30 28 27 28 27

New 27% 27 27 27 2727

Impact of regime change (%) (3.0) (1.2) 0.3 (1.2) 0.2

Increase in excise duty on CV chassis by ~4%For CV chassis, a specific rate duty of INR10,000 is to be replaced with an ad valorem rate of 3%, increasing total

excise duty on CV chassis to 15% (effective increase of 4%). For fully-built vehicles by OEM, excise duty is 12%

(increased by 2%).

Impact: Negative Approximately 80-85% of M&HCVs sold in India are on chassis basis and hence it would result

in overall increase in excise incidence by ~4%. However, it would accelerate shift towards

fully built vehicle which would be beneficial to OEMs in the long run.

Increase in customs duty on flat-rolled steelThe customs duty on non-alloy flat rolled steel has increased to 7.5% from 5% earlier. Majority of steel for cars,

especially by Maruti, is imported.

Impact: Negative Higher customs duty on steel would somewhat increase the raw material cost for industry

players, impacting EBITDA margins by ~10-30bps.

Other measures supporting demand Five-year extension of 200% weighted deduction on R&D expenditure and the introduction of 150% weighted

deduction for expenditure on skills development to benefit the industry.

Import duty on large CBU's costing greater than USD40,000 increased to 75% ad-valorem from 60% earlier,

auguring well for the domestic industry.

Reduction in income tax, resulting in higher disposable incomes with consumers.

Sustained focus on infrastructure development, with increased outlay for NHDP by 14% to INR254b and for

PMGSY by 20% to INR240b.

Increase in agricultural credit outlay by INR1trn to INR5.75trn; extension of interest subvention scheme for

short-term loans and additional 3% subvention for prompt paying farmers.

However, reduction in expenditure outlay for NREGA to INR330bn from INR400bn earlier is negative for Hero

MotoCorp and M&M.

Impact: Positive While continued focus on infrastructure, especially urban infrastructure, will benefit CV

players, increase in outlay for agriculture/rural areas will be positive for M&M, Hero MotoCorp

and Maruti.

Union Budget 2012

1519 March 2012

Dhirendra Tiwari ([email protected] ) +9122 30295127

Deepak Narnolia ([email protected]); Tel: +91 22 3029 5126

Capital Goods Budget Impact: Negative Sector Stance: Neutral

Overall budget impact, Sector outlook and Recos The proposals announced in the budget would have a mixed impact on the capital goods sector.

Non-implementation of long-awaited/expected import duty on mega power plants was a key

disappointment. Negative for L&T, BHEL, BGR and Thermax.

Removal of the 5% duty on imported steam coal would benefit fuel-starved utilities and captive power

plants, which in turn would provide support to new generation capacity expansion in the power sector.

The 15% increase in defense spending is a big positive for companies like L&T and BEL. Infrastructure spend

has also been pegged at INR50t during 12th plan which is likely to provide significant boost to the sector.

Increase in investment-linked depreciation rate to 150% for cold storage and hospitals would boost investment

in these particular segments. Positive for Voltas and Blue Star.

We remain Neutral on the sector and expect the budget to have a mix impact on capital goods companies.

Top picks: L&T, Cummins and Havells.

Valuation Matrix



Capital Goods

ABB 853 Neutral 3.0 8.7 17.0 285.9 97.9 50.1 208.6 67.2 31.8 2.6 7.4 13.4

BGR Energy 329 Neutral 44.7 29.3 26.0 7.4 11.2 12.7 4.8 7.0 8.2 38.9 20.8 16.4

BHEL 274 Neutral 23.1 25.5 25.8 11.8 10.7 10.6 7.1 6.6 6.7 31.4 28.1 23.8

Crompton Greaves 139 Neutral 14.3 7.1 10.6 9.7 19.7 13.1 6.8 10.2 7.7 30.5 13.1 17.4

Cummins India 473 Buy 21.3 19.8 24.3 22.2 23.9 19.4 15.8 16.7 13.7 35.5 29.8 34.0

Havells India 579 Buy 22.0 28.9 35.8 26.3 20.0 16.2 15.6 12.1 10.1 42.0 38.0 33.8

Larsen & Toubro 1,320 Buy 69.7 75.6 83.5 18.9 17.5 15.8 12.7 11.9 11.3 18.3 17.7 15.6

Siemens 774 Neutral 22.5 25.7 22.9 34.4 30.1 33.9 18.4 18.4 20.4 25.9 23.2 19.2

Thermax 496 Neutral 32.0 34.4 34.5 15.5 14.4 14.4 8.8 8.3 8.1 31.9 28.1 23.6



Removal of 10% excise duty

concessional customs duty of 2.5%

on power equipment for the

expansion of mega/ultra mega

power projects

Concessional rate of 5% basic

customs duty and 5% CVD on raw

materials used to manufacture

high-voltage power transmission

equipment

Capital expenditure on defense up

15% YoY

According infrastructure status to

cold storage projects

Major proposals

Contrary to expectations, the budget did not propose

imposition of import duty on power equipment for mega

power plants.

12th Five-Year Plan infrastructure investment targeted at

INR50t. Capital expenditure on defense set to increase by

15% from INR692b to 796b (total expenditure up by 17% YoY

from INR1644b to INR1934b).

Import duty on steam coal removed from current 5%.

Rate of investment-linked depreciation on cold storage,

hospitals, etc increased from 100% to 150%.

Import duty on plant and machinery for iron ore

beneficiation plant or pallet plant reduced to 7.5%. Import

duty on plants for fertilizer projects fully exempted up to

March 31, 2015. Import duty on equipment for train

protection & warning systems, and track up-gradation

reduced to 7.5% from 10%.

Basic excise duty increased to 12% from 10% for all non-

petroleum products.

Impact

Negative

Positive

Positive

Positive

Negative

Negative

At a glance Flashback

Union Budget 2012

1619 March 2012

Capital Goods (Contd.)

Key budget proposals and impactNo import duty on mega power projectsThe finance minister did not propose the levy of long-awaited/expected import duty on mega power plants. The

industry was expecting the imposition of 21% import duty on power generation equipment for projects above

1,000MW. The move was highly-expected which would have provided a level-playing field to domestic manufacturers

against cheaper imports, particularly from China.

Impact: Neutral Levy of duty would have provided a level-playing field to domestic manufacturers against

cheaper imports particularly from China. The domestic BTG industry is grappling with slowing

demand, stiff competition and cheap imports from China. Negative for L&T, BHEL, BGR and

Thermax.

Removal of import duty on steam coalThe 5% import duty on steam coal was removed. Steam coal is mainly used in power plants and consumed by large

utilities and captive power plants (primarily popular with process plants like steel plants). Currently, the power

sector faces around 40mmt annual coal shortage, which is being imported.

Impact: Positive Currently, power utilities are facing acute coal shortages and many coal-based powers projects

are becoming unviable due to the increase in international coal prices. This is deterring IPPs

to go for capacity expansion. The removal of import duty would benefit these fuel-starved

utilities and captive power plants, which in turn will provide support to new generation capacity

expansion in the power sector.

Increase in defense allocation/ infrastructure spend pegged at INR50t during 12th Five-Year PlanThe budget has proposed a 15% increase in capital expenditure for defense from INR 692b to INR796b. Infrastructure

spend has also been pegged at INR 50t during the 12th plan, up from INR20t during the 11th plan, which is likely to

provide significant boost to engineering sector in next 3-4 years.

Impact: Positive A big positive for companies like L&T which has technological expertise in constructing

patrolling boats, submarines and cruise missiles. Announcement of Infrastructure spend was

expected, and has re-emphasized the continued focus of the government on the sector.

Reduction/exemption of import duties on some key plant equipmentImport duty on plant and machinery for iron ore beneficiation plant or pallet plant reduced to 7.5%, while import

duty on plants for fertilizer projects fully exempted up to March 31, 2015. Import duty on equipment for Train

Protection & Warning Systems and track up-gradation reduced to 7.5% from 10%.

Impact: Negative Reduction/exemption of import duty on plant equipment would marginally impact domestic

players like Siemens and L&T. L&T has the capability to set up iron ore and urea plants. Siemens

is key player in railway signaling products and also stands to benefit from track upgradation

opportunities. A lower duty will marginally negatively impact the company, as imports will

become cheaper.

Other measures Budget allocation to power sector in FY13 more or less flat YoY at INR 695b

Solar power plant and equipment exempted from import duty

Coating chemical used for compact fluorescent lamps exempted from import duty

Import duty on coating material used for manufacture of electrical steel reduced to 5% from 7.5%

Union Budget 2012

1719 March 2012

Jinesh K Gandhi ([email protected]); Tel +91 22 39825416

Cement Budget Impact: Positive Sector Stance: Neutral

Key budget proposals & impactThe Budget is net positive for the cement industry. While change in excise duty is expected to marginally increase

excise incidence, continued focus on infrastructure would augur well for demand.

Excise duty change might result in marginal increase in excise incidence The budget has increased excise duty by 2%. Also, it has changed mechanism for excise levy on cement.

It prescribes a unified rate of 12% + INR120/ton for non-mini cement plants and 6% + INR120/ton for mini-

cement plants.

This would be levied on Retail Sale Price less abatement of 30%, as against earlier levy of excise of 10% ad-

valorem (invoice value).

Valuation Matrix



Cement

ACC 1,340 Neutral 53.9 59.0 76.5 24.8 22.7 17.5 14.8 13.2 9.7 16.2 16.2 19.0

Ambuja Cements 168 Neutral 8.1 8.2 10.5 20.7 20.5 16.1 12.9 11.9 9.3 18.1 16.4 19.0

Birla Corporation 283 Buy 41.5 34.1 41.0 6.8 8.3 6.9 4.0 6.5 5.2 15.5 11.6 12.6

Grasim Industries 2,768 Buy 248.5 294.3 344.2 11.1 9.4 8.0 4.8 4.3 3.5 15.7 15.9 15.9

India Cements 103 Buy 2.2 12.4 13.6 46.3 8.3 7.6 12.9 6.1 5.4 1.6 8.8 8.5

Shree Cement 2,890 Buy 197.6 204.7 217.7 14.6 14.1 13.3 11.8 8.0 6.6 36.0 34.1 30.6

Ultratech Cement 1,480 Buy 51.2 77.6 99.5 28.9 19.1 14.9 16.1 10.7 8.5 18.4 18.2 19.6



Change in excise from 10% of MRP to

10% ad-valorem plus Rs160/ton for

bagged cement above Rs190/bag.

Continued focus on infrastructure

development with higher allocation

and focus on availability of funding.

Major proposals

Increase in general excise by 2%. Also, change in excise

from 10% plus Rs160/ton to 12% of MRP plus INR6/bag less

30% abatement.

Imported steam coal is full exempted from basic custom

duty of 5% and 1% CVD.

Continued focus on infrastructure development with higher

allocation and focus on availability of funding.

Impact

Neutral

Positive

Positive

Overall budget impact, Sector outlook and Recos The budget is net positive for the cement sector. There is a marginal increase in excise incidence, which we

expect to be fully passed on to the consumer.

Also, customs duty on imported coal has been exempted till Mar-14, resulting in potential upgrade of up to

4% in FY13 EPS (India Cement being biggest beneficiary).

We expect sustained recovery in cement volumes in FY13. This coupled with limited capacity addition and

gradual improvement in capacity utilization would drive cement prices and profitability.

Prefer UltraTech in large-caps, and Birla Corp and Shree Cement in mid-caps.


Union Budget 2012

1819 March 2012

Cement (Contd.)

Impact: Neutral The increase in excise rate by 2% would be partly offset by change in mechanism for levy of

excise and specific duty. We expect it to be fully passed-on to the consumers.

INR/bag Earlier Now

Cement price (MRP) 280 280

Invoice price (ex-factory) 196 196

Excise duty

@ 10% ad-valorem (on invoice price) 20 –

@ 12% of MRP after 30% abatement – 24

Add: specific duty 8 6

Total excise duty 28 30

Exemption of customs duty on imported coal till Mar-14 With shortage of coal for power sector, the budget has fully exempted imported coal from basic customs duty

of 5% and CVD of 1%.

Impact: Positive While cement industry awaits clarity on eligibility for exemption of customs duty, we estimate

up to 4% upgrade in FY13 EPS. India Cement would be biggest beneficiary with ~4% upgrade.

Other measures supporting demand

~INR2/bag increase in excise duty

% of imported coal % impact on FY13 EPS

ACC 15 1

Ambuja 40 1

UltraTech (Consol) 35 1

Birla Corp 20 1

Shree 40 2

India Cement 60 4

Potential upgrade in EPS of upto 4% driven by exemption ofcustoms duty on imported coal

Allocation to schemes like NHDP, AIBP, PMGSY, etc, up 10-20%, 12th Plan infrastructure sector spending target at

INR50t. NHAI project award target at 8800km, highest ever.

Various proposals to address the shortage of housing for low income groups in major cities and towns including

allowing ECB for low cost housing projects, increase in provisions under Rural Housing Fund by 33% to INR40b,

setting up of a credit guarantee trust fund etc.

Extension of scheme of interest subvention of 1% on housing loans upto INR1.5m (from INR1m) where cost of

house doesn't exceed INR2.5m.

Impact: Positive Continued focus on infrastructure and housing for poor will benefit cement demand.

Union Budget 2012

1919 March 2012

Construction/Infra Budget Impact: Positive Sector Stance: Neutral

Dhirendra Tiwari ([email protected] ) +91 22 30295127

Pooja Kachhawa ([email protected]) +91 22 3982 5585

Valuation Matrix



Construction/Infrastructure

Gammon India 45 Neutral 9.1 1.9 3.6 4.9 23.9 12.5 10.2 7.9 7.3 1.9 1.2 2.3

GVK Power & Infra 17 UR 1.0 1.3 1.4 17.8 13.3 12.2 15.5 14.8 9.6 4.6 5.8 6.0

Hind. Construction 26 Neutral 1.0 -3.8 -1.0 25.7 -6.9 -26.2 9.0 17.8 11.2 4.1 -16.2 -4.7

IVRCL 53 Buy 5.9 1.6 3.2 9.0 32.7 16.8 6.5 8.6 7.2 8.2 2.2 4.1

Jaiprakash Asso. 79 Buy 3.5 3.6 4.1 22.5 21.5 18.9 12.4 10.4 9.5 8.3 8.0 8.5

NCC 54 Buy 8.6 1.9 2.9 6.3 28.6 18.8 8.8 12.1 11.0 7.4 1.4 2.0

Simplex Infra. 221 Buy 24.8 16.5 24.6 8.9 13.4 9.0 5.8 6.0 5.1 12.0 7.3 10.1


Major proposals

Tax-free infrastructure bonds of INR600b (up 2x YoY);

Allowed Qualified Foreign Investors (QFIs) to access Indian

Corporate Bond market.

