Brittania Antique Aug10

8/8/2019 Brittania Antique Aug10

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August 11, 2010

Antiques Morning Presentation

Strictly confidential

Market Snapshot From the Research DeskGlobal, Sector & Corporate News GAIL - Confident on transmission volume growth

Block Deals & Corporate Events Hindalco Industries Ltd.: Novelis 1QFY11 results review - Reiterate BUY

Derivatives Update Britannia Industries Ltd.: Limited upside - Downgrade to HOLD

Economy, Money & Banking Great Offshore Ltd. - Mild turbulence

Commodities Update

Valuation Guide


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Antique Stock Broking Limited 3

Antiques Morning Presentation (AMP) August 11, 2010

Sectoral indices Closing % Chg % MTD % YTD

BSE Auto 8,640 0.1 2.6 16.2

BSE Bank 11,943 (0.0) 3.5 19.1

BSE Cap Goods 14,793 0.1 1.4 4.8

BSE Cons dur 5,551 (0.8) 4.8 46.6

BSE FMCG 3,284 (0.3) 1.7 17.6

BSE IT 5,592 (1.4) 2.1 7.8

BSE Health 5,548 (0.8) (0.9) 10.6BSE Metal 15,594 (0.7) 1.3 (10.4)

BSE Oil 10,056 (0.2) (1.1) (4.0)

BSE Power 3,137 (0.3) 0.9 (1.6)

BSE PSU 9,574 (0.8) (0.0) 0.4

BSE Realty 3,621 0.5 7.4 (6.1)

BSE TECK 3,486 (1.3) 2.5 6.4

Nifty Outperformers Price % Chg % MTD % YTD

Tata Motors Ltd 957 4.1 13.1 20.9

Jaiprakash Associates Ltd 122 3.3 3.6 (16.7)

Suzlon Energy Ltd 58 2.5 2.8 (35.7)

Hindustan Unilever Ltd 260 1.6 3.5 (1.7)

Gail India Ltd 443 1.2 1.0 7.2

ICICI Bank Ltd 989 0.9 9.3 12.8

Larsen & Toubro Ltd 1,827 0.8 1.8 8.9

Nifty Underperformers Price % Chg % MTD % YTD

Sterlite Industries India Lt 176 (2.3) 0.4 (18.7)

Wipro Ltd 428 (2.1) 3.8 4.9

Hindalco Industries Ltd 164 (2.1) 2.0 1.7

ABB Ltd 784 (2.0) (3.3) 2.2

Tata Consultancy Svcs Ltd 865 (1.7) 2.9 16.7

Kotak Mahindra Bank Ltd 810 (1.7) 5.0 0.3

Infosys Technologies Ltd 2,829 (1.6) 1.5 8.8

Sector & Corporate News

Economy: The government is now looking to add MMTC and Shipping Corporation

of India to its disinvestment list, raising the possibility of the proceeds crossing the budgeted

INR400bn mark for the current fiscal.

GMR Infra: According to news reports, Ontario Teachers Pension Plan (OTPP),

Canadas largest single-profession pension fund, with USD96.4bn in net assets, has

offered to buy GMR Infrastructure out of InterGen for about USD1bn.

Educomp Solutions: According to news reports, Education services provider Educomp

Solutions has picked up a majority stake in Delhi-based engineering test preparation

company Vidya Mandir Classes for about INR340m.

Capital Goods: Leading manufacturers of railway rolling stock like GE, Siemens,

Alstom and Bombardier have been shortlisted for setting up an INR19.6bn electric

locomotive manufacturing unit at Madhepura in Bihar.


