>GEOMETRIC (ANGEL BROKING)

Performance highlights

■ Global slowdown takes toll, Top-line crashes sequentially: For 4QFY2009, Geometric recorded a 12.9% qoq de-growth in Top-line (growth of 12.3% yoy). This was on account of the intensifying global economic slowdown and particularly in the segments in which the company operates. Geometric is witnessing a ramp down from major customers and this is having an adverse impact on its business. All three segments of the company saw a fall in revenues sequentially, with Software Services falling 11.8% qoq, Engineering Services contracting by 15.7% qoq and Products 10.2% qoq. Revenues in US Dollar terms fell 15.6% qoq and even on a yoy basis, contraction of 11.7% was recorded. Billing rates in Software Services witnessed a fall, another factor that impacted Top-line. The average realised Rupee rate for the quarter rose 3.1% qoq and 27.1% yoy to Rs50.47 v/s Rs48.96 in 3QFY2009 and Rs39.71 in 4QFY2008. The company actually witnessed a yoy growth in Rupee revenues entirely on account of this factor. Thus, the worsening business environment continues to negatively impact Geometric. We believe, with major companies like General Motors and Chrysler in a major crisis (Chrysler recently filed for bankruptcy), the impact particularly on the Engineering Services Business is expected to be severe. On yoy basis, Software Services grew 20.8% and Products 12.3%, while Engineering Services saw a fall of 1.1%. The slowdown is beginning to increasingly envelope Geometric every quarter. Its major automotive clients are in a fairly perilous financial position. With demand slowing down, this sector has suffered. The company saw lower order inflows for the third consecutive quarter (US $4.6mn v/s US $5.4mn in 3QFY2009). Thus, all indications point to a more challenging environment for Geometric.

■ Higher SG&A, lower billing rates, one-time costs hammer Margins: In 4QFY2009, Geometric recorded a significant 917bp qoq fall in Margins due to higher SG&A costs, lower rates and one-time employee retrenchment costs. On a yoy basis, Margins fell by 302bp again due to higher SG&A costs. In absolute terms, EBIDTA fell by over 53% qoq and by 12.5% yoy.

■ Lower Margins, Forex losses lead company into the red: On account of the Margin contraction witnessed and Forex losses to the tune of Rs24.9cr, as well as higher Interest and Depreciation Costs, Geometric recorded a Net Loss of Rs20.5cr in 4QFY2009 (Net Profit of Rs1.8cr in 3QFY2009). Thus, the company has posted a disappointing performance this quarter and will require the global economy to resume its upward trend to help bring better times for the company.

To see full report: GEOMTERIC

>Areva T & D (ANGEL BROKING)

* Strong Top-line growth: Areva T&D India posted a strong Top-line growth of 66.9% to Rs845cr (Rs506cr) for 1QCY2009, which was ahead of our expectations. Primary reason for the phenomenal growth was the accounting policy change with regards to recognition of Revenues from long-term contracts in Systems and Power Transformer business on the basis of certain internal milestones as compared to invoicing on dispatches being followed earlier. In addition, better than expected execution of the healthy outstanding Order book aided the Top-line growth as well.

* Sharp dent in the Margins: On the Operating front, Areva T&D reported a sharp decline in EBITDA Margins by 390bp to 12.9% (16.8%). This was primarily due to the high raw material costs, which increased by a substantial 880bp to 72.1% (63.3%) of Net Sales. The changing product mix with increasing contribution from the Systems Segment (which entails higher
bought-out items and hence comparatively lower Margins) was a major reason behind the same. Though the company benefited from the Operating leverage with reduction in Employee cost (170bp) and Other expenses (320bp) as a % of Sales, it could only partially offset the Margin dip due to the high raw material costs. Going ahead as well, we expect the company’s Margins to decline gradually on the back of the changing Product mix and increasing competitive pressure in the market.