Allocation to schemes like NHDP, AIBP, PMGSY, etc up

between 10-20%, 12th plan infrastructure sector spending

target at INR50 trln. NHAI project award target at 8800kms,

highest ever.

Withholding tax on the interest payable on ECB has been

reduced from 20% to 5%. To allow ECB for capital

expenditure on maintenance and operations of toll systems

for roads and highways, if part of the original project.

Full exemption from import duty on specified equipment

imported for road construction by contractors of Ministry

of Road Transport, NHAI and State Governments is being

extended to contracts awarded by Metropolitan

Development Authorities.

Harmonised infrastructure master list has been approved

and will help in addressing policy and regulatory

ambiguity.

Impact

Positive

Positive

Positive

Positive

Positive


23% increase in allocation for

infrastructure development at INR2,

140b, 48.5% of Plan spending.

IIFCL expected to achieve cumulative

disbursement target of INR250b by

31 March 2012

Tax-free bonds of INR300b to be

issued by various Government

undertakings in 2011-12.

Increased allocation towards

Bharat Nirman - INR580b in FY12, up

from INR480b in FY11 and INR453b

in FY10

Investment in NHAI increased to

INR82.50b in FY12 from INR78.49b in

FY11

Overall budget impact, Sector outlook and Recos Increased focused on improving the long term financing options for

Infrastructure sector through tax free bonds, allowing QFIs to access Corporate

Bond market and relaxations on withholding tax on ECB. We believe that more

serious efforts are required as infrastructure finance remains a constraining

factor with heavy dependence on bank financing

Budget speech highlighted NHAI project award of 8800kms, highest in a year

for FY13. Also, NHAI is allowed to raise additional INR100b through bonds in

FY13, which would help land acquisition and funding projects on Annuity / cash

contract basis.

Harmonised infrastructure master list has been approved and will help in

addressing policy and regulatory ambiguity. This was long overdue, given that

most of the legislations had different definitions of Infrastructure.

Top picks: JPA and NCC

Budget allocation to keyschemes (INR b)

FY12 FY13

Bharat Nirman 580 nm

AIBP 120 142

NHDP 222 254

PMGSY/JNNURM 200 240


Union Budget 2012

2019 March 2012

Construction/Infra (Contd.)

Key budget proposals and impactOverall, the budget is positive for the infrastructure/Construction sector. The Infrastructure sector is expected to

get a big boost with INR50trillion of spend anticipated in the Twelfth five year plan, which in turn would help

maintain project award momentum and increased participation from private sector.

Increased allocation towards ongoing Infrastructure schemes Allocation towards Accelerated Irrigation Benefit Programme (AIBP) is INR142b in FY13, up from INR120b in

FY12 and INR115b in FY11.

Investment in National Highway Development Programme (NHDP) has increased to INR254b in FY13 from

INR222b in FY12.

Pradhan Mantri Gram Sadak Yojana (PMGSY) allocation increased by 20% to INR240b in FY13.

Impact: Positive We expect higher allocation towards various infrastructure schemes would accelerate order

flows for Infrastructure companies in FY13/FY14E.

Deepening Long term domestic funding for infrastructure projects Tax-free bonds of INR600b to be issued by various Government undertakings in 2012-13 vs INR300b in 2012-11.

Allowing Qualified Foreign Investors (QFIs) to access Indian Corporate Bond market is also an important step.

However, continued crowding out by the government given the extensive borrowing programme remains a

concern.

Impact: Positive Infrastructure finance remains a constraining factor with heavy dependence on bank financing.

Easing funding terms to facilitate foreign inflows To facilitate low cost funds to stressed infrastructure sectors, the rate of withholding tax reduced from 20% to

5% for three years on ECB interest payments. These sectors include power, airlines, roads and bridges, ports

and shipyards etc.

To allow ECB for capital expenditure on the maintenance and operations of toll systems for roads and highways,

till they are a part of the original project.

To address financing concerns of aviation sector, it has been allowed ECB financing for working capital, subject

to a ceiling of USD1b.

Impact: Positive This is sentimentally positive for infrastructure sector constrained for low cost funds and thus

would help improve project viability.

Increased Infrastructure investment through PPP (Public Private Partnership model) In order to ease access of credit to infrastructure projects, India Infrastructure Finance Company Limited (IIFCL)

has introduced a structure for credit enhancement and take-out finance. A consortium for direct lending and

grant of in-principle approval to developers before the submission of bids for PPP projects has also been

created.

Impact: Positive This would increase the opportunity canvass for infrastructure companies.

Union Budget 2012

2119 March 2012

Amnish Aggarwal ([email protected])Tel:+9122 39825404

Consumer Budget Impact: Negative Sector Stance: Neutral

Valuation Matrix



Consumer

Asian Paints 3,210 Buy 87.9 100.1 120.7 36.5 32.1 26.6 22.8 20.9 16.9 38.5 35.3 34.9

Britannia 573 Se l l 12.3 16.7 20.5 46.6 34.4 28.0 29.9 22.3 17.8 32.5 37.2 38.4

Colgate 1,090 Se l l 29.6 32.0 37.4 36.8 34.0 29.2 27.3 25.1 21.0 114.1 102.7 99.5

Dabur 103 Neutral 3.3 3.6 4.4 31.6 28.3 23.6 24.2 21.3 17.5 40.9 36.5 35.6

Godrej Consumer 447 Neutral 14.9 17.2 21.9 30.0 26.0 20.4 25.1 19.5 14.6 27.9 26.7 23.3

GSK Consumer 2,574 Neutral 71.3 85.7 102.3 36.1 30.0 25.1 21.9 19.1 15.5 31.2 31.0 31.7

Hind. Unilever 390 Neutral 10.0 12.2 14.1 39.2 32.0 27.7 30.2 23.9 20.4 81.8 76.3 70.1

ITC 216 Buy 6.4 7.9 9.3 33.5 27.5 23.4 21.3 17.8 15.0 33.2 35.0 34.9

Marico 158 Buy 4.7 5.4 7.1 33.2 29.1 22.1 24.8 19.5 15.0 31.9 28.5 28.3

Nestle 4,386 Neutral 86.8 105.7 124.8 50.5 41.5 35.1 33.5 27.6 22.4 116.5 96.0 80.9

Pidilite Inds. 159 Buy 6.5 6.5 8.3 24.5 24.5 19.3 16.4 15.8 11.7 28.9 24.4 24.3

United Spirits 579 Neutral 28.2 25.6 32.8 20.5 22.6 17.7 12.5 10.8 9.4 8.2 6.9 8.2


Major proposals

Increase in excise duty on cigarettes of more than 65mm

length by adding an ad valorem duty at 10% of MRP with an

abatement of 50% in addition to already prevailing specific

excise duty.

Change in excise duty slabs by increasing the length in

<60mm to <65mm and having a new segment at 65-70mm in

place of <70mm

Increase in excise duty from 10% to 12%

Reduction in customs duty on Titanium dioxide from 10%

to 7.5%.

Reduction in customs duty on probiotics from 10% to 5%

Impact

Negative

Positve

(long-term)

Negative

Positive

Positive


Flat excise duty on cigarettes

Reduction in excise duty on Sanitary

Napkins and Baby Diapers from 10%

to 1%

Increase in excise duty from 4 to 5%

on Coffee/Tea Mix, Sauces/Ketchups,

instant Mix/Soups, Flavored Milk,

Confectionery, Pastry, Cakes

Consumer products placed under nil

excise duty subject to 1% excise duty;

Noodles, Pasta etc under excise

Reduction in custom duty on Palm

Styrene used in Laundry soaps from

10% to Nil

Overall budget impact, Sector outlook and Recos Overall the budget impact on the Consumer sector is Negative.

Increase in excise duty from 10% to 12%, and merit rate from 5% to 6% and on 130 items from 1% to 2% is

negative. Companies need to increase prices by 0.2-1.2% to pass on the impact to the consumers

16% increase in basic excise duty on cigarettes by adding ad valorem duty is a negative for ITC. Increase in

slab size for excise from <60mm to <65mm is a positive. Ad valorem excise duty will increase the cascading

impact of excise on cigarettes. Expect ITC to pass on the price increase to consumers.

We are reducing ITC's volume growth assumptions for FY13 from 6% to 3%, offset by price increase from 6.2%

to 12%. Expect 15% EBIT CAGR in cigarettes.

Reduction in customs duty in Titanium dioxide will benefit Asian Paints.

ITC, Marico and Pidilite are top picks in our coverage universe.


Union Budget 2012

2219 March 2012

Consumer (Contd.)

Key budget proposals and impactThe Budget is negative for the Consumer sector. Increase in excise duty on cigarettes by 16% by adding ad valorem

duty of 10% with 50% abatement is negative for ITC; however change in excise slabs is long-term positive. Also hike

in excise duty from 10% to 12% is a negative for other Consumer companies. Reduction in customs duty from 10%

to 7.5% on Titanium dioxide will benefit Asian Paints. Relief in personal income tax (albeit marginal) is positive for

consumer goods demand.

Cigarette excise duty hiked by 16% by adding ad valorem, duty slabs changedThe Budget hiked excise duty on cigarettes by 16% by adding an ad valorem of 10% to the existing specific rates for

cigarettes above 65mm. The ad valorem would be charged on 50% of the MRP on the pack. The excise duty slabs

have been changed with <60mm being increased to <65mm and <70mm being replaced with 65-70mm.

Impact: Neutral The increase in excise duty by 16% is towards the upper band of expected increase in duty.

In addition the imposition of ad-valorem duty has cascading impact as the duty will increase

with every price increase.

Introduction of <65mm duty slab is long term positive as ITC was practically not present in

<60mm segment. We note that tax differential between a 64mm and 69mm cigarette is

now INR0.6 as against earlier difference of INR0.35 between <60mm and 69mm cigarette.

This will make the 64mm as an attractive segment for cigarette companies.

We expect ITC to aggressively vie for a strong share in <65mm segment (it was defocused

on <60mm segment earlier). We note that ITC can shift some of the lower end brands like

Scissors, Capstan, Bristol and Flake from 69mm to 64mm which can lower prices by INR0.35/

stick rather than increasing prices by INR0.3/stick; this can provide boost to volume growth.

We are reducing volume growth estimates for FY13 to 3% from earlier 6%, largely offset by

12% price increase. We estimate 15% EBIT CAGR in cigarettes over FY12-14.

Reduction in custom duty on Titanium dioxide from 10% to 7.5%

Impact: Positive Reduction in custom duty on Titanium dioxide from 10% to 7.5% is a positive for Asian Paints,

Titanium Dioxide is 30% of total input cost and has seen sharp increase in prices in the past

one year.

Excise hike from 10% to 12%

Impact: Negative We note that a hike in excise duty from 10% to 12% would require price increase of 1.2%, for

merit goods with excise at 6% the required price increase would be 0.6% and for goods at 2%

it would be 0.2%. We expect FMCG companies to pass on this price increase to the consumers

in most of the cases.

Union Budget 2012

2319 March 2012

Other measures supporting demand NREGA allocation has been reduced to INR330b for providing a legal guarantee of 100 days of wage employment

in a financial year to rural households.

Increase in farm outlay by 18% to INR202b, increase in farm credit to INR5.75t.

Revised personal income tax slabs will reduce tax incidence by INR2,000 for income of INR0.2m, and INR22,000

for income of INR1m and above. In addition savings bank interest up to INR10,000 will be tax free in the hands

of salaried if the income is less than INR0.5m.

Impact: Positive Despite reduction in the allocation under NREGA, other fiscal measures will aid in higher

income with the rural population, thereby creating demand for consumer goods. Urban and

salaried consumers will gain from change in tax slabs which will also support demand growth.

Consumer (Contd.)

Union Budget 2012

2419 March 2012

Alpesh Mehta ([email protected]) + 91 22 3982 5415

Sohail Halai ([email protected]) / Umang Shah ([email protected])

Financials Budget Impact: Neutral Sector Stance: Positive


PSU banks' capitalization In addition to INR120b allocated for capitalization of PSU banks in FY12, the government has planned for additional

infusion of ~INR146b in FY13 to shore up the Tier I capital of the banks to 8%+.

Impact: Positive Government's commitment to keep PSU banks adequately capitalized will allay fears of capital

shortage for growth.

Thrust on affordable housing finance continues The interest rate subvention of 1% on housing loans up to INR1.5m, where the cost of the house does not

exceed INR2.5m, has been continued for one more year.

Limit on indirect financing under priority sector has been increased from INR0.5m to INR1.0m.

Impact: Positive For banks and HFCs (especially for DEWH and GRHF). The benefit is likely to accrue on

incremental borrowings and hence would have limited impact on spreads. The government's

increased focus on this segment will keep growth rate healthy.

Major proposals

Fiscal deficit for FY13 is expected to be 5.1% as against

5.9% (revised estimate) for FY12. Net market borrowings

expected to be at ~INR4.8t, marginally lower than MOSL

estimate of ~INR5.0t.

Allocation of INR146b for recapitalization of PSU banks to

maintain minimum Tier I CAR at 8%+.

Interest subvention scheme of 1% on housing loans up to

INR1.5m, where the value of the house is less than INR2.5m,

has been continued for one more year.

Limit on indirect financing under priority sector has been

increased from INR0.5m to INR1.0m.

To increase the outlay for tax free bonds to be issued by

infrastructure financing companies to INR600b from INR300b

in the previous fiscal.

Impact

Neutral

Positive

Neutral

Positive

Positive


Fiscal deficit expected to be 4.6% for

FY12 with net market borrowings of

~INR3.6t

Allocation of INR60b for

recapitalization of PSU banks

Enhancement of limit for 1% housing

loan interest subvention to INR1.5m

(from INR1m). Further housing loan

limit under priority sector lending

enhanced from INR2m to INR2.5m

Agri loan target increased from

INR3.75t to INR4.75t

Overall budget impact, Sector outlook and Recos The fiscal deficit and government borrowing expectations for FY13 are largely in-line with our estimates.

Although net borrowing remains higher compared to that in current fiscal (FY12), we expect the RBI to take

necessary steps to maintain adequate liquidity in the system.

Steps taken for the development of the corporate bond market are in the right direction. The government's

re-assurance to undertake key financial sector reforms is positive. However, execution will be the key.

Government committed to provide capital to banks to ensure that funds are not a constraint for growth.

Focused approach for housing sector overall positive, especially for housing finance companies. Dewan

Housing is likely to be a biggest beneficiary.

Top picks: SBIN, ICICIBC, PNB, YES and INBK.

Union Budget 2012

2519 March 2012

Financials (Contd.)