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Nifty Premium / Discount NSE Volatility Index (%)

Bulk Deals

Long buildupCompany Last % Chg % Chg OI OI (in 000)

TATAMOTORS 960 5.7 19.8 14,247

SUZLON 59 2.6 0.9 86,712

HINDUNILVR 260 1.9 5.7 12,282

ESSAROIL 133 1.8 2.4 20,182

Short buildup

Company Last % Chg % Chg OI OI (in 000)

HCC 72 (50.2) 91.3 20,944PIRHEALTH 482 (3.1) 1.8 8,028

STER 176 (2.6) 0.7 26,700

NAGARFERT 31 (2.2) 2.0 33,576

Short covering


IBREALEST 186 5.8 (19.3) 13,356

EDUCOMP 683 4.4 (14.6) 2,889

JPASSOCIAT 123 3.2 (5.5) 35,406

GMRINFRA 61 2.7 (5.8) 39,244

Profit booking


ABAN 881 (4.0) (18.0) 2,890

IFCI 58 (3.3) (7.9) 87,816

RENUKA 66 (2.5) (0.3) 39,822

Derivatives Update

Date Security Name Client Name Buy/Sell Qty Price10-Aug-10 Autolite India Standard Chartered Bank SELL 26,647 31.02

10-Aug-10 Avon Corp India Focus Cardinal Fund Dr SELL 400,000 5.74

10-Aug-10 Gayatri Proj Citigroup Global Markets SELL 80,200 387.59

10-Aug-10 Lancor Hold Sundaram BNP Paribas Mutual Fund BUY 226,155 103.00

10-Aug-10 Lancor Hold Sundaram BNP Paribas Mutual Fund SELL 226,155 102.97

10-Aug-10 TVS Motor TVS Motor Harita Emp Welfare Foundation SELL 1,200,000 140.75

10-Aug-10 Aban Offshore Morgan Stanley SELL 320,000 899.83

10-Aug-10 Sanghi Ind Spinnaker GS SELL 6,599,370 31.00

Company Volume % Spike % Chg

GMR Infra 6,891,328 538 2.64

IB Real 6,631,629 503 5.81

IVRCL 3,710,354 397 (2.85)

India Bulls 3,592,305 346 (1.82)

Tata Steel 2,718,363 333 (0.69)

Bajaj Auto 208,185 304 (2.03)

HDFC Bank 619,413 230 0.63Hindalco 4,076,736 212 (2.07)

JP Associate 7,193,188 209 3.34

Aban 1,234,661 192 (3.51)

Delivery Spike

Nifty ended down 0.46%, OI down 1.85%.

Nifty ATM IVs traded @ 15 vols.

17

18

19

20

21

12-Jul 19-Jul 26-Jul 2-Aug 9-Aug

-7.7

10.4

3.2

-4.1

0.3

-10-5

0

5

10

15

04-Aug 05-Aug 06-Aug 09-Aug 10-Aug


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Gold and crude prices Metal prices

Commodities Last % Chg % MTD % YTD

Gold ($/Ounce) 1,203 (0.1) 1.9 9.7

Crude Oil ($/Bl) 80 (0.4) 1.2 (3.6)

Aluminium ($/t) 2,161 (0.6) (0.1) (1.7)

Copper ($/t) 7,274 (1.7) - (0.9)

Zinc ($/t) 2,054 (3.1) 2.8 (18.8)

Lead ($/t) 2,099 (3.4) 2.1 (12.6)

Nickel ($/t) 22,130 (2.6) 5.0 19.9

Forex Rate Last % Chg % MTD % YTD

INR~USD 46.4 (0.6) 0.0 0.3

INR~EUR 61.0 0.2 (0.7) 9.3

INR~GBP 73.4 0.1 (0.8) 2.5

Bond Market Last Chg (bps) MTD (bps) YTD (bps)

10 Year Bond 7.8 2 2 25

Interbank call 5.5 - 60 215

Inflation vs. 10 yr yield INR/USD

The rupeedepreciated by 0.6% to end at INR46.4/USD.

Bond yieldswere up by 2bps to end at 7.8%.

Call rates remained flat at 5.5%.

Goldprices were down by 0.1% to end at USD1,203/ounce.

Crude oil prices were down by 0.4% to end at USD80/bl.

Aluminium, Copper and Zinc prices were down by 0.6%, 1.7% and 3.1%respectively.