* Disappointing Bottom-line: Owing to the fall in Margins, EBITDA grew by a moderate 28.2% to Rs109cr (Rs85cr) during the quarter. Interest cost increased by more than three times to Rs12cr (Rs3cr) along with the increase in Depreciation. This coupled with higher restructuring and relocation costs and a slightly higher Tax rate led to reported Net Profit declining by 5.0% to Rs51cr (Rs54cr) during the quarter. However, after adjusting for the extraordinary item of profit on sale of property, adjusted Net Profit for the quarter managed to grow 5.8% to Rs51cr (Rs49cr).

To see full report: AREVA T&D

>Multiplex Sector (ANGEL BROKING)

'Exhibiting Gloomy Pictures'

Over the last one month, Multiplex stocks have witnessed sharp rally in the range of 35-50% despite looming concerns including lower occupancies and possible delays in handover of properties. Moreover, owing to the upcoming IPL season and the tiff between Multiplex operators and Producers, the Movie pipeline over 1QFY2010 is expected to remain weak. We believe that the slowdown in consumer spends and weak movie pipeline are likely to lead to stagnation in Footfalls and Average Ticket Prices (ATPs). Overall, we see no near-term catalysts for the Sector and given the recent rup up in the stock prices, we recommend a Neutral rating on the Multiplex Sector.

* Poor Content, not Slowdown - the key culprit: Amidst the ongoing economic slowdown, it has been observed that the frequency of theatre visits by moviegoers, especially to multiplexes, has been affected. Occupancies in most multiplexes have declined to as low as 25-30% levels in FY2009. We, however, believe that slowdown is only a certain factor impacting footfalls, with content being the key culprit keeping audiences away from the multiplexes. For instance, while Ghajini, released in the midst of slowdown, managed to gross Rs100cr+ domestically, a weak movie pipeline particularly in CY2008 (highest number of average and flop movies over the last three years) was mainly responsible for lower occupancies during FY2009.

* Real Estate slowdown, Funding issues impact Multiplex expansion plans: In a scenario where Multiplex operators are facing funds crunch on one hand and slowdown in the Real Estate Sector on the other, we believe expansion plans of the Multiplexes in terms of property roll outs are likely to suffer, in turn impacting their growth prospects. As a result, while the Multiplex companies had chalked out optimistic expansion plans at the beginning of FY2009, most have fallen short of meeting their target rollouts. We believe this scenario will only worsen in FY2010. Hence, we have pruned our FY2010 estimates to factor in lower
capacity addition.

* Near-term negatives to remain an overhang: We believe the Multiplex industry is facing several headwinds in the near term, which are likely to create an overhang on the Multiplex stocks on the bourses - 1) Delayed Movie releases owing to Exhibitor-Producer tiff, 2) Weak movie pipeline in 1QFY2010 owing to upcoming IPL season and 3) Stagnation in Footfalls and ATPs due to slowdown in consumer spends. Moreover, our interaction with managements indicated that occupancies during 4QFY2009 worsened (almost at 20% levels) on both qoq and yoy basis. Hence, we expect Multiplexes to report poor 4QFY2009E results, which would prove to be a dampener for the Multiplex stocks in the near term.

We have revised our estimates for the Multiplex companies under our coverage to discount execution delays in capacity addition and lower occupancies in the near term. While we remain Neutral on Fame, Inox and Cinemax, we downgrade PVR from Buy (Target Achieved) to Neutral.

To see full report: MULTIPLEX SECTOR

>Pantaloon Retail (ANGEL BROKING)

PRIL masters the sustenance mantra

Same Store Sales growth sustains in March 2009

Pantaloons Retail's (PRIL) Standalone registered positive yoy Same Store Sales (SSS) growth in March 2009, indicating sustenance of growth and consumer confidence. The Value and Lifestyle Retailing Segments of PRIL Standalone registered yoy SSS growth of 5.3% and 4.3% respectively, in March 2009. The Home Retailing continued to register negative yoy SSS growth for the fifth consecutive month, at -10.3% in March09.