Valuation Matrix

CMP (INR) Rating EPS (INR) P/E (x) P/BV (x) RoE (%)


Private Banks

Axis Bank 1,214 Buy 82.5 97.0 112.1 14.7 12.5 10.8 2.6 2.3 2.0 19.3 19.9 19.5

Federal Bank 428 Buy 34.3 43.3 50.3 12.5 9.9 8.5 1.4 1.3 1.2 12.1 13.9 14.6

HDFC Bank 508 Neutral 16.9 22.2 27.9 30.1 22.9 18.2 4.7 4.0 3.5 16.7 18.9 20.5

ICICI Bank 917 Buy 44.7 55.1 62.3 20.5 16.6 14.7 2.5 2.3 2.1 12.2 13.8 14.3

IndusInd Bank 306 Buy 12.4 17.1 20.9 24.7 17.9 14.6 3.7 3.2 2.7 19.3 19.3 20.1

ING Vysya Bank 336 Buy 26.3 30.0 33.6 12.8 11.2 10.0 1.6 1.3 1.2 13.4 14.0 12.3

Kotak Mah. Bank 540 Neutral 21.3 24.1 28.2 25.4 22.4 19.2 6.2 5.4 4.8 14.5 14.2 14.1

South Indian Bank 25 Buy 2.6 3.4 3.9 9.5 7.1 6.3 1.6 1.4 1.2 18.5 21.1 20.3

Yes Bank 367 Buy 20.9 28.2 32.8 17.5 13.0 11.2 3.4 2.8 2.3 21.1 23.3 22.3

Private Bank Aggregate 21.2 16.9 14.4 3.4 3.0 2.6 16.0 17.6 18.1

PSU Banks

Andhra Bank 126 Buy 22.6 23.6 26.4 5.6 5.4 4.8 1.1 0.9 0.8 23.2 19.0 18.5

Bank of Baroda 809 Neutral 108.0 122.3 133.1 7.5 6.6 6.1 1.6 1.3 1.1 25.0 21.9 20.2

Bank of India 360 Neutral 45.5 45.1 58.5 7.9 8.0 6.2 1.2 1.1 1.0 17.3 14.6 16.7

Canara Bank 491 Buy 90.9 72.6 88.9 5.4 6.8 5.5 1.2 1.1 0.9 26.4 16.7 17.7

Corporation Bank 457 Neutral 95.4 105.7 120.3 4.8 4.3 3.8 0.9 0.8 0.7 21.9 20.2 19.8

Dena Bank 89 Buy 18.3 21.8 26.0 4.9 4.1 3.4 0.9 0.7 0.6 20.9 19.3 19.5

Indian Bank 238 Buy 39.9 44.5 48.4 6.0 5.3 4.9 1.3 1.1 0.9 22.9 21.6 20.0

Oriental Bank 279 Buy 51.5 41.8 49.6 5.4 6.7 5.6 0.8 0.7 0.7 17.1 11.4 12.4

Punjab Nat. Bank 968 Buy 139.9 155.3 180.8 6.9 6.2 5.4 1.5 1.3 1.1 24.4 22.3 21.7

State Bank 2,228 Buy 168.3 240.8 280.3 13.2 9.3 7.9 1.7 1.5 1.3 13.3 17.6 17.7

Union Bank 230 Buy 39.7 27.1 45.4 5.8 8.5 5.1 1.1 1.0 0.9 20.9 12.3 18.2

PSU Bank Aggregate 8.5 7.5 6.4 1.6 1.4 1.2 18.5 18.0 18.3

NBFC

Dewan Housing 256 Buy 28.1 29.1 38.2 9.1 8.8 6.7 1.7 1.4 1.2 26.7 18.7 19.5

HDFC 665 Neutral 24.1 27.4 31.3 27.6 24.3 21.2 5.6 5.2 4.2 26.6 26.6 28.8

IDFC 145 Buy 8.8 10.5 11.4 16.5 13.7 12.7 2.0 1.8 1.6 14.7 13.9 13.2

LIC Housing Fin 248 Buy 21.7 20.9 27.5 11.4 11.9 9.0 2.8 2.4 2.0 25.8 20.3 24.3

M & M Financial 706 Neutral 45.2 54.9 69.6 15.6 12.9 10.1 2.9 2.5 2.1 22.0 20.8 22.4

Power Finance Corp 188 Buy 23.0 23.9 29.1 8.2 7.9 6.5 1.4 1.2 1.1 18.3 16.6 16.6

Rural Electric. Corp. 209 Buy 25.4 28.5 34.1 8.2 7.3 6.1 1.6 1.4 1.3 21.1 20.7 21.8

Shriram Transport 583 Buy 54.4 56.9 64.3 10.7 10.3 9.1 2.7 2.2 1.8 28.2 23.6 22.0

NBFC Aggregate 15.1 13.3 11.1 3.1 2.6 2.2 20.7 19.5 19.7


Focus on infrastructure development remains the mainstay

The finance minister expects the spending on infrastructure development to cross INR50t during the 12th Five-

Year Plan.

To provide credit support for the development of the sector, the finance minister has proposed to increase the

outlay for the tax free bonds issued by the infrastructure financing companies to INR600b from INR300b in the

previous fiscal.

Impact: Positive For banks and IFCs:

Improves visibility over growth in the medium to long term.

POWF and RECL are likely beneficiaries as power financiers are allotted INR100b to be

raised through tax-free bonds. During FY12, POWF and RECL raised INR50b and INR30b,

respectively, through tax-free bonds.

Various other budgetary announcements/incentives are likely to reduce other bottlenecks

for Infrastructure sector

Union Budget 2012

2619 March 2012

Constructive steps taken for the capital markets Securities transaction tax (STT) slashed by 20% to 0.1% from 0.125% earlier.

The finance minister has proposed to launch a new scheme - Rajiv Gandhi Equity Saving Scheme - under which

50% income tax deduction will be allowed for investment up to INR50,000 for individual investor whose annual

income is below INR1m. The scheme will have a lock-in period of three years.

Impact: Positive For capital markets

Other measures supporting demand Deduction up to INR10,000 earned by way of interest on savings deposits will be allowed to an individual or a

Hindu Undivided Family. This is positive as it would incentivize mobilization of savings deposits.

A Credit Guarantee Fund for the purpose of educational loan is proposed to be set up.

The government has increased the loan target to the agriculture sector from INR4.8t in FY12 to INR5.8t in FY13,

implying growth of ~20%.

Interest subvention to farmers for timely repayment of crop loan has been continued at 3%, resulting in effective

rate of interest of 4%. Further, it has been extended to post harvest loans up to six months against negotiable

warehouse receipt.

Allowing qualified foreign investors (QFIs) to access Indian corporate bond market.

Taking forward the process of financial sector reforms, the government plans to move the following Bills in the

Budget Session of the Parliament:

The Micro Finance Institutions (Development and Regulation) Bill, 2012;

The National Housing Bank (Amendment) Bill, 2012;

The Small Industries Development Bank of India (Amendment) Bill, 2012;

National Bank for Agriculture and Rural Development (Amendment) Bill, 2012;

Regional Rural Banks (Amendment) Bill, 2012;

Indian Stamp (Amendment) Bill, 2012; and

Public Debt Management Agency of India Bill, 2012.

Impact: Positive As the pace of financial sector reforms is picking pace

Financials (Contd.)

Union Budget 2012

2719 March 2012

Nimish Desai ([email protected]); Tel: +91 22 39825406Amit Shah ([email protected]); Tel: +91 22 39825423

Healthcare Budget Impact: Neutral Sector Stance: Neutral


MAT levied on profit generated from

SEZs

Excise duty on formulations

increased from 4% to 5%

Levy of service tax for air conditioned

hospitals with more than 25 beds

Levy of service tax on diagnostic

services


Overall budget impact, Sector outlook and Recos Post-budget, we are not changing our earnings estimates for our healthcare universe. Levy of AMT on Sun Pharma and Cadila will reduce their FY13/14 earnings by 13-15% if they do not take MAT

credit. Otherwise, reported earnings will not change (since increased tax will be off-set by MAT credit). The US and emerging markets will be the key growth drivers for the sector in the medium to long term. Our top picks are Lupin, Divi's Lab, IPCA and Torrent Pharma.

Major proposals

Levy of Alternate Minimum Tax (AMT) on all persons other

than companies, claiming profit-linked deductions, i.e. levy

of MAT on partnership profits from tax-exempt zones

Extension of concessional basic custom duty of 5% with

full exemption from excise duty/CVD to six specified life-

saving drugs/vaccines

Excise duty on formulations increased from 5% to 6% and

on APIs increased from 10% to 12%

Extension of 200% weighted average deduction on R&D

spending for another 5 years

Impact

Negative (For

Sun Pharma and

Cadi la)

Neutral

Neutral

Neutral

Valuation Matrix



Healthcare

Aventis Pharma 2,158 Neutral 67.3 83.0 91.1 32.1 26.0 23.7 30.1 26.9 20.0 15.5 17.3 16.7Biocon 241 Neutral 18.4 15.8 19.3 13.1 15.3 12.4 7.2 7.7 6.3 18.1 14.0 15.4Cadila Health 712 Neutral 30.9 25.7 38.0 23.0 27.7 18.7 15.0 15.1 12.8 33.4 21.7 26.1Cipla 302 UR 12.0 13.5 16.4 25.1 22.4 18.4 18.3 15.4 12.9 14.5 14.5 15.6Dishman Pharma 48 Neutral 10.0 4.6 8.0 4.8 10.3 6.0 7.5 6.7 5.5 9.7 4.2 6.9Divis Labs 725 Buy 32.4 34.9 44.1 22.4 20.8 16.4 18.5 15.9 11.9 23.9 22.0 23.4Dr Reddy’ s Labs 1,680 Neutral 65.6 93.7 85.5 25.6 17.9 19.6 19.3 14.2 15.3 24.1 29.1 23.3Glenmark Pharma 300 Neutral 12.5 10.0 20.6 24.0 29.9 14.6 16.9 10.6 11.0 17.4 13.0 21.1GSK Pharma 2,140 Buy 68.6 74.5 85.9 31.2 28.7 24.9 21.7 21.5 17.9 30.1 32.9 33.7IPCA Labs. 335 Buy 20.9 26.3 31.6 16.0 12.7 10.6 12.6 9.1 7.6 27.4 27.9 26.9Jubiliant Organosys 181 Neutral 14.4 11.1 28.5 12.6 16.3 6.4 11.1 7.8 6.4 10.5 8.4 20.2Lupin 504 Buy 19.3 19.8 25.9 26.1 25.4 19.4 21.8 18.8 14.3 29.3 24.3 26.4Opto Circuits 271 Neutral 19.6 24.7 31.1 13.8 11.0 8.7 12.8 9.6 7.7 30.4 30.2 31.2Ranbaxy Labs 410 UR 25.8 13.8 17.4 15.9 29.7 23.6 9.8 11.5 16.5 19.4 -72.0 15.2Strides Arcolab 572 Buy 20.9 31.2 45.7 27.4 18.3 12.5 15.2 12.1 9.7 11.6 13.7 13.8Sun Pharma 545 Neutral 13.6 22.4 21.2 40.2 24.3 25.7 26.6 16.7 16.0 16.2 22.3 17.9Torrent Pharma 603 Buy 31.9 42.6 51.7 18.9 14.2 11.7 12.7 9.4 7.5 29.2 30.9 29.5Sector Aggregate 24.8 22.1 18.7 17.3 14.1 12.9 19.8 20.2 20.1

Note: Above estimates assume that Sun Pharma will not be taking MAT credit. If it takes MAT credit reported PAT will not change.

UR – Under Review

Union Budget 2012

2819 March 2012

Healthcare (Contd.)

Key budget proposals and impactThe budget was neutral for the pharmaceutical industry. Levy of AMT on partnerships operating in tax-exemptzone will be a big negative for companies like Sun Pharma and Cadila Healthcare. Since other companies do notoperate through partnerships, they will not be impacted. All other changes were incremental in nature with exciseduty on formulations being increased by 1% and on APIs by 2%. The companies are likely to pass on the increase toconsumers. Few other benefits such as weighted average deduction on R&D and concessional basic custom dutyfor life savings drugs/vaccines were extended. These will not have any financial implications on the sector.

Levy of AMT on partnership firms claiming profit-linked deductionsThe finance minister, in order to moderate the outgo on profit-linked deductions, has extended the levy of AMT onall persons other than companies, claiming profit-linked deductions.

Impact: Neutral We expect 13-15% earnings cut for companies like Sun Pharma and Cadila since thesecompanies will have to pay MAT on profits generated from partnership firms. These companiesoperate their domestic formulations business in tax-exempt zones through a partnershipstructure and hence did not attract MAT. If MAT credit entitlement is taken by these companies,reported earnings will not be impacted despite the higher tax outflow.

Impact: MAT on certain partnership structures (INR m)

Sun Pharma Cadila Healthcare

FY13E FY14E FY13E FY14E

PAT from partnership firm (current est) 16,944 19,993 5,422 6,236

Tax on above (%) 20 20 20 20

Incremental Tax 3,389 3,999 1,084 1,247

Overall PAT (current est) 25,375 26,722 7,778 9,283

Overall PAT (revised est) 21,986 22,724 6,694 8,036

Change (%) -13.4 -15.0 -13.9 -13.4

E - MOSL Estimates; Above estimates assume that cos will not be taking MAT credit. If they take MAT credit rep. PAT will not change

Extension of concessional basic custom duty on life-saving drugs/vaccinesExtension of concessional basic custom duty of 5% (compared to previous 10%) with full exemption from exciseduty/CVD to six specified life-saving drugs/vaccines

Impact: Neutral We expect no benefit for companies as the size of these drugs will be relatively small and thecompanies would have to pass on the benefits of reduced duties to the consumer.

Increase in excise dutyExcise duty on formulations increased from 5% to 6% and on APIs from 10% to 12%

Impact: Neutral We expect companies to pass on the impact of increased excise duty to consumers.

Extension of weighted average deduction on R&D spendingThe finance minister has extended the 200% weighted average deduction on R&D spending for another 5 years

Impact: Neutral We expect no impact on companies as this is an extension of an existing benefit and waswidely expected.

Union Budget 2012

2919 March 2012

Media Budget Impact: Neutral Sector Stance: Neutral


Lower effective tax rate due to

reduction in surcharge from 7.5% to

5%

Concessional import duty of 5% basic

custom duty, 5% CVD and Nil SAD

currently applicable to high-speed

printing machinery extended to

mailroom equipment


Minimal impact Service tax to increase from 10% to 12% thus increasing the effective service tax rate from 10.3% to 12.36%. Service tax increase for broadcasters to be largely passed-on; hence no significant impact expected In case of DTH companies, three companies have pack pricing excluding service tax which implies that higher

service tax will be passed-through. However pack pricing for Dish TV, Tata Sky and RCom DTH is inclusive ofservice tax which would warrant a pack price increase to pass-through the tax hike.