Economy, Money & Banking Commodities Update

-2

0

2

4

6

8

10

12

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Inflation (%) 10 Yr Yield (%)

42

44

46

48

50

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Jul-10

Aug-10

USD~INR

600

700

800

900

1000

1100

1200

1300

Aug-09 Nov-09 Feb-10 May-10 Aug-10

30

55

80

105

130

Gold ($/ounce) (LHS)

Crude oil ($/bl) (RHS)

500

1,500

2,500

3,500

4,500

Aug-09 Nov-09 Feb-10 May-10 Aug-10

2,500

3,500

4,500

5,500

6,500

7,500

8,500

Alum ($/t) Zinc ($/t)

Copper ($/t)(RHS)


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GAIL - Pipeline network in India, led by GAIL


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GAIL - Focus on transmission

Projected capex (INRbn)

Source: Company

Projected borrowing (INRbn)

Source: Company

Percentage share in capex

Source: Company

Projected means of financing

Source: Company

4557

92

4

5

8

6

8

12

12

15

25

40

65

90

115

140

2010-11 2011-12 2012-13

Pipeline E & P Petchem Others

67

138

86

24

45

85

10

30

50

70

90

2010-11 2011-12 2012-13

Projected borrow ings (INR bn)

Pipeline

67%

E & P

6%

Petchem

9%

Others

18%

Bonds

31%

Term loan

31%

OIDB

5%

ECA

10%

FC Loan

23%


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Antique Stock Broking Limited 1 0


GAIL - Valuations

Valuations

We reiterate a BUY on GAIL with a target price of INR492 based on SOTP valuation.

We value the core business at INR415/share, applying a 13x multiple on FY12e EPS

of INR32/share. We value listed investments at INR50/share and E&P business at

INR27/share.

Key financials

Year ended March 2008 2009 2010 2011e 2012e

Net revenue (INRm) 180,420 237,897 249,514 277,585 294,298

EBITDA (INRm) 39,492 40,510 47,760 62,252 69,553

EBITDA growth (%) 32 3 18 30 12

PAT (INRm) 26,015 28,037 31,398 37,774 40,536

PAT growth (%) 9 8 12 20 7

EPS (INR/share) 20.5 22.1 24.8 29.8 32.0

EPS growth (%) 9 8 12 20 7

PE (x) 21.2 19.6 17.5 14.6 13.6

PB (x) 4.2 3.7 3.3 2.8 2.4

EV/EBITDA (x) 13.1 13.0 11.7 9.4 9.8

RoE (%) 20 19 19 19 18

Source: Company, Antique

Schedule of investments

Investment Shares (m) Price Value

O N G C 51 960 49,344

Indraprastha Gas 32 224 7,056

Petronet LNG 94 68 6,375

Guj. Inds. Power 1 88 50

Total 62,825

No. of shares (m) 1,268

Value per share 50

Note: Investments valued at CMP less 20% discount

SOTP valuation

Particulars Earnings Multiple Value per share

Core business on FY11 earnings 32.0 13 415

E&P valuation 27

Investments 50

Value per share 4

Source: Antique


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Hindalco Industries Limited: Novelis 1QFY11 results review - Reiterate BUY

Rajesh Zawar, +91 22 4031 3450, [email protected]

BUY CMP: INR165 Target Price: INR201 Potential Upside: 21%

Key highlights

Strong demand recovery: Novelis witnessed strong demand recovery in the regionswith shipment volumes growth of 4% QoQ reaching pre-recession levels. With 13% YoY

growth in realisations, revenues increased 29% YoY to USD2.5bn. The shipments reached

746kt in 1QFY11 with 15% YoY growth. The premium for realisation was USD1,303per tn.

Adjusted EBITDA at its highest level: Adjusted EBITDA per tonne has stabilised atUSD353 with high volumes resulting in USD263m in adjusted EBITDA recording

historically the highest EBITDA for the company. The resported EBITDA was USD213m.

Working capital consumes cash flow: Reported PAT increased QoQ to USD50m,but higher revenues consumed cash for working capital and FCF for the quarter was at

USD34m.

