9am with Emkay

Contents

n Research Views

ABG Shipyard Q2FY11 Result – First Cut Analysis

Above estimates

n ABG Shipyard (ABGS) delivered strong performance during Q2FY11 was above estimates.

n Revenues (including subsidy income) grew by 38% yoy to Rs5555 mn – above estimates.

n Operating margins (including subsidy income) declined 100 bps yoy to 26.2% - though above estimates. Expansion in operating margins was due to higher raw material costs. Consequently growth in operating profits was lower at 33% yoy to Rs1454 mn – marginally above estimates.

n Led by strong operational performance, adjusted net profits increased 39% yoy to Rs637 mn – above estimates. After accounting for losses on sale of investments of Rs74 mn, ABGS reported net profit of Rs563 mn

n At CMP, the stock is trading at 10.2X FY11E and 9.5X FY12E earnings of Rs44.4 and Rs47.5 per share respectively.

Inflation eases by 4bps to 8.58%, core inflation inches up to 5.1%

n Headline inflation for the month of October eased marginally by 4bps to 8.58%.

n Primary articles inflation has eased to 16.7%, driven mainly by the presence of a high base.

n Inflation in primary articles showed a broad based increase on a MoM basis, led by price increases in potatoes (9.4% MoM), onions (24.2% MoM), fruits (4.7% MoM) and fibres (8.5% MoM).

n Fuel inflation saw a drop by 10bps, but also saw the price of petrol increase by 1.7% MoM.

n Manufactured products inflation inched up to 4.8% in the month of October from 4.6% last month.

n Core inflation that has been trending downwards has made a slight northward move to 5.1% from 4.9% last month.

n With YTD inflation for FY11 at 4.3%, the broad downtrend in inflation would probably stay unaffected.

n The month of November is likely to see primary articles inflation easing considerably owing to a favourable base effect. This in turn would bring about a significant drop in headline inflation.

n Research Update Included

Lupin Pharma Q2FY11 Result Update; Robust earnings; Revise target price upwards; Accumulate; Target: Rs496

n Strong operating performance largely driven by robust growth momentum in US, Europe, Japan and India coupled with favorable product mix

n US branded business grew at 24% (adjusted for one time impact of change in accounting treatment for rebates) and India formulations at 22% (adjusted for inventory correction)

n Both existing and new prescriptions seeing growth in Antara; OC launches in US in Q312 will aid long term revenue visibility

n On account of improved performance, revise earning estimates and raise target to Rs496; Maintain Accumulate, owing to limited upside

HPCL Q2FY11 Result Update; Results above expectation, Maintain BUY; Target: Rs.515

n HPCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to issuance of oil bonds/Cash receivables during the quarter

n EBIDTA at Rs.24.8bn, against Rs1.7bn, YoY, mainly due to inventory Gain and issuance of oil bonds/cash receivables from the government of India

n Average gross refining margin for 1H FY11 was at $3.2/bbl as compared to $3.8/bbl (decline by 18% YoY) below our expectation of $3.7/bbl.

n Valuations look attractive at 1x FY12E ABV, mainly due to recent change in reforms, Continue BUY rating with TP of Rs.515

Glenmark Pharma Q2FY11 Result Update; On a comeback trail; Upgrade to Accumulate; Target: Rs381

n Adjusted PAT growth of 27% was in-line driven by a) 23% growth in sales at Rs7.4bn (est. of Rs7bn) and b) 11% growth in EBITDA at Rs1.87bn (est. Rs1.77bn)

n Revenue growth was driven by a) 19% growth in Speciality business (55% contribution to top line) and b) 27% growth in Generics business (45% contribution to top line)

n Managements conscious effort to clean the balance sheet is a welcome move; further improvement in working capital situation can lead to expansion in valuation

n Positive Ph-III trials a step forward for Crofelemer launch

n Tweak earning estimates; raise target price to Rs381 (Rs308 earlier); upgrade to Accumulate from Hold

IOCL Q2FY11 Result Update; Results above expectation, ACCUMULATE; Target: Rs.458

n IOCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to inventory gain and issuance of oil bonds/Cash receivables during the quarter

n EBIDTA at Rs.68.9bn, against Rs.6.1bn a year ago, mainly due to Inventory gain and issuance of oil bonds/cash receivables from the government of India

n Average gross refining margin for 1H FY11 was at $4.7/bbl as compared to $5.4/bbl (declined by 13% YoY) above our expectation of $3.5/bbl.

n Valuations look attractive at 1.4x FY12E ABV, mainly due to recent change in reforms, Accumulate rating with TP of Rs.458