While we expect price increases to be taken to mitigate higher service tax, there would be ~170bp EBITDAmargin impact on Dish TV if pack prices remain unchanged.

Certain other transactions of media companies could also be impacted due to the transition to negative listfor service tax.

Major proposals

Service tax to increased from 10% to 12%

Impact

Negative

Shobhit Khare ([email protected]); Tel: +91 22 3982 5428

Valuation Matrix



Media

HT Media 134 Neutral 7.7 7.3 8.3 17.4 18.4 16.3 8.5 9.0 7.5 14.9 11.3 11.3Jagran Prakashan 101 Neutral 6.9 6.0 7.2 14.6 16.7 13.9 8.8 9.3 7.7 33.2 26.0 28.2Sun TV 316 Buy 19.6 17.7 21.6 16.1 17.9 14.6 7.6 8.4 6.9 32.4 26.5 29.0Zee Entertainment 126 Neutral 6.0 6.1 6.8 21.0 20.8 18.6 15.5 15.0 13.1 16.9 18.7 19.3Sector Aggregate 17.6 18.8 16.0 9.8 10.4 8.7 23.5 20.4 21.4

Service tax increased from 10% to 12%Service tax has been hiked from 10% to 12%. Effective service tax (including education cess) increased from 10.3%to 12.36%.

Impact: Neutral Service tax increase for broadcasters to be largely passed-on; hence no significant impactexpected. While we expect price increases to be taken by DTH companies like Dish TV tomitigate higher service tax, there would be ~170bp EBITDA margin impact on the company ifpack prices remain unchanged.

Union Budget 2012

3019 March 2012

Sanjay Jain ([email protected]); Tel: +9122 39825412Pavas Pethia ([email protected]); Tel:+91 22 3982 5413

Metals Budget Impact: Neutral Sector Stance: Equal Weight


Increase in export duty on iron ore

from 5% on fines and 15% on lumps

to uniform 20%

Import duty on pet coke reduced

from 5% to 2.5%

Import duty increased from 2% to

2.5% on ore and concentrate

Foreign dividend tax rate cut to 15%

for FY12

Stainless steel scrap import duty

removed


Overall budget impact, Sector outlook and Recos Although Tata Steel, SAIL and JSW steel will be beneficiary of import duty hike on flat rolled steel products,

we are keeping the earnings unchanged because oversupply of flat products in domestic market and importpressure in value added segment has curtailed their pricing power now.

Sesa-Sterlite's consolidated earnings are affected 5% due to increase in cess on crude oil production. We prefer non-ferrous metals over steel because slowing demand in China will have greater impact on

prices of latter. Hindalco - top pick.

Major proposals

Excise duty increased from 10% to 12% across-the-board

Import duty on nickel and coal reduced to nil from 7.5%

and 5%, respectively

Import duty on equipments for surveying and prospecting

cut from 10% to 2.5%. Full import duty exemption for

imported mining equipments

Import duty on non-alloy flat-rolled steel increased from

5% to 7.5%

Export duty on chrome ore changed from INR3,000/t to 30%

ad-valorem

Impact

Neutral

Positive

Positive

Positive

Neutral

Valuation Matrix



Metals

Hindalco 140 Buy 17.6 17.8 19.5 8.0 7.9 7.2 5.6 6.2 5.9 23.1 19.8 18.6Hindustan Zinc 130 Buy 11.6 13.4 13.8 11.1 9.6 9.4 7.2 5.7 4.6 24.2 22.9 19.8JSPL 575 Buy 40.1 44.4 49.9 14.3 13.0 11.5 10.5 9.8 9.2 30.6 25.9 23.2JSW Steel 748 Se l l 77.4 29.5 57.0 9.7 25.3 13.1 7.4 7.9 6.5 12.8 4.1 7.7Nalco 57 Neutral 4.2 2.8 4.1 13.7 20.4 14.0 6.4 10.1 6.8 18.0 11.0 14.7SAIL 96 Se l l 12.0 7.9 9.7 8.0 12.2 9.9 5.9 9.0 8.2 13.9 8.4 9.7Sesa Goa 199 Neutral 49.0 34.1 33.9 4.1 5.8 5.9 1.6 5.5 9.2 40.4 21.0 17.6Sterlite Inds. 114 Buy 15.2 17.4 14.9 7.5 6.6 7.7 4.2 3.1 2.6 13.0 13.4 10.5Tata Steel 454 Neutral 62.3 26.5 44.4 7.3 17.1 10.2 5.8 7.1 6.1 40.5 11.1 15.7Sector Aggregate 8.7 10.5 9.3 6.0 6.7 6.1 16.0 11.9 12.1

Union Budget 2012

3119 March 2012

Metals (Contd.)

Key budget proposals and impactThe budget has been largely neutral for primary steel producers. Excise increase will inflate finished productsprices, impacting demand marginally. On the other hand, customs duty hike on flat-rolled products and reductionof customs duty on thermal coal will enhance margins provided demand accelerates.

Import duty on coal cut 500bp and increased 250bp on flat rolled products

Impact: Positive Import duty on coal has been cut 500bp to nil. Reduced cost of coal imports should helpsponge iron producers and captive power generators. Margins of secondary steel producerswill also be enhanced because the custom duty on finished steel products has been increased250bp to 7.5% for flat-rolled products.

Excise duty increased by 2%The Finance Minister has increased the ad-valorem excise duty by 200bp to 12%.

Impact: Neutral Enhanced excise duty will increase the overall cost of steel to end-users. Since most of thethem will be able to claim MODVAT, steel producers will be able to pass-on the impact to thecustomers. Thus, the earnings of steel companies are unlikely to be impacted. There will bemarginal impact on price sensitive end user demand

Other measures Import duty on equipment for surveying and prospecting cut from 10% to 2.5%. Full import duty exemption for

imported mining equipment. The reduction in duty on mining related equipment imports will reduce CapEx,but it is unlikely to have major effect on the mining costs.

Export duty on chrome ore changed from INR3,000/t to 30% ad-valorem. Since Tata Steel had already reducedexports to minimum, there will be little impact.

Sunset date for claiming 100 % deduction of profits for 10 years for power sector undertakings extended toMarch 31, 2013. Jindal steel and power's 3 units at Angul out of 10 units of 135X10MW CPP were yet to becommissioned. Since these units would make loss due to shortage of coal, JSPL can now postpone commissioningfor another year without losing tax benefits.

Additional depreciation of 20 % in the initial year is proposed to be extended to new assets acquired by powergeneration companies. This will help captive power projects of Hindalco, JSPL, and Sesa-Sterlite.

Crude petroleum oil production Cess has been increased from INR2,500/ton to INR4,500/ton. This will increasethe tax burden for Cairn India thereby affecting the earnings of Sesa-Sterlite merged entity estimates by 5% toINR33.6. Simultaneously, Oil and gas team has increased the crude oil price assumption from USD100/bbl toUSD110/bbl for Cairn India. As a result, the consolidated earnings of Sesa-Sterlite have increased by 7% toINR36.1/share. i.e. a net upgrade of 2%.

Reduction in basic customs duty on plant and machinery imported for iron ore pellet and beneficiation plantsfrom 7.5% to 2.5%. This will reduce capex for producers such as JSPL and Godawari Power who have plannedexpansion in their pellet capacity.

Union Budget 2012

3219 March 2012

Oil & Gas Budget Impact: Negative Sector Stance: Neutral

Harshad Borawake ([email protected]); +91 22 3982 5432Deepak Dult ([email protected]); +91 22 3982 5445


Reduction of excise duty on CNG kits

from 10% to 5%

Customs duty on pet coke cut from

5% to 2.5%

Later in June 2011, EGoM announced

price hikes for diesel (INR3/liter),

kerosene (INR2/liter) and LPG

(INR50/cylinder), eliminated 5%

custom duty on crude oil and

reduced the specific excise duty on

diesel (from INR4.6 to INR2/liter)


Overall budget impact, Sector outlook and Recos Overall budget impact on the sector is negative with respect to new cess rate hike proposals and also with

respect to key pre-budget expectations. As expected, clarity on FY12 subsidy sharing is yet to emerge. We are changing our estimates for ONGC and Cairn India to factor in the higher cess rate on crude oil from

INR2,500/mt to INR4,500/mt. This has resulted in FY13 EPS estimates being lowered by 10% and 8% for ONGCand Cairn India, respectively. We downgrade ONGC to Neutral and retain our Neutral rating on Cairn India.

We have not changed our subsidy sharing assumption. However, it is under risk as the government has madesignificantly lower provisioning than our assumption.

Our gross under-recoveries for FY12/13 stand at INR1,360b/INR1,367b and we model upstream sharing at40%/38.7% for FY12/13. We model INR2/liter diesel price hike in FY13.

We remain neutral on the sector due to (1) pending clarity on subsidy sharing mechanism, and (2) weakrefining and petrochemical margins.

Our top picks in the sectors are BPCL owing to its E&P upside potential and Petronet LNG. High crude oil priceregime augurs well for Cairn India. The key things to watch out for in the near future would be productionramp-up, reserve upgrade and dividend policy.

Major proposals

Cess on crude oil production increased from INR2,500/MT

to INR4,500/MT under Oil Industries Development Act

Huge under provisioning for FY13 subsidy. Clarity yet to

emerge on final subsidy sharing for FY12.

Pilot projects commenced for direct transfer of subsidy for

LPG and kerosene

Oil & Gas/LNG storage facilities and oil & gas pipelines

projects will be eligible for viability gap funding (VGF)

Custom duty exemption for gas used in power generation

as against our expectation of overall exemption

No update on tax holiday for natural gas production from

the NELP blocks prior to NELP VIII.

Impact

Negative

Negative

Long term

Positive

Positive

Marginally

Positive

Valuation Matrix



Oil & Gas

BPCL 664 Buy 45.2 42.5 48.5 14.7 15.6 13.7 11.7 9.1 8.3 11.1 9.7 10.2Cairn India 346 Neutral 33.3 48.0 49.3 10.4 7.2 7.0 7.6 5.6 4.4 17.1 21.1 18.8Chennai Petroleum 165 Buy 34.3 14.8 30.8 4.8 11.1 5.3 6.0 27.6 6.1 14.2 5.7 11.3GAIL 367 Neutral 28.7 30.9 31.1 12.8 11.9 11.8 8.9 8.4 8.8 18.5 18.0 16.2Guj. State Petronet 77 Neutral 9.0 9.2 8.4 8.6 8.4 9.2 6.1 5.4 5.7 28.4 23.3 18.0HPCL 298 Buy 45.4 28.8 35.2 6.6 10.4 8.5 11.6 11.4 8.0 12.8 7.6 8.8Indraprastha Gas 362 Neutral 18.8 21.3 25.4 19.2 17.0 14.2 11.1 8.9 7.5 28.8 27.1 27.1IOC 273 Buy 32.3 29.1 32.6 8.5 9.4 8.4 10.3 7.1 6.7 14.2 12.2 13.0MRPL 66 Neutral 6.7 3.4 6.5 9.8 19.6 10.2 5.8 12.5 5.9 19.4 8.8 15.5ONGC 273 Neutral 24.5 30.1 27.0 11.2 9.1 10.1 4.2 3.5 3.5 19.5 21.0 16.7Petronet LNG 162 Buy 9.3 14.7 14.2 17.5 11.0 11.4 11.8 8.3 7.6 28.4 35.9 27.8Reliance Inds. 772 Neutral 68.4 69.4 69.7 11.3 11.1 11.1 7.5 7.3 7.4 14.8 13.3 12.0Sector Aggregate 11.3 10.3 10.3 6.8 5.9 5.6 15.3 15.1 13.6

Union Budget 2012

3319 March 2012

Oil & Gas (Contd.)

Key budget proposals and impactThe budget was negative for the oil & gas sector. The increase in cess on crude oil production and huge underprovisioning for subsidy were the key negatives. Further, there was disappointment as budget did not provide anyclarity on subsidy sharing mechanism.

Cess on crude oil increased from INR2,500/mt to INR4,500/mtThe finance minister proposed an increase in cess on crude oil from INR2,500/mt to INR4,500/mt. The cess ratewhich comes under Oil Industries Development Act was last revised in Budget of 2006-07 and as a measure ofindexation Finance minister proposed the increase.

FY13E FY14E Fair value

Earlier Revised Chg (%) Earlier Revised Chg (%) Earlier Revised Chg (%)

ONGC 29.9 27.0 -10 35.5 32.2 -9 315 285 -10

Cairn India 53.9 49.3 -8 49.7 44.5 -11 328 302 -8

Impact:Negative for companies: Cess is a direct tax outflow for the oil producers and hence the increase in negative

for Cairn India, ONGC and Oil India. The impact on NAV is higher for ONGC thanCairn India as in case of the latter, the cess is a cost recoverable and to that extentthe profit petroleum gets reduced.

Positive for government: Assuming 38mmt of crude oil production in FY13, government revenue will Increaseby INR76b.

Subsidy conundrum continues; expect clarity on sharing mechanism by year-endFacts about government accounting: Government budget accounting is based on cash basis and not accrual basis.Over the last few years, the 4Q subsidy is typically postponed (cash basis) to next year (refer exhibit below).

Subsidy reconciliation with budget provisioning and actual accounted by the companies

Union Budget 2012

3419 March 2012

(1) Government has budgeted net subsidy of INR650b {A} in FY12 as subsidy payout, however this includes INR200b{B} of the previous year FY11. Hence, for FY12 effective subsidy provisioning is only INR450b {C} (alreadyaccounted by OMCs in 9MFY12).

(2) For FY12, we estimate government subsidy of INR816b {D}. Out of this, the government has provided INR450b{C} and is yet to provide INR366b {E}.

(3) Assuming that INR366b {E} is part of the FY13E budgeted amount of INR400b {F}, then the effective provision forFY13 as of now is only INR34b {G}. We currently estimate government sharing requirement of INR829b {H} inFY13E.

(4) The huge under provisioning for FY13 indicates likely higher burden on upstream companies and/or likely pricehikes in the near-term.

(5) However, we believe there is a limit in reducing the subsidy through price hikes due to political issues as wellas inflationary impact and similar to previous years, the government will need to hike its subsidy provisioning.

(6) Even if we were to model price hikes of INR3/liter in diesel, INR2/liter in kerosene and INR50/cylinder in LPG,the overall gross under-recovery reduces by only INR315b and hence will be insufficient. Current underrecoveries are INR12/liter in diesel, INR28.5/liter in PDS kerosene and INR439/cylinder in LPG.

We model upstream subsidy sharing at 40% in FY12 and 38.8% in FY13

Oil & Gas (Contd.)