Shipments jumped with strong demand recovery

Source: Company

Financial snapshot

USDm 1QFY11 1QFY10 4QFY10 Chg YoY (%) Chg QoQ (%)

Sales 2,533 1,960 2,420 29 5

EBITDA 213 413 164 (48) 30

Adjusted EBITDA 263 124 231 112 14

Adjusted EBITDA margin (%) 10.4 6.3 9.5 406 (322)

Reported PAT 50 143 (1) (65) 5,100

Source: Company

Particulars 1QFY11 1QFY10 4QFY10 Chg YoY (%) Chg QoQ (%)

Shipments (kt) 746 650 716 15 4

Average realisation (USD/t) 3,395 3,015 3,380 13 0

Average LME Spot (USD/t) 2,092 1,496 2,167 40 (3)

Premium (USD/t) 1,303 1,519 1,213 (14) 7EBITDA/t (USD) 353 191 323 85 9

Source: Company

Average realisation stabilising with pricing

Source: Company

777 759

633 601650

687649

716746

-

100

200

300

400

500

600700

800

900

1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 2QFY10 3QFY10 4QFY10 1QFY11

kt

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500


USD/t

LME Aluminium - USD/t Novelis realisation - USD/t


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Free cash flow impacted due to working capital

Source: Company

Cost savings and restructuring benefits drove adjusted EBITDA per tonne

Source: Company

Liquidity remains strong

Source: Company

Modest capex easing pressure on cash flow

Source: Company

20

124

213

34

-2

-50

0

50

100

150

200

250

1QFY10 2QFY10 3QFY10 4QFY10 1QFY11

USDm

33

37 38

2422

28 27

23

37

0

5

10

15

20

25

30

35

40


USD

m

446

634

1026 1051

555

0

200

400

600

800

1000

1200


USDm

191

290

356

323

353

0

50

100

150

200

250

300

350

400


USD/tn


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Rationale

The stock is currently trading at 11.7x FY11e EPS and 5.4x FY11 EV/EBITDA. Wereiterate a BUY on this stock with a target price of INR201 per share on SOTP on

FY12e basis giving an upside of 20% from CMP. We believe the turnaround of Novelis,

robust domestic operations with rising volumes and operational efficiency would insulate

the company in these volatile macro environment.

The company has achieved fairly stable business operating metrics with structural stabilityin aluminium pricing by year end, the company would achieve significant growth traction.

SOTP valuation

Particulars FY12 EBITDA Multiple Amount

Hindalco - parent 48,418 6.0 290,505

Novelis 43,615 6.0 261,691

ABML 5,623 4.0 22,492

Total EV 574,688Net debt 219,020

Implied Mcap 355,668

Value per share 186

Value of investments Discount:20% 15

SOTP value per share 201

Source: Antique

Earnings estimate

Year ended Mar (INRbn) 2009 2010 2011e 2012e

Revenues 698 607 624 669

EBITDA 30 97 87 95

EBITDA growth (%) (59) 227 (11) 10

PAT 14 39 30 37

PAT growth (%) (11) 188 (23) 23

EPS (INR) 3 21 14 19EPS growth (%) (81) 537 (31) 37

P/E 51.4 8.1 11.7 8.5

P/BV 2.1 1.9 1.8 1.7

EV/EBITDA 15.8 4.8 5.4 5.0

RoE (%) 9 18 13 14



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Britannia Industries Ltd.: Limited upside - Downgrade to HOLD