It may be noted here that in March 2009, all the three retailing segments of PRIL
Consolidated sustained yoy SSS growth at February 2009 levels, when the Value, Lifestyle and Home Retailing clocked yoy SSS growth of 5.3%, 4.4% and -10.2%, respectively. This indicates that consumer footfalls are being sustained and is expected to go up in the future following indications of revival of the economy, albeit at a sluggish pace. We believe that this sustenance of SSS growth was on account of regular promotions and discounts offered by PRIL through 3QFY2009 (June-ending).

To see full report: PANTALOON RETAIL

>Sesa Goa (ANGEL BROKING)

' Not Enough ‘Iron ’

Sesa Goa (SGL), a subsidiary of Vedanta Resources Plc., is India's largest private player in iron ore exports with combined Iron ore reserves of 180mn tonnes. Amidst the ongoing downturn, we estimate the company's Earnings to decline at a compounded rate of 8.4% during FY2008-10E, owing to the weak pricing outlook for the next two years. Even so, we believe that SGL is the most insulated player in the current downturn considering its low cost operation, zero debt and strong cash balance of Rs3,219cr (Rs41/share). At Rs105 the stock is trading at a P/E of 4.3x and 6.4x FY2009E and FY2010E EPS and EV/EBIDTA of 2.1x and 2.2x FY2009E and FY2010E EBIDTA, respectively. With the recent run up of around 40% in the stock, we believe the stock is fairly valued. Hence, we Initiate Coverage on the stock with a Neutral recommendation, with a Fair Value of Rs112.

* Volume Growth achievable: We estimate the company to post 21% CAGR in iron ore volumes over FY2008-10E as against the management's optimistic guidance of over 25% growth in iron ore volumes over the next 2-3 years. It may be noted here that the company posted 12.5% CAGR in iron ore volumes in the last five years.

* Most insulated amidst downturn: We believe that SGL is insulated from the current downturn considering its huge cash and cash equivalents of Rs3,219cr in FY2009E (fetches Rs41/share) and it's zero debt on the book. We also believe that considering SGL's low cost of operation compared to its domestic peers, company is well placed to eat into the market share of small high cost Indian iron ore exporters, amidst falling prices.

* Contract Iron ore prices to be settled 30-40% lower: Worldwide iron ore contract negotiations for FY2010 are currently progressing. Negotiations signal weak iron ore prices at 30-40% lower levels owing to the slowdown in steel demand globally and especially in China. The Spot iron ore prices in China have also collapsed by more than 65% to US $64 from the peak of US $186 during July 2008. We also estimate the Australian FOB Iron ore fines contract price to be 30% lower yoy at US $64/tonne in FY2010. Overall, we believe that the weak pricing outlook in the next two years will pressurise SGL's Earnings and expect it to de-grow at a compounded rate of 8.4% during FY2008-10E.

To see full report: SESA GOA

>Areva T & D (ANGEL BROKING)

Areva T&D India is the subsidiary of the France-based Areva Group, which is a world-wide leader in the nuclear power business and the third largest player in the global Transmission & Distribution (T&D) space. The Indian subsidiary has been gradually gaining market share over the last few years and has now edged past ABB to achieve the Number 1 position in the Indian T&D market in 2008. However, in the current challenging scenario, several headwinds emerging due to the unfavourable macro-economic environment are taking its toll on the entire Capital Goods Sector including Areva T&D. At the current price of Rs214, the stock is quoting at 19.2x and 15.7x CY2009E and CY2010E EPS respectively, which we believe is expensive. Against this backdrop of an unfavourable broader environment, we Initiate Coverage on the stock, with a Reduce rating and Target Price of Rs177.