*our base case models INR2/liter diesel price hike in FY13E

Per unit sensitivity of price hikes on under-recoveries

Price hike impact on under-recoveries

INR1/liter diesel price hike reduces gross U/R by INR81b.

INR1/liter kerosene price hike reduces gross U/R by INR12b.

INR25/cylinder LPG price hike reduces gross U/R by INR24b

Union Budget 2012

3519 March 2012

Government subsidy provisioning: Excerpt from budget document

Oil & Gas (Contd.)

Impact: Neutral The huge under provisioning indicates likely higher burden on upstream companies and likelyprice hikes in the near-term.

Pilot projects for direct transfer of subsidy; positive from long-term perspective in view of reducingsubsidya) Pilot projects for direct subsidy transfer into the beneficiary's bank account are conducted. For LPG at Mysore,

for Kerosene at Alwar district in Rajasthan.b) The Aadhaar platform has also been successfully used to validate PDS ration cards in Jharkhand.c) Government endeavors to scale-up and roll-out these Aadhaar-enabled payments for various government

schemes in at least 50 selected districts within the next six months.

Impact: Long-term In view of reducing subsidy, implementation of direct transfer of subsidy will bepositive positive from a long-term perspective.

Viability gap funding (VGF) for oil & gas/LNG storage facilities and oil & gas pipelinesThe finance minister has proposed viability gap funding for oil and gas/LNG storage facilities and oil & gas pipelines.Under the scheme for support to PPP in infrastructure, VGF is an important instrument in attracting privateinvestment into the sector.

Impact: Positive VGF will be positive for oil & gas infrastructure spending (Gail India, GSPL).

Custom duty exemption for gas used in power generationThe finance minister proposed full exemption from basic customs duty on natural gas and LNG for domestic thermalpower producers for a period of two years till March 31, 2014. We expected overall removal of customs duty on LNG.

Impact: Marginally positive Customs duty exemption will be positive for gas based power producers

Union Budget 2012

3619 March 2012

Real Estate Budget Impact: Neutral Sector Stance: Overweight

Sandipan Pal ([email protected]); Tel: 3982 5436


MAT on SEZ developers as well asunits operating in SEZs.

Interest subvention of 1% onhousing loans extended to housingloan up to INR1.5m (v/s INR1m),where the cost of the house is lowerthan INR2.5m (v/s INR2m)

Priority sector housing loan limitincreased from INR2m to INR2.5m

Provision under Rural Housing Fundhas been increased to INR30b (v/sINR20b)


Overall budget impact, Sector outlook and Recos

Permitting ECBs, lowering of withholding tax, and exemption from service tax would result in cheaper fund-flow to the low-cost affordable housing segment. However, not many major urban developers are active inthis segment. Further, more clarity is required on the value-based classification of "affordable housing"segment.

Extension of 1% interest subvention scheme, enhancing limit of indirect finance under priority sector lendingwould improve affordability. Key beneficiaries would be Unitech (Unihomes), Puravankara (Provident Projects)and HDIL (Extended suburbs projects). However, expectation that the current INR2.5m level price band wouldbe enhanced on the back of cost escalation was unaddressed

Budget remains silent on major sector expectations like (1) increase in tax exemption limit on interest/principal payment on housing loan, (2) industry status to the sector and (3) relaxation of FDI norms.

Increase in service tax from 10% to 12% would further increase burden on end-price of under constructionprojects (unless exempted under low-cost mass housing category) and could impact demand recovery.

Top picks: Prestige, Oberoi, Phoenix and DLF.

Major proposals

Impetus to low-cost affordable housing by (1) permittingECBs for low-cost affordable housing projects and settingup credit guarantee trust fund, (2) exempting theseprojects from service tax, and (3) reducing withholdingtax on ECB interest from 20% to 5%.

Extended the scheme of interest subvention of 1% forhousing loan up to INR1.5m (where cost of the house isup to 2.5m) for one more year.

Increase in service tax by 2% to 12% could result inadditional tax incidence of ~0.5% on property value.

Enhance the limit of indirect finance under prioritysector from INR0.5m to INR1m.

Provision under Rural Housing Fund has been increasedto INR40b (v/s INR30b) to provide competitive housingfinance to rural EWS / LIG segments.

Impact

Marginallypositive

Marginallypositive

Negative

MarginallypositiveMarginallypositive

Valuation Matrix



Real Estate

Anant Raj Inds 59 Buy 5.7 5.5 8.8 10.4 10.7 6.7 10.9 11.0 6.2 4.6 4.5 6.6DLF 196 Buy 9.7 7.9 9.3 20.3 24.9 21.1 15.0 13.4 11.8 5.8 5.0 5.6Godrej Properties 650 Neutral 18.7 17.1 27.8 34.7 38.1 23.4 50.8 49.9 26.2 15.2 12.5 18.0HDIL 99 Neutral 19.8 16.4 28.0 5.0 6.0 3.5 7.5 7.9 4.2 9.0 6.9 10.6IBREL 68 Buy 4.0 4.8 5.5 17.1 14.2 12.4 18.5 14.0 10.2 1.6 2.6 2.9Mahindra Lifespace 321 Buy 26.3 31.4 36.4 12.2 10.2 8.8 9.1 8.1 6.0 10.2 11.0 11.4Oberoi Realty 269 Buy 15.8 13.1 22.9 17.1 20.5 11.7 12.9 16.2 7.9 19.9 12.2 18.3Phoenix Mills 215 Buy 5.6 9.1 9.6 38.1 23.7 22.3 28.3 18.5 12.6 4.9 7.4 7.4Prestige Estates 107 Buy 5.1 4.3 8.8 21.1 24.7 12.2 12.5 14.2 8.0 11.6 6.6 12.4Unitech 29 Buy 2.2 1.3 1.6 13.5 22.7 18.5 13.6 24.1 17.2 4.9 2.8 3.4Sector Aggregate 16.3 19.4 13.7 14.1 14.2 10.2 6.3 5.2 6.9

Union Budget 2012

3719 March 2012

Real Estate (Contd.)

Key budget proposals and impactOverall, the budget was neutral for the real estate industry. It was silent on various important proposals that couldhave provided the sector much-needed boost. While various incentives on low-cost affordable housing are in theright direction, the impact could have been much broad-based if wider price segments would have considered.

ECB permitted in low-cost affordable housing projectsThe finance minister has proposed various measures to address the shortage in the low-cost housing segment, themost important being allowance of ECBs for such projects. Additionally the rate of withholding tax on interestpayments on ECBs for this segment has been proposed to be reduced from 20% to 5% for three years. Low-costmass housing (less than 60sqmt) and affordable housing (even in partnership mode) have been exempted fromservice tax. However, clarity is yet to emerge on the value-based classification of "affordable housing" segment.

Impact: A definite positive steps towards mitigating the huge shortage in the affordable segment.But organized developers have only a limited exposure to this segment due tovarious otherissues. Hence, the magnitude would only be marginal for the sector as a whole, which couldhave otherwise reduced the capital cost of the developers under this high interest ratescenario.

One-year extension of interest subvention schemeThe finance minister has extended the existing scheme of interest subvention of 1% for housing loan up to INR1.5m,where the cost of the house does not exceed Rs2.5m, for one more year. While the scheme has been extended, theprice range of the eligible projects remains unaltered.

Impact: Would keep on supporting sales momentum in these price brackets. Key beneficiaries wouldMarginally be Unitech (Unihomes), Puravankara (Provident Projects) and HDIL (Extended suburbs projects).positive However, it would have had more impact if a broader price bracket was covered. This also

does not address the bigger concern of price-led non-affordability in metro markets.

Major disappointments Increase in service tax by 2%: Increase in service tax from 10% to 12% would further increase burden on end-

price of under construction projects (unless exempted under low-cost mass housing category), resulting into ahindrance against demand revival which is already under stress with high property price and low liquidity.Rental outgo for commercial tenants would also increase.

No industry status for sector: There has been no meaningful step towards proving industry status to real estatesector which could been a huge positive for easy and cheaper bank financing for this liquidity striven sector.

No hike in tax incentives: Interventions such as increase in income tax exemption on principal and interest,which would have boosted demand and was among the top industry expectations, remained unaddressed.

Increase in excise duty on steel/cement could have a minor adverse impact on input cost.

Other positive developments Enhanced provision under Rural Housing Fund could improve rural real estate potential: Provision under Rural

Housing Fund has been increased to INR40b (from INR30b last year) to provide competitive housing finance torural economically weaker segments and low-income groups.

High incentive in investment-linked deduction: Last year, notified affordable housing schemes have beenincluded as eligible for investment-linked deduction under Section 35AD of Income Tax Act. This year, capexincurred in such projects is proposed to be provided at the enhanced rate of 150% v/s 100% currently.

Limit of indirect finance under priority sector enhanced from INR0.5m to INR1m.

Marginallypositive

Union Budget 2012

3819 March 2012

Retail Budget Impact: Negative Sector Stance: Neutral

Overall budget impact, Sector outlook and Recos Overall, the budget is negative for the retail sector. However, the finance minister said that efforts were on

to arrive at a political consensus on the issue of allowing 51% in multi-brand retail. Reduction in excise duty on branded apparel from 4.5% to 3.6% will benefit apparel retailers like Shoppers

Stop and Pantaloon Retail. Increase in service tax on lease rentals will increase the lease rentals for all the major retailers. Doubling of custom duty on gold imports from 2% to 4% and 1% TDS on cash purchase and sale of jewelry

above INR0.2m is negative for organized jewelry retailers. We are cutting FY13 volume growth estimates for Titan Industries from 10% to 5% and EPS estimates by 4%

from INR8.1 to INR7.8, even after factoring in lower corporate tax rates by 75bp.


10% excise duty on sale of branded

garments applicable at 60% of retail

selling price

Government program for vegetable

clusters, National Mission for

Protein Supplements, 15 mega food

parks, capital expenditure for

modern food storage eligible for

viability gap funding

At a glance FlashbackMajor proposals

Increase in basic customs duty on standard gold bars; gold

coins of purity exceeding 99.5% and platinum from 2% to

4%

1% TDS on cash purchase and sale of jewelry above INR0.2m

Excise duty on branded jewelry retained at 1%, unbranded

jewelry subject to excise duty at 1% with 70% abatement

Increase in excise duty on apparels from 10% to 12%,

abatement rate changed from 55% to 70%, effective excise

duty down from 4.5% to 3.9%

Increase in service tax on lease rentals from 10% to 12%

Government to seek consensus on permitting 51% FDI in

multi-brand retail

Impact

Negative

Positive

Negative

Amnish Aggarwal ([email protected])Tel:+91 22 39825404

Valuation Matrix



Retail

Jubilant Foodworks1,077 Neutral 11.2 16.0 24.0 96.6 67.4 45.0 56.5 36.0 24.3 37.6 36.8 38.2Pantaloon Retail 156 Neutral 8.7 5.4 7.6 17.8 29.0 20.5 7.3 6.8 6.1 6.2 3.8 5.2Shopper's Stop 367 Neutral 9.1 8.1 10.1 40.1 45.1 36.3 20.3 21.0 16.1 12.6 10.3 11.5Titan Industries 233 Neutral 4.9 6.6 7.8 47.6 35.4 29.8 33.5 25.6 21.4 49.6 47.7 41.7Sector Aggregate 44.0 38.8 30.8 20.1 16.7 13.8 15.9 15.9 17.5

Union Budget 2012

3919 March 2012

Retail (Contd.)

Key budget proposals and impactThe budget has been a negative for the retail industry although the government said it hoped to create a consensuson 51% FDI in multi-brand retail. Branded apparel players will gain from lower excise while branded jewelryplayers will lose out due to higher gold prices and 1% TDS on cash purchase and sale of jewelry above INR0.2mIncrease in service tax will raise the lease rentals for the industry.

Decline in effective excise duty on branded apparelThe budget has increased excise duty on branded apparel from 10% to 12%; however it has also increased abatementfrom 55% to 70%. This will reduce the incidence of excise duty from 4.5% to 3.6%. Retail sector was lobbying forcomplete removal of excise duty which has not happened. However, the move is positive as lower excise duty andfalling cotton prices would reduce prices and increase demand.

Impact: Positive Lower excise duty and cotton prices would reduce end product prices and boost demandwhich has seen sharp contraction in the past year.

Increase in custom duty on gold, PAN requirement

Impact: Negative The 2% increase in custom duty on gold will increase gold jewelry prices upto INR750/10gm.Custom duty has increased from INR300/10gm to INR1120/10gm; this will reduce the demandfor jewelry. 1% TDS on cash purchase and sale of jewelry above INR0.2m will impact jewelrypurchase in cash. We are lowering FY13 volume growth assumptions for Titan's jewelry businessfrom 10% to 5% for FY13. We are cutting FY13 EPS estimates by 4% to INR7.8 (INR8.1 earlier).

Increase in service tax on lease rentals from 10% to 12%

Impact: Negative Increase in service tax on lease rentals will increase the lease rental costs for retailers as theydo not get a set-off due to lack of GST.

Union Budget 2012

4019 March 2012

Nitin Padmanabhan ([email protected]) Tel: +91 22 3982 5426Ashish Chopra ([email protected]); Tel: 3982 5424

Technology Budget Impact: Neutral Sector Stance: Neutral


Levy of MAT on units operating in SEZ

Increase in MAT rate from 18% to

18.5%. Decrease in surcharge from

7.5% to 5%


Overall budget impact, Sector outlook and Recos There are no changes in our earnings estimates for the IT universe post the budget. Managements indicate that discretionary spends return by 1QFY13 with improving sentiment in the US and

as clients are more comfortable post the finalization of budgets. Our top picks are Infosys and HCL Tech.