Margins primarily impacted by higher sugar prices

Source: Company

Realisation change YoY % of key raw materials

Source: Company

Sugar price index witnessing a sequential drop, YoY drop to follow in 2HFY11

Source: Company, Office of Economic Advisor

Sugar and wheat price index

Source: Office of Economic Advisor

58.8% 58.7%63.7%

60.2% 61.4%63.8%

10.8% 11.1%12.4%

11.2%10.5%

8.6%

6.4%7.9%

8.8%

6.4% 6.6%

9.3%

10.6% 12.2%13.5% 15.5%

16.8% 15.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

FY05 FY06 FY07 FY08 FY09 FY10

0%

10%

20%

30%

40%

50%

60%

70%

Cost of RM Flour Hydrogenated Vegetable Oil Sugar Others

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

FY05 FY06 FY07 FY08 FY09 FY10

Flour w heat Hydrogenated Vegetable Oil Sugar

60.6% 60.6% 60.4%

64.2%

60.3% 60.8% 60.4%

64.2%

68.8%

65.4%

-4.9%

3.2%

11.0% 14.1%

21.3%

31.8%

39.3%

52.0%54.6%

24.3%

-10%

0%

10%

20%

30%

40%

50%

60%

4QFY08 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 2QFY10 3QFY10 4QFY10 1QFY11

56%

58%

60%

62%

64%

66%

68%

70%

RM as % of net sales (RHS) Wheat index change (yoy %) (LHS)

Sugar index change (yoy %) (LHS)

-

50

100

150

200

250

300

350

4QFY07 2QFY08 4QFY 08 2QFY 09 4QFY 09 2QFY10 4QFY 10

Sugar index Wheat index


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Britannia Industries Ltd.: Limited upside - Downgrade to HOLD

Financials

Year ended March 2009 2010 2011e 2012e

Revenue 31,122 34,014 40,402 46,031

EBITDA 2,589 1,601 2,684 3,691

EBITDA margin (%) 8.3 4.7 6.6 8.0

EBITDA growth (%) 12 (38) 68 38

PAT 1,940 1,694 2,014 2,764

PAT growth (%) 5 (13) 19 37EPS (INR/share) 81.2 70.9 84.3 115.7

EPS growth (%) 5 (13) 19 37

PE (x) 25.3 28.9 24.3 17.7

PB (x) 5.9 12.4 9.3 7.0

EV/EBITDA (x) 19.8 32.1 19.1 13.9

RoE (%) 24 43 38 39



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Events CalendarAugust 2010

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

14 AugustLanco Infratech, Unitech,NALCO

11 August 12 August 13 August 15 AugFinancial Technologies, Bharti

Airtel, Bosch, Parsvnath DevState Bank of India, Tata Power,Tata Steel, Shree RenukaSugars, Indiabulls Real Estate,PTC India

Shiv Vani Oil & Gas ExplServ, Ess Dee Aluminium,Patel Engineering, RelianceCommunications


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Important Disclaimer:

This report is prepared and published on behalf of the research team of Antique Stock Broking Limited (ASBL). This is intended for private circulation and should not be taken as recommendation to trade in the securities mentioned or any legal or taxation advice. We have exercised

due diligence in checking the correctness and authenticity of the information contained herein, so far as it relates to current and historical information, but do not guarantee its accuracy or completeness. The opinions expressed are our current opinions as of the date appearing in the

material and may be subject to change from time to time without any notice. ASBL or any persons connected with it do not solicit any action based on this report and do not accept any liability arising from the use of this document. The recipients of this material should rely on their

own judgment and take their own professional advice before acting on this information. The research reports are not, and are not to be construed as, an offer to sell or solicitation of an offer to buy any securities. Unless otherwise noted, all research reports provide information of

a general nature and do not address the circumstances of any particular investor. ASBL or any of its connected persons including its directors or subsidiaries or associates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any

inadvertent error in the information contained, views and opinions expressed in this publication. ASBL, its af filiates, directors, officers or employees may, from time to time, deal in the securities ment ioned herein, as principal or agent. ASBL or its af filiates may have acted as an Investment

Advisor or Merchant Banker for some of the companies (or its connected persons) mentioned in this report. The research reports and all the information opinions and conclusions contained in them are proprietary information of ASBL and the same may not be reproduced or distributed

in whole or in part without express consent of ASBL.

Antique Stock Broking LimitedNirmal, 2nd Floor, Nariman Point, Mumbai 400 021.Tel. : +91 22 4031 3444 Fax : +91 22 4031 3445

www.antiquelimited.com

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