* Economic Slowdown weighs heavily on the Sector: Post a strong GDP growth of more than 9% for three consecutive years, the Indian economy has shifted to a lower growth trajectory of around 6-7% atleast for the next couple of years. The Corporate capex plans are also showing signs of deceleration with an increasing number of projects either being shelved or deferred. Hence, in the near term there would be a rising pressure both on future order inflows as well as execution of the current order book for the entire Sector.

* Areva T&D vulnerable to slowdown: Areva T&D too, with around 35-40% private sector orders cannot remain completely immune from the slowdown. In terms of end customer classification as well, the mix for the company stands at 50:50 for Utility and Industrial. Again, the industrial clients are expected to be hit the hardest in wake of the ongoing slowdown.
* Generation delays to impact T&D growth: In the present macro environment, though the Power Sector capex is relatively resilient with majority of projects being envisaged by the Central and State sector utilities, major worry for the T&D Sector is delays in the generation capacity addition. The execution rate even for the current Plan period is pretty dismal with around 54% of projects already running behind schedule.

To see full report: AREVA

>hcl technologies (ANGEL BROKING)

‘Axed on’ growth'

HCL Technologies’ Axon acquisition, while a long-term positive, is expensive and will lead to Margin and Bottom-line pressures, given lower Margins of Axon, US $585mn debt taken on and goodwill write offs. The slowdown has led to greater uncertainty in HCL's prospects and has started reflecting in its financials. Even as valuations are at historic lows, we see little scope of re-rating, given the headwinds faced by the company and 1.4% EPS compounded fall estimated over FY2008-10E. We Initiate Coverage on the stock with a Reduce recommendation and Target Price of Rs96, implying a P/E of 6x FY2010E EPS.

* Axon, an expensive acquisition: HCL Tech had acquired the UK-based Axon Group plc last year for £441.1mn (US $658mn). While the strategic rationale of the deal is well understood, in the medium-term, owing to lower Margins of Axon, debt of US $585mn taken on and goodwill write-offs, HCL Tech's Margins and Bottom-line are expected to remain under pressure. We expect the Axon deal to become EPS-accretive only post-FY2011.
* Forex losses expected owing to significant hedged positions: HCL Tech had a significant US $1.6bn as outstanding hedged positions at the end of 2QFY2009 (nearly 75% of FY2009E Revenues). In an environment of currency volatility and Rupee depreciation, this subjects the company to significant risks. Accumulated losses in "Other Comprehensive Income" in the Balance Sheet stood at US $210mn. With the Rupee not expected to strengthen anytime soon against the greenback, forex losses are likely to continue to negatively impact Earnings, even as the company is not taking any fresh hedges.
* Valuations low, but little scope for re-rating; high dividend yield provides cushion: HCL Tech's stock has traded in a historical 1-year forward P/E band of 5-21x over the past six years. However, over the past year, with the global economic slowdown and deterioration in prospects of the sector, the stock has been severely de-rated with its trough P/E multiple at just 5x. Thus, at current levels of 6.7x P/E multiple, the stock is trading close to its life-time low levels. However, we do not expect any major re-rating going forward given the weak global economic environment, overhang on account of the Axon acquisition and a disappointing 1.4% EPS compounded de-growth estimated over FY2008-10E. However, a dividend yield of 8.4% provides some downside cushion.

To see full report: HCL TECHNOLOGIES

>Gujarat State Petronet (ANGEL BROKING)

Stepping on Gas....

Gujarat State Petronet (GSPL) has borne the brunt of adverse developments such as 30% profit sharing with the Government of Gujarat, delay in arrival of KG gas (due to the Gas Allocation Policy), execution risks of new pipelines and deteriorating fundamentals of the Spot LNG markets. As a result, the GSPL stock witnessed a steep 66% correction on the bourses from its highs. Nonetheless, we expect the company to remain on high growth path with concerns receding on the economics of Spot LNG and KG gas expected to flow during the year. We have arrived at a Fair Value of Rs42 (at a higher cost of Equity of 17%) from Rs80 for the stock factoring in the 30% profit sharing (barring which our Target Price would stand revised at Rs60) and assumption of backended volume growth. We recommend an Accumulate on the stock.