Major proposals

Royalty: The budget clarifies that the consideration for use

or right to use of computer software is royalty. These

amendments will take effect retrospectively from 1st June,

1976

Service tax: Increase in service tax from 10% to 12%

Impact

Negative

Neutral

Comparative valuatuionCompany TP/TM* Rating EPS (INR) P/E (x) FY11-13 CAGR (%)

FY11 FY12 FY13 FY11 FY12 FY13 USD Rev EPS

Infosys 3,226 / 20x Buy 119.4 147.0 161.3 22.3 18.1 16.5 13.4 16.2

TCS 1,270/ 20x Neutral 44.4 54.5 63.3 24.9 20.3 17.4 18.3 19.5

Wipro 424 / 16x Neutral 21.6 23.2 26.5 19.7 18.4 16.1 12.7 10.8

HCL Tech 555 / 15x Buy 23.1 32.8 37.0 20.0 14.1 12.5 17.6 27.3

Tech Mahindra 647 / 11x Neutral 54.3 69.5 70.3 12.0 9.4 9.3 6.9 9.2

Mphasis 367 / 10x Se l l 39.3 38.6 37.5 7.7 7.9 9.1 0.4 -3.5* - TP: Target Price, TM - Target Multiple based on FY13EPS Source: Company/MOSL

Valuation Matrix



Technology

HCL Technologies 498 Buy 23.1 32.8 37.0 21.6 15.2 13.5 13.1 9.1 8.3 20.8 24.5 23.1Infosys 2,866 Buy 119.4 147.0 161.3 24.0 19.5 17.8 16.6 13.2 11.7 27.8 29.0 26.9MphasiS 415 Se l l 39.3 34.9 36.7 10.5 11.9 11.3 9.1 9.0 8.6 23.1 17.6 16.1Patni Computer 495 Neutral 42.2 28.8 36.4 11.7 17.2 13.6 8.1 8.3 7.5 17.9 12.3 13.7TCS 1,168 Neutral 44.4 54.5 63.3 26.3 21.4 18.4 19.9 14.9 13.1 37.4 36.5 33.6Tech Mahindra 607 Neutral 54.3 67.7 64.7 11.2 9.0 9.4 5.8 6.0 4.8 30.2 27.7 21.3Wipro 428 Neutral 21.6 23.2 26.5 19.8 18.5 16.1 15.2 14.0 11.0 24.2 22.0 21.2Sector Aggregate 22.7 19.1 16.9 16.5 13.2 11.5 26.1 25.2 23.9

Union Budget 2012

4119 March 2012

Key budget proposals and impactThe budget has Neutral impact for the IT sector. The classification of payment for software licenses as royalty witha retrospective effect from 1976 could be negative. The increase in service tax from 10% to 12% has no impact as theincrease will be passed on to clients.

Classification of payment for software licenses as royaltyThe proposal to classify software licenses as royalty could have a negative impact as it is with retrospective effect.However, Infosys has already paid withholding tax on the same, while Wipro, TCS and HCL Tech are yet to assess theimpact. We understand that payments with retrospective effect would happen only if the IT assessment for aparticular year is under dispute. If the assessment is closed it would have no retrospective impact.

Impact: Negative Companies are yet to assess the impact of this change. While the impact could be negative weunderstand that it is unlikely to be significant.

Increase in service tax from 10% to 12%

Impact: Neutral The increase is service tax from 10% to 12% would have no impact as this would be passed onto clients

Technology (Contd.)

Union Budget 2012

4219 March 2012

Telecom Budget Impact: Neutral Sector Stance: Overweight

Shobhit Khare ([email protected]); Tel: +91 22 3982 5428


Effective service tax unchanged at

~10.3% and MAT rate unchanged at

~20%

Exemption of 4% special additional

duty on mobile phone components

extended for FY12

FY12 budget incorporated ~INR125b

non-tax revenue over and above the

revenue sharing licence fee and

spectrum charges


Overall budget impact, sector outlook and recommendations Post-budget, our earnings estimates remain unchanged with the increase in service tax unlikely to impact

financials of telecom majors. Although major network rollouts have already been completed, availability of viability gap funding is likely

to be positive for the sector. Explanations for the definition of "property" and "transfer" in the finance bill bring back focus on Vodafone's

tax liability case. Income-tax authorities had demanded tax of ~INR110b related to capital gain in the Vodafone-Hutch deal. Vodafone has already won the case in the Supreme Court.

Our top picks are Idea Cellular and Bharti Airtel.

Major proposals

Service tax increased from 10% to 12%

Telecommunication network and tower companies to be

eligible for viability gap funding

FY13 budget incorporates revenue of INR582b from "other

communication services". Assuming a 15% YoY increase in

recurring revenue in FY13 to INR190b, implied FY13 budget

estimate for proceeds from spectrum auction is estimated

at INR392b, broadly in-line.

Impact

Neutral

Neutral

Neutral

Valuation Matrix



Telecommunication

Bharti Airtel 327 Buy 15.9 12.1 20.2 20.5 27.0 16.2 9.2 8.0 6.4 12.6 8.8 13.5Idea Cellular 99 Buy 2.7 2.2 4.9 36.3 44.0 20.2 11.4 8.8 6.5 7.6 5.8 11.7Reliance Comm 92 Neutral 7.2 3.8 5.6 12.7 24.5 16.5 7.8 8.5 6.7 3.9 2.1 3.2Tulip Telecom 99 Neutral 18.9 19.5 18.5 5.3 5.1 5.4 4.2 4.7 4.6 28.6 23.4 15.6Sector Aggregate 20.3 27.5 16.6 9.1 8.1 6.4 8.9 6.4 9.8

Key budget proposals and impactThe budget is Neutral for the telecom sector.

Increase in service tax from 10% to 12%Service tax has been hiked from 10% to 12%. Effective service tax (including education cess) increased from 10.3%to 12.36%.

Impact: Negative Although service tax has increased, we do not expect any impact on the financials since it is apass-through.

Union Budget 2012

4319 March 2012

Telecommunication network and tower companies to be eligible for viability gap fundingTelecom network and tower companies have been made eligible for viability gap funding (VGF) under the schemefor support to public-private partnerships.

Impact: Positive With bulk of the network rollouts already completed, we don't expect any significant impacton the network rollouts for telecom majors. Bharti currently has population coverage of 86%.

FY13 budget incorporates revenue of INR582b from "other communication services"Excluding the recurring revenue sharing licence fee and spectrum charges, we estimate revenue budgeted fromspectrum auction in FY13 at INR392b.

Impact: Neutral Revenue from "other communication services", which includes the recurring revenue sharinglicence fee, spectrum charges and revenue from spectrum sale, has been revised to NR165.5bfor FY12 (v/s budget estimate of INR296.5b). FY12 budget estimates likely included ~INR130bfrom "spectrum auction" which did not materialize in FY12. FY13 revenue from othercommunication services has been budgeted at INR582b, broadly in-line with our expectationof >INR500b. Assuming a 15% YoY increase in recurring revenue in FY13 to INR190b, impliedFY13 budget estimate from spectrum auction is INR392b. Spectrum available for auctionincludes (1) 2G spectrum likely to be vacated post cancellation of 122 licences by SupremeCourt, (2) unallocated surplus 2G spectrum available with the government, and (3) spectrumin the 700MHz band.

Summary of 2G spectrum likely to be available for auction

Operator Allocated Spectrum Unallocated Potential spectrum

Total Allocated To be auctioned Not to be auctioned spectrum available for auction

Delhi 54 4 49 12 16

Mumbai 72 13 59 5 18

Tamil Nadu (Incl Chennai) 54 22 32 25 47

Kolkata 60 18 43 23 41

Maharashtra 69 22 47 6 28

Gujarat 60 18 43 4 22

A.P. 69 22 47 15 37

Karnataka 69 22 47 12 34

Kerala 61 18 44 28 46

Punjab 63 18 46 1 19

Haryana 64 22 42 4 26

U.P.(W) 61 18 44 8 26

U.P.(E) 62 18 45 0 18

Rajasthan 64 18 46 3 21

M.P. 63 18 45 18 36

W.B. & A&N 53 18 35 4 22

H.P. 58 18 40 6 24

Bihar 67 22 45 0 22

Orissa 59 22 37 18 40

Assam 55 22 33 4 26

N.E. 53 22 31 7 29

J & K 49 22 27 6 28

Sum 1,342 414 928 211 625

Average 61 19 42 10 28

Telecom (Contd.)

Union Budget 2012

4419 March 2012

Utilities Budget Impact: Positive Sector Stance: Neutral

Nalin Bhatt ([email protected]) +91 22 3982 5429Satyam Agarwal ([email protected]) / Vishal Periwal ([email protected])


Sunset clause of Sec 80IA tax holidayextended till March 2012

SEZ developers and units operatingwithin SEZ subject to MAT

Facilitates dedicated debt funds forthe infrastructure sector


Overall budget impact, sector outlook and recommendations Overall, the budget has been positive with focus on easing funding availability, reduction in direct and indirect

taxes, and simplified dividend tax regime. The much-expected imposition of additional duties on projectequipments for power plants was not implemented which means there will not be a hike in project costs.

Additionally, the budget highlighted the focus on "co-ordinated approach" across several ministries to improvethe delivery of the legislation and mentioned Coal India's commitment of signing FSA for projects commissionedtill Dec 2011 by March 2012. In his speech, the finance minister said, "In the realm of infrastructure, myproposals address some weaknesses in the troika of power, coal and railways".

Attempts to mitigate the impact of imported fuel for power producers as by waiving the import duty on fuels.Though this will improve the cost structure for generators, projects which have signed PPA will not benefit asit get covered under "change in laws of land". JSW Energy would be a beneficiary as sizable capacity is stillopen.

We continue to prefer CPSUs, as fuel supply/PPA structure issues along with funding continue to impactprivate IPPs. Our top picks are PGCIL, NTPC and Coal India.

Major proposals

Sunset clause of Sec 80IA tax holiday extended till March2013

Imported Coal, Natural Gas, LNG exempted from 5% customsduty and CVD lowered to 1% (from 5% earlier) till March2014

Excise duty exemption to coal mining projects. Custom dutyon machinery used for surveying reduced

Companies allowed to part-finance debt of existing powerprojects through ECBs. Withholding tax on the interestpayable on ECB has been reduced from 20% to 5%

INR100b of tax-free infrastructure bonds for power Proposal to remove the cascading effect of dividend

distribution tax in multi-tier corporate structures Repatriation of dividends from foreign subsidiaries of

Indian companies to India at a lower tax rate of 15% forone more year till March 31 2013

Impact

Positive

Positive

Positive

Positive

PositivePositive

Positive

Valuation Matrix



Utilities

Adani Power 73 Neutral 2.4 2.2 5.1 31.0 33.1 14.3 33.4 31.1 11.0 8.5 8.1 16.6CESC 308 Buy 38.9 40.1 42.7 7.9 7.7 7.2 6.0 4.8 4.8 11.4 10.6 10.3Coal India 342 Buy 17.3 23.2 27.8 19.8 14.8 12.3 12.8 9.7 7.3 26.4 27.6 26.3JSW Energy 68 Neutral 5.1 2.5 3.0 13.2 27.1 22.4 12.1 14.0 8.7 16.1 3.2 8.2Lanco Infratech 19 Buy 2.0 0.2 2.8 9.2 109.2 6.7 9.9 10.9 8.9 16.4 6.3 17.8NHPC 21 Neutral 1.6 1.6 2.0 13.3 13.4 10.6 10.5 9.2 8.7 7.0 6.3 7.8NTPC 173 Buy 9.7 10.1 11.0 17.9 17.1 15.7 12.8 12.5 11.9 12.2 11.8 12.0Power Grid Corp. 108 Buy 5.5 6.7 7.9 19.6 16.2 13.6 12.3 11.4 10.1 13.6 13.8 14.9PTC India 60 Buy 5.7 6.3 7.6 10.6 9.5 7.9 7.7 17.4 6.8 6.5 4.8 5.0Reliance Infra. 633 Buy 40.4 62.3 59.0 15.7 10.2 10.7 9.2 2.9 2.8 6.8 10.1 8.1Tata Power 106 Neutral 7.4 8.3 8.3 14.3 12.7 12.8 19.6 17.2 17.0 7.5 9.5 7.1Sector Aggregate 18.0 15.4 13.1 12.9 11.3 9.4 14.2 15.0 15.8

Union Budget 2012

4519 March 2012

Utilities (Contd.)

Key budget proposals and impact

Sunset clause for claiming Sec 80IA tax holiday extended till March 2013

Impact: Positive Our SOTP already factors in continuation of 80IA tax benefits for projects commissioned andthus the extension is maintaining status quo. Among the private IPPs, key beneficiaries willbe Adani Power, JSW Energy, Lanco Infratech, etc, which expect to commission large capacitiesby March 2012.

Imported coal, natural gas, LNG exempted from customs duty; CVD lowered

Impact: Positive Given the shortage of domestic coal/gas availability, dependence on imported fuel hasincreased. The waiver of import duty will lower the cost of fuel/power. Though this will improvethe cost structure for generators, projects which have signed PPA will not benefit as it getcovered under "change in laws of land". JSW Energy would be a beneficiary as sizable capacityis still open.

Attempt to ease funding

Impact: Positive ECB funding is now allowed to refinance the rupee term debt for power projects. Withholdingtax on ECB on interest outgo has been lowered from 20% to 5%. We believe that thesedevelopments will ease pressure only at the margin.

Dividend tax structures

Impact: Positive The budget has proposed to remove the cascading effect of dividend distribution tax in multi-tier corporate structures. This is a meaningful easing given the prevalence of project SPVstructures. Dividend repatriation from foreign subsidiaries of Indian companies to India at alower tax rate of 15% has been extended for one more year till March 31, 2013. Tata Power willbe a key beneficiary of the extension.