Tata Steel Q2FY11 Result Update; Getting fit for future; Accumulate; Target: Rs 712

n Higher volume in Indian operations and slightly higher realization in European operation helped revenue growth of 5% to Rs 286.5 bn, in line with our expectations

n Higher raw material costs (up ~20% QoQ) weighed on the EBITDA margin, which fell 348 bps QoQ to 12.8%. EBITDA/ tonne for Tata Steel Europe remained at ~US$60

n Higher other income due to stake sales in Tata Motors and Tata Power helped consolidated PAT to grow 8.4% on QoQ to Rs 19.8 bn

n Revising up our earnings estimates for FY11E and FY12E to Rs 81.4 and Rs 97.8 respectively. We assign Accumulate on the stock

IVRCL Infrastructure Q2FY11 Result Update; Earnings continue to disappoint; Hold; Target: Rs160

n Q2FY11 PAT at Rs 233 mn sharply below estimates (Rs434 mn) led by revenue decline of 16%. Execution impacted by delays in financial closure of own BOT projects & extended monsoons

n EBITDA at Rs 706 mn down 41% margins at 6.7%, contracted 287 bps – as slow execution rate led to poor overhead absorption –impacting margins to an extent of 230 bps

n Mgmt revenue guidance of ~Rs6.75 bn, lowered to Rs 6.5 bn still implying a steep H2FY11E revenue growth of 42% & EBIDTA growth of 47%

n We believe IVRCL will continue to face execution headwinds as ~ 40% of order backlog remains slow moving. We cut FY11E/12E EPS by 19.5%/16.5%. Maintain HOLD - cut target to Rs160

Mahindra Satyam Q2FY11 Result Update; 'Growth+ cost' pangs= Margin pressures; REDUCE; Target Price: Rs 70

n Mahindra Satyam's result continue to indicate the 'Hard toil' faced by the company as Sep'10 qtr revenues decline by ~2% QoQ, margins falling by ~380 bps QoQ to 5.9%

n Result vindicate our negative stance on the company as it faces stiff challenges from both weaker competitive positioning in erstwhile areas of strength

n Cut our FY11E/12E/13E margins to 8.4%/14%/14.7% (V//s 15.2%/17.1%/17% earlier) driving a 48%/24%/19% in EPS to Rs 2.7/4.9/6(V/s Rs 5.1/6.4/7.5 earlier)

n Maintain REDUCE rating with a revised March'12 DCF based TP of Rs 70(V/s Rs 81 earlier, implying ~12.5x 1 yr forward P/E)

n Dealer Comments

The markets started the day's session on a positive note by 40 odd points upward gap led by weak to subdued cues from the world markets particularly the Asian counterparts. Immediately after a positive start markets slipped in the negative zone and kept on see sawing in both zones till almost post noon trades. Markets were just swaying around the Fridays closing levels in the absence of any major trigger leading to buying mood and even muted flows from the funds keeping the indices in a narrow range for time being. But post lower inflation data and improved trade data lead to very robust and renewed buying interest in banking stocks particularly the second rung banking stocks thereby taking the indices to positive terrain at the closing bells. B esides buying in fmcg, technology and select auto and healthcare stocks also aided the day's late rally. Finally once again markets closed the day on a positive note towards the end at almost day's highs with Sensex gaining 153 points or 0.76% higher to settle at 20310 levels while Nifty gained 50 points or 0.82% higher to settle at 6122 levels. The overall traded volumes were quite lower compared to the earlier day by almost 25% and were at Rs 1620 bn. While delivery based volumes were also lower compared to the earlier day at 38.2% of the total traded turnover. Among the Fund activities FII's were net sellers to the tune of Rs 6.74 bn on 12th November 2010. While on 15th November 2010, FII's bought shares worth Rs. 3.13 bn in cash segment (provisional) while in the F&O segment they were net sellers to the tune of Rs 16.67 bn whereas Domestic Funds sold shares worth Rs. 0.03 bn (provisional).

n Technical Comments

Within the falling channel

In today's session, Nifty saw the anticipated bounce, from the support of 50-daily simple moving average. However, we still stick to our bearish stance and recommend going short in range of 6130-6150. Moreover, on hourly degree Nifty is still trading within a falling channel and has also approached the upper boundary of that channel. Also, Nifty is just below the resistance of its 20-daily simple moving average. Hence this is the best time to go short, for all those, whose have missed the previous bus.

BSE Bankex

Today's move in BSE Bankex was just a relief rally, which has already retraced 50% of the previous fall and hence in the coming session its downtrend is expected to resume. The target for this index is still packed in range of 13600-13500.