■ Deeper connectivity and Exclusivity in Gujarat: A strong industrial base, a developed gas transportation infrastructure and better connectivity with the end consumers have led to a steep increase in demand for natural gas in Gujarat. GSPL, being the largest gas transporter in the state, stands to benefit from the same.

■ Increasing Transmission volumes to improve fundamentals: We believe that GSPL is the best play on the improving gas supplies in the country. Robust Spot LNG dynamics, increase in re-gasification capacity at Dahej, Hazira and commissioning of the new R-LNG terminal at Dabhol are likely to provide an opportunity to GSPL to transmit additionalR-LNG volumes going ahead. RIL is also likely to start production from its KG-D6 block next month, which will augment GSPL’s volumes during the latter part of FY2010. Overall, we estimate GSPL's volumes to increase significantly in FY2010E posting a robust CAGR of 20.2% over FY2008-10E from 16.8mmscmd to 24.7mmscmd.

■ Negative developments, major Execution risks factored in: Various negative developments such as 30% profit sharing with the Government of Gujarat, uncertain volume outlook and Execution risks involved in building and capitalisation of new pipelines are largely factored in and thus, limiting further downside from current levels.

To see full report: GUJARAT STATE PETRONET

>Pantalooon Retail (Angel Broking)

Back in Business
Same Store Sales growth positive in January and February 2009

Pantaloon Retail (PRIL) recorded positive Same Store Sales (SSS) for the two consecutive months of January and February 2009, after having plunged and recorded negative growth in November 2008 and ruling weak in December 2008. Amidst the ongoing economic slowdown, Pantaloon’s Lifestyle Retailing Segment sprung a surprise registering higher SSS growth than Value Retailing in January 2009.

The Lifestyle Retailing Segment reported a better performance on the back of the month-long Great Indian Shopping Festival held by the Future Group in December 2008- January 2009 and increased consumer confidence compared to the last quarter of CY2008. The Segment witnessed healthy yoy SSS growth of 12% in January 2009 v/s 14% degrowth registered in December 2008. On the other hand, the Value Retailing Segment witnessed yoy SSS growth of 4% in January 2009 as against 3.6% degrowth in December 2008.

The positive trend continued in February 2009 with the Value and Lifestyle Retailing Segments recording yoy SSS growth of 5.3% and 4.4%, respectively. The sustained sales growth in February 2009 can also be attributed to aggressive pricing, continuous promotional efforts and availability of more credit for consumers following softening of Interest rates. Pertinently, on a yoy basis, SSS growth of PRIL Standalone is nearing July 2008 levels which is an indicator of revival in consumer sentiment.

To see full report: PANTALOON RETAIL

>Banking Sector (ANGEL BROKING)

Navigating the downturn

Since September 2008, the impact of the global crisis on India's GDP growth prospects has intensified through two channels - by dampening our exports and by reducing availability of finance. This slowdown in GDP growth poses material headwinds for the banking sector in the form of slowing credit demand and increasing asset quality pressures.

We believe that Monetary softening, strong Domestic Savings and falling Interest rates will help revive domestic demand from late FY2010E and subscribe to the view that stimulus packages and bank bailouts will stabilise developed economies over a similar timeframe. But uncertainty regarding the timing of the revival poses material risks for the Banking sector.

That said, after more than a year of falling stock prices, valuations for several banks are much below median levels. In our view, the sector is well placed to navigate the ongoing downturn and valuations provide substantial margin of safety against potential worst case scenarios of asset quality deterioration.

In order to draw conclusions regarding the course of revival of domestic demand and correspondingly, banking sector earnings, we have provided projections and analysis of financial savings, combined fiscal deficit as well as sources and deployment of funds by the banking sector. Underpinning our positive long-term outlook on the sector, is our view that long-term growth drivers for the sector continue to hold true (revisited in a recent report).