Union Budget 2012

4619 March 2012

Valuations - MOSL universe

SECTOR P/E EV/EBITDA P/BV RoE Div. PAT

(x) (x) (x) (%) yld (%) CAGR

(No. of companies) FY11 FY12E FY13E FY11 FY12E FY13E FY11 FY12E FY13E FY11 FY12E FY13E FY11 FY11-13

Auto (5) 14.0 12.4 10.5 7.9 6.3 5.1 5.2 4.0 3.1 37.0 32.1 29.7 2.1 15.3

Capital Goods (9) 17.3 16.5 15.3 11.0 10.5 10.0 5.1 4.1 3.5 29.3 25.2 22.5 1.8 6.3

Cement (7) 18.9 15.5 12.7 10.3 8.3 6.7 3.0 2.5 2.2 15.9 16.3 17.3 1.1 21.7

Consumer (12) 35.5 30.0 25.1 23.7 19.8 16.4 12.7 10.6 8.7 35.6 35.2 34.7 1.6 18.9

Financials (28) 13.1 11.3 9.5 NM NM NM 2.4 2.0 1.8 18.2 18.1 18.5 2.2 17.3

Private Banks (9) 21.2 16.9 14.4 NM NM NM 3.4 3.0 2.6 16.0 17.6 18.1 1.1 21.6

PSU Banks (11) 8.5 7.5 6.4 NM NM NM 1.6 1.4 1.2 18.5 18.0 18.3 2.3 15.5

NBFC (8) 15.1 13.3 11.1 NM NM NM 3.1 2.6 2.2 20.7 19.5 19.7 4.1 16.4

Health Care (17) 24.8 22.1 18.7 17.3 14.1 12.9 4.9 4.5 3.8 19.8 20.2 20.1 1.1 15.2

Infrastructure (7) 17.0 26.9 18.6 10.9 10.7 9.0 1.2 1.1 1.1 6.9 4.2 5.8 1.2 -4.2

Media (4) 17.6 18.8 16.0 9.8 10.4 8.7 4.1 3.8 3.4 23.5 20.4 21.4 2.3 4.7

Metals (9) 8.7 10.5 9.3 6.0 6.7 6.1 1.4 1.2 1.1 16.0 11.9 12.1 1.5 -3.3

Oil & Gas (12) 11.3 10.3 10.3 6.8 5.9 5.6 1.7 1.5 1.4 15.3 15.1 13.6 2.1 4.6

Excl. RMs (9) 11.7 10.2 10.5 6.0 5.4 5.2 1.9 1.6 1.5 15.9 16.1 14.1 1.9 5.6

Real Estate (10) 16.3 19.4 13.7 14.1 14.2 10.2 1.0 1.0 0.9 6.3 5.2 6.9 0.8 8.9

Retail (4) 44.0 38.8 30.8 20.1 16.7 13.8 7.0 6.2 5.4 15.9 15.9 17.5 0.5 19.5

Technology (7) 22.7 19.1 16.9 16.5 13.2 11.5 5.9 4.8 4.0 26.1 25.2 23.9 1.6 15.7

Telecom (4) 20.3 27.5 16.6 9.1 8.1 6.4 1.8 1.8 1.6 8.9 6.4 9.8 0.3 10.6

Utilities (11) 18.0 15.4 13.1 12.9 11.3 9.4 2.6 2.3 2.1 14.2 15.0 15.8 1.8 17.2

Others (1) 10.9 11.4 8.0 5.7 5.3 4.4 1.8 1.6 1.4 17.0 13.9 17.6 1.5 16.5

MOSL (147) 15.5 14.3 12.5 N.M N.M N.M 2.7 2.3 2.1 17.2 16.5 16.5 1.7 11.1

MOSL Excl. RMs (144) 15.7 14.4 12.6 N.M N.M N.M 2.7 2.4 2.1 17.4 16.7 16.8 1.7 11.6

Sensex (30) 17.1 15.6 14.0 N.M N.M N.M 3.0 2.8 2.5 17.8 18.2 17.8 1.3 13.5

Nifty (50) 16.8 15.2 13.6 N.M N.M N.M 3.0 2.7 2.3 17.7 17.5 17.2 1.3 13.1

N.M. - Not Meaningful. Source: MOSL

Annual performance - MOSL universe (INR billion)

Sales EBITDA Net profit

FY11 FY12E FY13E CHG * CHG # FY11 FY12E FY13E CHG * CHG # FY11 FY12E FY13E CHG * CHG #

(%) (%) (%) (%) (%) (%)

Auto (5) 2,333 3,023 3,470 29.6 14.8 331 401 475 21.1 18.4 190 214 252 12.8 17.9

Capital Goods (9) 1,297 1,529 1,667 17.8 9.0 188 203 218 8.0 7.2 132 139 149 5.1 7.4

Cement (7) 587 704 826 19.9 17.3 123 152 186 23.2 22.6 70 85 104 21.8 21.5

Consumer (12) 846 1,014 1,182 19.9 16.5 173 207 246 19.7 18.9 117 138 165 18.5 19.3

Financials (28) 1,574 1,857 2,164 18.0 16.5 1,265 1,475 1,736 16.6 17.6 640 744 880 16.3 18.2

Private Banks (9) 344 408 489 18.5 20.0 294 342 422 16.6 23.1 165 208 244 25.6 17.7

PSU Banks (11) 1,041 1,228 1,407 18.0 14.5 779 916 1,055 17.7 15.1 345 389 459 12.8 18.2

NBFC (8) 188 221 268 17.5 21.1 192 216 259 12.6 19.7 130 148 176 13.6 19.3

Health Care (17) 609 717 798 17.8 11.3 136 168 180 23.4 7.4 93 104 123 12.2 18.3

Infrastructure (7) 400 428 469 6.9 9.5 57 61 74 7.1 22.0 15 10 14 -36.6 44.7

Media (4) 79 81 91 2.8 12.0 30 28 33 -6.2 15.7 18 16 19 -6.2 16.9

Metals (9) 3,260 3,773 3,873 15.7 2.6 630 593 657 -6.0 10.8 352 294 330 -16.7 12.3

Oil & Gas (12) 10,894 14,534 15,037 33.4 3.5 1,280 1,403 1,448 9.6 3.2 654 717 715 9.6 -0.3

Excl. RMs (9) 4,967 6,545 6,786 31.8 3.7 1,079 1,129 1,149 4.6 1.8 544 621 606 14.2 -2.4

Real Estate (10) 203 192 255 -5.1 32.4 77 77 102 -0.5 33.6 44 37 52 -15.9 40.9

Retail (4) 199 241 284 20.9 18.0 18 22 27 21.5 20.4 8 9 11 13.4 26.0

Technology (7) 1,249 1,571 1,796 25.8 14.3 319 391 434 22.5 10.9 245 291 328 18.6 13.0

Telecom (4) 979 1,142 1,300 16.6 13.9 310 361 436 16.7 20.5 87 64 107 -26.4 66.2

Utilities (11) 1,648 1,978 2,439 20.0 23.3 453 536 662 18.3 23.4 287 335 394 16.9 17.5

Others (1) 58 76 86 30.4 13.9 11 14 16 25.6 15.6 6 5 8 -4.4 42.1

MOSL (147) 26,214 32,860 35,736 25.4 8.8 5,402 6,093 6,928 12.8 13.7 2,957 3,203 3,651 8.3 14.0

Excl. RMs (144) 20,287 24,871 27,485 22.6 10.5 5,201 5,818 6,630 11.9 14.0 2,847 3,107 3,542 9.1 14.0

Sensex (30) 6,910 8,617 9,187 24.7 6.6 1,552 1,741 1,933 12.2 11.0 820 943 1,056 15.1 11.9

Nifty (50) 7,853 9,895 10,592 26.0 7.0 1,745 1,990 2,213 14.1 11.2 945 1,079 1,209 14.2 12.0

* Growth FY12 over FY11; # Growth FY13 over FY12. For Banks : Sales = Net Interest Income, EBITDA = Operating Profits;

Note: Sensex & Nifty Numbers are Free Float.

Union Budget 2012

4719 March 2012

Valuation Matrix

(Contd.)



Automobiles

Bajaj Auto 1,722 Buy 90.4 108.5 123.0 19.1 15.9 14.0 13.2 10.8 8.8 66.7 54.9 47.7

Hero Motocorp 1,955 Buy 100.5 119.0 142.7 19.4 16.4 13.7 15.5 13.4 9.9 62.5 60.5 54.2

Mahindra & Mah. 677 Buy 48.2 42.1 55.9 14.1 16.1 12.1 5.4 4.8 3.8 25.0 20.7 19.5

Maruti Suzuki 1,374 Buy 82.4 54.0 93.6 16.7 25.4 14.7 9.0 12.7 7.4 16.5 9.8 14.9

Tata Motors 287 Buy 27.1 35.2 38.1 10.6 8.1 7.5 6.5 4.5 3.8 47.3 40.7 31.9


Capital Goods

ABB 853 Neutral 3.0 8.7 17.0 285.9 97.9 50.1 208.6 67.2 31.8 2.6 7.4 13.4

BGR Energy 329 Neutral 44.7 29.3 26.0 7.4 11.2 12.7 4.8 7.0 8.2 38.9 20.8 16.4

BHEL 274 Neutral 23.1 25.5 25.8 11.8 10.7 10.6 7.1 6.6 6.7 31.4 28.1 23.8

Crompton Greaves 139 Neutral 14.3 7.1 10.6 9.7 19.7 13.1 6.8 10.2 7.7 30.5 13.1 17.4

Cummins India 473 Buy 21.3 19.8 24.3 22.2 23.9 19.4 15.8 16.7 13.7 35.5 29.8 34.0

Havells India 579 Buy 22.0 28.9 35.8 26.3 20.0 16.2 15.6 12.1 10.1 42.0 38.0 33.8

Larsen & Toubro 1,320 Buy 69.7 75.6 83.5 18.9 17.5 15.8 12.7 11.9 11.3 18.3 17.7 15.6

Siemens 774 Neutral 22.5 25.7 22.9 34.4 30.1 33.9 18.4 18.4 20.4 25.9 23.2 19.2

Thermax 496 Neutral 32.0 34.4 34.5 15.5 14.4 14.4 8.8 8.3 8.1 31.9 28.1 23.6


Cement

ACC 1,340 Neutral 53.9 59.0 76.5 24.8 22.7 17.5 14.8 13.2 9.7 16.2 16.2 19.0

Ambuja Cements 168 Neutral 8.1 8.2 10.5 20.7 20.5 16.1 12.9 11.9 9.3 18.1 16.4 19.0

Birla Corporation 283 Buy 41.5 34.1 41.0 6.8 8.3 6.9 4.0 6.5 5.2 15.5 11.6 12.6

Grasim Industries 2,768 Buy 248.5 294.3 344.2 11.1 9.4 8.0 4.8 4.3 3.5 15.7 15.9 15.9

India Cements 103 Buy 2.2 12.4 13.6 46.3 8.3 7.6 12.9 6.1 5.4 1.6 8.8 8.5

Shree Cement 2,890 Buy 197.6 204.7 217.7 14.6 14.1 13.3 11.8 8.0 6.6 36.0 34.1 30.6

Ultratech Cement 1,480 Buy 51.2 77.6 99.5 28.9 19.1 14.9 16.1 10.7 8.5 18.4 18.2 19.6


Consumer

Asian Paints 3,210 Buy 87.9 100.1 120.7 36.5 32.1 26.6 22.8 20.9 16.9 38.5 35.3 34.9

Britannia 573 Se l l 12.3 16.7 20.5 46.6 34.4 28.0 29.9 22.3 17.8 32.5 37.2 38.4

Colgate 1,090 Se l l 29.6 32.0 37.4 36.8 34.0 29.2 27.3 25.1 21.0 114.1 102.7 99.5

Dabur 103 Neutral 3.3 3.6 4.4 31.6 28.3 23.6 24.2 21.3 17.5 40.9 36.5 35.6

Godrej Consumer 447 Neutral 14.9 17.2 21.9 30.0 26.0 20.4 25.1 19.5 14.6 27.9 26.7 23.3

GSK Consumer 2,574 Neutral 71.3 85.7 102.3 36.1 30.0 25.1 21.9 19.1 15.5 31.2 31.0 31.7

Hind. Unilever 390 Neutral 10.0 12.2 14.1 39.2 32.0 27.7 30.2 23.9 20.4 81.8 76.3 70.1

ITC 216 Buy 6.4 7.9 9.3 33.5 27.5 23.4 21.3 17.8 15.0 33.2 35.0 34.9

Marico 158 Buy 4.7 5.4 7.1 33.2 29.1 22.1 24.8 19.5 15.0 31.9 28.5 28.3

Nestle 4,386 Neutral 86.8 105.7 124.8 50.5 41.5 35.1 33.5 27.6 22.4 116.5 96.0 80.9

Pidilite Inds. 159 Buy 6.5 6.5 8.3 24.5 24.5 19.3 16.4 15.8 11.7 28.9 24.4 24.3

United Spirits 579 Neutral 28.2 25.6 32.8 20.5 22.6 17.7 12.5 10.8 9.4 8.2 6.9 8.2


Union Budget 2012

4819 March 2012

Valuation Matrix (Contd.)

(Contd.)UR - Under Review



Healthcare

Aventis Pharma 2,158 Neutral 67.3 83.0 91.1 32.1 26.0 23.7 30.1 26.9 20.0 15.5 17.3 16.7

Biocon 241 Neutral 18.4 15.8 19.3 13.1 15.3 12.4 7.2 7.7 6.3 18.1 14.0 15.4

Cadila Health 712 Neutral 30.9 25.7 38.0 23.0 27.7 18.7 15.0 15.1 12.8 33.4 21.7 26.1

Cipla 302 UR 12.0 13.5 16.4 25.1 22.4 18.4 18.3 15.4 12.9 14.5 14.5 15.6

Dishman Pharma 48 Neutral 10.0 4.6 8.0 4.8 10.3 6.0 7.5 6.7 5.5 9.7 4.2 6.9

Divis Labs 725 Buy 32.4 34.9 44.1 22.4 20.8 16.4 18.5 15.9 11.9 23.9 22.0 23.4

Dr Reddy’ s Labs 1,680 Neutral 65.6 93.7 85.5 25.6 17.9 19.6 19.3 14.2 15.3 24.1 29.1 23.3

Glenmark Pharma 300 Neutral 12.5 10.0 20.6 24.0 29.9 14.6 16.9 10.6 11.0 17.4 13.0 21.1

GSK Pharma 2,140 Buy 68.6 74.5 85.9 31.2 28.7 24.9 21.7 21.5 17.9 30.1 32.9 33.7

IPCA Labs. 335 Buy 20.9 26.3 31.6 16.0 12.7 10.6 12.6 9.1 7.6 27.4 27.9 26.9

Jubiliant Organosys 181 Neutral 14.4 11.1 28.5 12.6 16.3 6.4 11.1 7.8 6.4 10.5 8.4 20.2

Lupin 504 Buy 19.3 19.8 25.9 26.1 25.4 19.4 21.8 18.8 14.3 29.3 24.3 26.4

Opto Circuits 271 Neutral 19.6 24.7 31.1 13.8 11.0 8.7 12.8 9.6 7.7 30.4 30.2 31.2

Ranbaxy Labs 410 UR 25.8 13.8 17.4 15.9 29.7 23.6 9.8 11.5 16.5 19.4 -72.0 15.2

Strides Arcolab 572 Buy 20.9 31.2 45.7 27.4 18.3 12.5 15.2 12.1 9.7 11.6 13.7 13.8

Sun Pharma * 545 Neutral 13.6 22.4 21.2 40.2 24.3 25.7 26.6 16.7 16.0 16.2 22.3 17.9

Torrent Pharma 603 Buy 31.9 42.6 51.7 18.9 14.2 11.7 12.7 9.4 7.5 29.2 30.9 29.5


Infrastructure

Gammon India 45 Neutral 9.1 1.9 3.6 4.9 23.9 12.5 10.2 7.9 7.3 1.9 1.2 2.3

GVK Power & Infra 17 UR 1.0 1.3 1.4 17.8 13.3 12.2 15.5 14.8 9.6 4.6 5.8 6.0

Hind. Construction 26 Neutral 1.0 -3.8 -1.0 25.7 -6.9 -26.2 9.0 17.8 11.2 4.1 -16.2 -4.7

IVRCL 53 Buy 5.9 1.6 3.2 9.0 32.7 16.8 6.5 8.6 7.2 8.2 2.2 4.1

Jaiprakash Asso. 79 Buy 3.5 3.6 4.1 22.5 21.5 18.9 12.4 10.4 9.5 8.3 8.0 8.5

NCC 54 Buy 8.6 1.9 2.9 6.3 28.6 18.8 8.8 12.1 11.0 7.4 1.4 2.0

Simplex Infra. 221 Buy 24.8 16.5 24.6 8.9 13.4 9.0 5.8 6.0 5.1 12.0 7.3 10.1


Media

HT Media 134 Neutral 7.7 7.3 8.3 17.4 18.4 16.3 8.5 9.0 7.5 14.9 11.3 11.3

Jagran Prakashan 101 Neutral 6.9 6.0 7.2 14.6 16.7 13.9 8.8 9.3 7.7 33.2 26.0 28.2

Sun TV 316 Buy 19.6 17.7 21.6 16.1 17.9 14.6 7.6 8.4 6.9 32.4 26.5 29.0

Zee Entertainment 126 Neutral 6.0 6.1 6.8 21.0 20.8 18.6 15.5 15.0 13.1 16.9 18.7 19.3


Metals

Hindalco 140 Buy 17.6 17.8 19.5 8.0 7.9 7.2 5.6 6.2 5.9 23.1 19.8 18.6

Hindustan Zinc 130 Buy 11.6 13.4 13.8 11.1 9.6 9.4 7.2 5.7 4.6 24.2 22.9 19.8

JSPL 575 Buy 40.1 44.4 49.9 14.3 13.0 11.5 10.5 9.8 9.2 30.6 25.9 23.2

JSW Steel 748 Se l l 77.4 29.5 57.0 9.7 25.3 13.1 7.4 7.9 6.5 12.8 4.1 7.7

Nalco 57 Neutral 4.2 2.8 4.1 13.7 20.4 14.0 6.4 10.1 6.8 18.0 11.0 14.7

SAIL 96 Se l l 12.0 7.9 9.7 8.0 12.2 9.9 5.9 9.0 8.2 13.9 8.4 9.7

Sesa Goa 199 Neutral 49.0 34.1 33.9 4.1 5.8 5.9 1.6 5.5 9.2 40.4 21.0 17.6

Sterlite Inds. 114 Buy 15.2 17.4 14.9 7.5 6.6 7.7 4.2 3.1 2.6 13.0 13.4 10.5

Tata Steel 454 Neutral 62.3 26.5 44.4 7.3 17.1 10.2 5.8 7.1 6.1 40.5 11.1 15.7


* Sun Pharma estimates assume that it will not be taking MAT credit. If it takes MAT credit reported PAT will not change.

Union Budget 2012

4919 March 2012


UR - Under Review (Contd.)



Oil & Gas

BPCL 664 Buy 45.2 42.5 48.5 14.7 15.6 13.7 11.7 9.1 8.3 11.1 9.7 10.2

Cairn India 346 Neutral 33.3 48.0 49.3 10.4 7.2 7.0 7.6 5.6 4.4 17.1 21.1 18.8

Chennai Petroleum 165 Buy 34.3 14.8 30.8 4.8 11.1 5.3 6.0 27.6 6.1 14.2 5.7 11.3

GAIL 367 Neutral 28.7 30.9 31.1 12.8 11.9 11.8 8.9 8.4 8.8 18.5 18.0 16.2

Guj. State Petronet 77 Neutral 9.0 9.2 8.4 8.6 8.4 9.2 6.1 5.4 5.7 28.4 23.3 18.0

HPCL 298 Buy 45.4 28.8 35.2 6.6 10.4 8.5 11.6 11.4 8.0 12.8 7.6 8.8

Indraprastha Gas 362 Neutral 18.8 21.3 25.4 19.2 17.0 14.2 11.1 8.9 7.5 28.8 27.1 27.1

IOC 273 Buy 32.3 29.1 32.6 8.5 9.4 8.4 10.3 7.1 6.7 14.2 12.2 13.0

MRPL 66 Neutral 6.7 3.4 6.5 9.8 19.6 10.2 5.8 12.5 5.9 19.4 8.8 15.5

ONGC 273 Neutral 24.5 30.1 27.0 11.2 9.1 10.1 4.2 3.5 3.5 19.5 21.0 16.7

Petronet LNG 162 Buy 9.3 14.7 14.2 17.5 11.0 11.4 11.8 8.3 7.6 28.4 35.9 27.8

Reliance Inds. 772 Neutral 68.4 69.4 69.7 11.3 11.1 11.1 7.5 7.3 7.4 14.8 13.3 12.0


Real Estate

Anant Raj Inds 59 Buy 5.7 5.5 8.8 10.4 10.7 6.7 10.9 11.0 6.2 4.6 4.5 6.6

DLF 196 Buy 9.7 7.9 9.3 20.3 24.9 21.1 15.0 13.4 11.8 5.8 5.0 5.6

Godrej Properties 650 Neutral 18.7 17.1 27.8 34.7 38.1 23.4 50.8 49.9 26.2 15.2 12.5 18.0

HDIL 99 Neutral 19.8 16.4 28.0 5.0 6.0 3.5 7.5 7.9 4.2 9.0 6.9 10.6

IBREL 68 Buy 4.0 4.8 5.5 17.1 14.2 12.4 18.5 14.0 10.2 1.6 2.6 2.9

Mahindra Lifespace 321 Buy 26.3 31.4 36.4 12.2 10.2 8.8 9.1 8.1 6.0 10.2 11.0 11.4

Oberoi Realty 269 Buy 15.8 13.1 22.9 17.1 20.5 11.7 12.9 16.2 7.9 19.9 12.2 18.3

Phoenix Mills 215 Buy 5.6 9.1 9.6 38.1 23.7 22.3 28.3 18.5 12.6 4.9 7.4 7.4

Prestige Estates 107 Buy 5.1 4.3 8.8 21.1 24.7 12.2 12.5 14.2 8.0 11.6 6.6 12.4

Unitech 29 Buy 2.2 1.3 1.6 13.5 22.7 18.5 13.6 24.1 17.2 4.9 2.8 3.4


Retail

Jubilant Foodworks1,077 Neutral 11.2 16.0 24.0 96.6 67.4 45.0 56.5 36.0 24.3 37.6 36.8 38.2

Pantaloon Retail 156 Neutral 8.7 5.4 7.6 17.8 29.0 20.5 7.3 6.8 6.1 6.2 3.8 5.2

Shopper's Stop 367 Neutral 9.1 8.1 10.1 40.1 45.1 36.3 20.3 21.0 16.1 12.6 10.3 11.5

Titan Industries 233 Neutral 4.9 6.6 7.8 47.6 35.4 29.8 33.5 25.6 21.4 49.6 47.7 41.7


Technology

HCL Technologies 498 Buy 23.1 32.8 37.0 21.6 15.2 13.5 13.1 9.1 8.3 20.8 24.5 23.1

Infosys 2,866 Buy 119.4 147.0 161.3 24.0 19.5 17.8 16.6 13.2 11.7 27.8 29.0 26.9

MphasiS 415 Se l l 39.3 34.9 36.7 10.5 11.9 11.3 9.1 9.0 8.6 23.1 17.6 16.1

Patni Computer 495 Neutral 42.2 28.8 36.4 11.7 17.2 13.6 8.1 8.3 7.5 17.9 12.3 13.7

TCS 1,168 Neutral 44.4 54.5 63.3 26.3 21.4 18.4 19.9 14.9 13.1 37.4 36.5 33.6

Tech Mahindra 607 Neutral 54.3 67.7 64.7 11.2 9.0 9.4 5.8 6.0 4.8 30.2 27.7 21.3

Wipro 428 Neutral 21.6 23.2 26.5 19.8 18.5 16.1 15.2 14.0 11.0 24.2 22.0 21.2


Telecommunication

Bharti Airtel 327 Buy 15.9 12.1 20.2 20.5 27.0 16.2 9.2 8.0 6.4 12.6 8.8 13.5

Idea Cellular 99 Buy 2.7 2.2 4.9 36.3 44.0 20.2 11.4 8.8 6.5 7.6 5.8 11.7

Reliance Comm 92 Neutral 7.2 3.8 5.6 12.7 24.5 16.5 7.8 8.5 6.7 3.9 2.1 3.2

Tulip Telecom 99 Neutral 18.9 19.5 18.5 5.3 5.1 5.4 4.2 4.7 4.6 28.6 23.4 15.6


Union Budget 2012

5019 March 2012


CMP (INR) Rating EPS (INR) P/E (x) P/BV (x) RoE (%)


Private Banks

Axis Bank 1,214 Buy 82.5 97.0 112.1 14.7 12.5 10.8 2.6 2.3 2.0 19.3 19.9 19.5

Federal Bank 428 Buy 34.3 43.3 50.3 12.5 9.9 8.5 1.4 1.3 1.2 12.1 13.9 14.6

HDFC Bank 508 Neutral 16.9 22.2 27.9 30.1 22.9 18.2 4.7 4.0 3.5 16.7 18.9 20.5

ICICI Bank 917 Buy 44.7 55.1 62.3 20.5 16.6 14.7 2.5 2.3 2.1 12.2 13.8 14.3

IndusInd Bank 306 Buy 12.4 17.1 20.9 24.7 17.9 14.6 3.7 3.2 2.7 19.3 19.3 20.1

ING Vysya Bank 336 Buy 26.3 30.0 33.6 12.8 11.2 10.0 1.6 1.3 1.2 13.4 14.0 12.3

Kotak Mah. Bank 540 Neutral 21.3 24.1 28.2 25.4 22.4 19.2 6.2 5.4 4.8 14.5 14.2 14.1

South Indian Bank 25 Buy 2.6 3.4 3.9 9.5 7.1 6.3 1.6 1.4 1.2 18.5 21.1 20.3

Yes Bank 367 Buy 20.9 28.2 32.8 17.5 13.0 11.2 3.4 2.8 2.3 21.1 23.3 22.3

Private Bank Aggregate 21.2 16.9 14.4 3.4 3.0 2.6 16.0 17.6 18.1

PSU Banks

Andhra Bank 126 Buy 22.6 23.6 26.4 5.6 5.4 4.8 1.1 0.9 0.8 23.2 19.0 18.5

Bank of Baroda 809 Neutral 108.0 122.3 133.1 7.5 6.6 6.1 1.6 1.3 1.1 25.0 21.9 20.2

Bank of India 360 Neutral 45.5 45.1 58.5 7.9 8.0 6.2 1.2 1.1 1.0 17.3 14.6 16.7

Canara Bank 491 Buy 90.9 72.6 88.9 5.4 6.8 5.5 1.2 1.1 0.9 26.4 16.7 17.7

Corporation Bank 457 Neutral 95.4 105.7 120.3 4.8 4.3 3.8 0.9 0.8 0.7 21.9 20.2 19.8

Dena Bank 89 Buy 18.3 21.8 26.0 4.9 4.1 3.4 0.9 0.7 0.6 20.9 19.3 19.5

Indian Bank 238 Buy 39.9 44.5 48.4 6.0 5.3 4.9 1.3 1.1 0.9 22.9 21.6 20.0

Oriental Bank 279 Buy 51.5 41.8 49.6 5.4 6.7 5.6 0.8 0.7 0.7 17.1 11.4 12.4

Punjab Nat. Bank 968 Buy 139.9 155.3 180.8 6.9 6.2 5.4 1.5 1.3 1.1 24.4 22.3 21.7

State Bank 2,228 Buy 168.3 240.8 280.3 13.2 9.3 7.9 1.7 1.5 1.3 13.3 17.6 17.7

Union Bank 230 Buy 39.7 27.1 45.4 5.8 8.5 5.1 1.1 1.0 0.9 20.9 12.3 18.2

PSU Bank Aggregate 8.5 7.5 6.4 1.6 1.4 1.2 18.5 18.0 18.3

NBFC

Dewan Housing 256 Buy 28.1 29.1 38.2 9.1 8.8 6.7 1.7 1.4 1.2 26.7 18.7 19.5

HDFC 665 Neutral 24.1 27.4 31.3 27.6 24.3 21.2 5.6 5.2 4.2 26.6 26.6 28.8

IDFC 145 Buy 8.8 10.5 11.4 16.5 13.7 12.7 2.0 1.8 1.6 14.7 13.9 13.2

LIC Housing Fin 248 Buy 21.7 20.9 27.5 11.4 11.9 9.0 2.8 2.4 2.0 25.8 20.3 24.3

M & M Financial 706 Neutral 45.2 54.9 69.6 15.6 12.9 10.1 2.9 2.5 2.1 22.0 20.8 22.4

Power Finance Corp 188 Buy 23.0 23.9 29.1 8.2 7.9 6.5 1.4 1.2 1.1 18.3 16.6 16.6

Rural Electric. Corp. 209 Buy 25.4 28.5 34.1 8.2 7.3 6.1 1.6 1.4 1.3 21.1 20.7 21.8

Shriram Transport 583 Buy 54.4 56.9 64.3 10.7 10.3 9.1 2.7 2.2 1.8 28.2 23.6 22.0

NBFC Aggregate 15.1 13.3 11.1 3.1 2.6 2.2 20.7 19.5 19.7




Utilities

Adani Power 73 Neutral 2.4 2.2 5.1 31.0 33.1 14.3 33.4 31.1 11.0 8.5 8.1 16.6

CESC 308 Buy 38.9 40.1 42.7 7.9 7.7 7.2 6.0 4.8 4.8 11.4 10.6 10.3

Coal India 342 Buy 17.3 23.2 27.8 19.8 14.8 12.3 12.8 9.7 7.3 26.4 27.6 26.3

JSW Energy 68 Neutral 5.1 2.5 3.0 13.2 27.1 22.4 12.1 14.0 8.7 16.1 3.2 8.2

Lanco Infratech 19 Buy 2.0 0.2 2.8 9.2 109.2 6.7 9.9 10.9 8.9 16.4 6.3 17.8

NHPC 21 Neutral 1.6 1.6 2.0 13.3 13.4 10.6 10.5 9.2 8.7 7.0 6.3 7.8

NTPC 173 Buy 9.7 10.1 11.0 17.9 17.1 15.7 12.8 12.5 11.9 12.2 11.8 12.0

Power Grid Corp. 108 Buy 5.5 6.7 7.9 19.6 16.2 13.6 12.3 11.4 10.1 13.6 13.8 14.9

PTC India 60 Buy 5.7 6.3 7.6 10.6 9.5 7.9 7.7 17.4 6.8 6.5 4.8 5.0

Reliance Infra. 633 Buy 40.4 62.3 59.0 15.7 10.2 10.7 9.2 2.9 2.8 6.8 10.1 8.1

Tata Power 106 Neutral 7.4 8.3 8.3 14.3 12.7 12.8 19.6 17.2 17.0 7.5 9.5 7.1


Others

United Phosphorous 134 Buy 12.3 11.8 16.8 10.9 11.4 8.0 5.7 5.3 4.4 17.0 13.9 17.6


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Motilal Oswal Securities Ltd3rd Floor, Hoechst House, Nariman Point, Mumbai 400 021

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