Concerns over asset quality and slowing credit growth will remain an overhang over both Private and PSU bank stocks so long as the macro-economic outlook remains bleak. Therefore, in our view, keeping in mind attractive valuations, a longer-term investment perspective needs to be adopted, in order to take advantage of the eventual upturn in GDP growth - and several factors are falling into place to make this imminent over the next 12-18 months.

From this perspective, we prefer private banks, in light of their stronger core competitiveness. Moreover, PSU banks carry the risk of government interference affecting their financial performance. Importantly, private banks are presently available at compellingly cheap valuations, based on historic trends as well as justified fundamental valuation multiples.

Our top picks are HDFC Bank and Axis Bank.

To see full report: BANKING SECTOR

>Zee News (ANGEL BROKING)

'Time to tune in'

Zee News (ZNL) is an attractive play on the dual emerging themes of Regionalisation and Digitisation owing to its strong positioning in the lucrative Regional & News Broadcasting space, its proven execution track record and backing by the Zee Group. We believe that steady Viewership gains in new channels and Monetisation of the same coupled with higher Subscription Revenues will drive ZNL’s future Earnings growth. We Initiate Coverage on the stock, with a Buy recommendation and DCF-based Target Price of Rs37.

■ Regional + News = The Right Genre Mix: ZNL's business model clearly has an edge over other Media firms with limited presence in a single genre like News as ZNL offers investors an opportunity to play out a more resilient and diversified theme. Going ahead, weexpect ZNL's Advertising opportunity to register modest 12.3% CAGR in Revenues over FY2008-10E to Rs2,854cr. We also expect ZNL to emerge as one of the key beneficiaries of the upcoming General Elections.

■ Established Bouquet - Set for monetisation: ZNL is a diversified regional player with a strong foothold in all its markets. Its National channels, viz. Zee News and Zee Business have gained significant traction in Viewership while cash cows Zee Marathi and Zee Bangla are maintaining their strong No.1 position. ZNL's strategic foray in the South has also paid off well with Zee Telugu and Zee Kannada performing remarkably, and Zee Tamizh being well on track. Thus, as ZNL monetises its competitive position across markets, it is well poised to clock 23.3% CAGR in Ad Revenues over FY2008-10E.

■ Digitisation to accelerate ZNL's Revenue growth: A strong and diversified Bouquet coupled with advent of Digital Distribution platforms places ZNL in sweet spot in terms of maximising the emerging Subscription opportunity. We expect ZNL to register CAGR of 35.4% in Subscription Revenues over FY2008-10E driven by 77.5% CAGR in DTH Subscription Revenues (owing to DTH rollout) and Monetisation of its Southern Regional channels.

To see full report: ZEE NEWS

>Bombay Dyeing (ANGEL BROKING)

Bombay Dyeing (BD) in its attempt to prune operational costs has shifted its Home Textile operations from Mumbai to Ranjangaon and Patalganga. Post this shifting, the company proposes to capitalise on its prime land thus available. We believe its foray into the Real Estate business will drive its future revenues. BD has also forward integrated into polyester staple fibre (PSF) by setting up a plant of 1,65,000 tonnes capacity. In CY2008, the company's business was adversely affected by rising crude prices and its inability to pass on the same. However, now with crude correcting, its PSF plant fully operational and decent performance by its Real Estate Division, BD is a good bet at current valuations.

* Good play on Mumbai's Real Estate Sector: BD has a huge land bank at the prime locations of Worli (20 acres) and Dadar (40 acres) in Mumbai, which is being developed. We have valued BD's existing Real Estate business at Rs196/share on NAV basis. We have assumed that the projects would be completed over the next six-seven years as against our earlier estimate of four years and management's estimate of two-three years in wake of current slowdown in the Real Estate sector. Nonethless, we believe that BD is a safe bet on Mumbai's Real Estate Sector.

* Textile Business to turn-around: BD has shifted two of its textile mills out of Mumbai to Ranjangaon and Patalganga as part of its restructuring exercise, consolidate its manufacturing facilities and prune operational costs. Post shifting of these textile mills, BD proposes to exploit the land thus available at prime locations in Mumbai. We have valued the company's Textile business at 3x FY2010E EV/EBIDTA translating into Rs34/share.

* Maintain a Buy… 1.We see underlying value in BD's assets and believe that these would be Earnings accretive in the long run. 2. We believe Mumbai is one of the better Real Estate markets in the country, and if there is any revival in the Sector it would first happen in Mumbai. 3. BD is placed in an advantageous position as it has historically owned land.

To see full report: Bombay Dyeing

>Bosch (ANGEL BROKING)

BOSCH

4QCY2008 Result Update
BUY; Target - 3600

Performance Highlights.....

* Better-than-expected Performance: For 4QCY2008, Bosch India reported 13.5% yoy growth in Net Sales to Rs974cr, which was marginally below our expectation of Rs994cr. This came on back of 17% yoy decline in Auto segment while Other businesses posted robust 33.1% growth. The company’s Bottom-line, which recorded 24.3% yoy decline to Rs94.2cr (Rs124.4cr) however, exceeded our expectation. Bottom-line was mainly supported by the 72.8% yoy increase in Interest Income to Rs35.3cr. While the Auto Segment clocked sluggish growth (in some segments), the company’s Non-Auto businesses continued to clock strong growth.

* EBITDA Margin declines 270bp: During 4QCY2008, Bosch witnessed a substantial 270bp yoy fall in EBITDA Margins owing to higher Raw Material costs, which moved up 202bp yoy and accounted for over 50.9% of Sales (48.9% in 4QCY2007). Bosch imports some of its key components from Europe. Hence, unfavourable exchange rate fluctuation impacted Margins. Further, the company’s product mix has also undergone changes consequent to which, its overall input mix has seen a gradual change, which was one of the reasons for higher Raw Material cost, as indicated by management. Other expenditure for the quarter however, declined by 231bp yoy, which cushioned the fall in Margins to an extent. Other expenditure declined mainly on the back of continuous efforts of the company to cut Operating costs on account of the industrial slowdown. Overall, Bosch reported a 27.2%yoy decline in Operating Profits (excluding Other Income) to Rs175.4cr (Rs240.9cr) primarily owing to low operating leverage during the quarter.

* Bottom-line down 24.3%: Bosch reported 24.3% decline in Net Profit to Rs94.2cr (Rs124.4cr) for 4QCY2008. The company reported 9.3% increase in Depreciation to Rs105.3cr (Rs96.4cr) in 4QCY2008 due to its ongoing capex in CY2008. Almost 70% of capex was booked in 2HCY2008. However, 113.1% yoy jump in Other Income negated the impact on Bottom-line to an extent. An increase of 72.8% yoy in Interest Income to Rs35.3cr also lent a boost to Bottom-line.

To see full report: Bosch

>Reliance Industries (ANGEL BROKING)

RELIANCE INDUSTRIES
EVENT UPDATE

RIL-RPL merger: Swap ratio - Win-win game for the companies....

In the Board meeting held today, RIL- RPL Boards have accepted the merger proposal. The Swap ratio has been fixed at 1 Share of RIL for 16 shares of RPL. RIL has also decided to extinguish the treasury shares created following merger of the companies. Appointed date of merger of RPL with RIL is April 1, 2008. Based on the recommended merger ratio, RIL will issue 6.92 crore new equity shares to the existing shareholders of RPL. This will result in 4.4% increase in RIL's equity base from Rs1,574cr to Rs1,643cr. Consequently, the effective promoter holding in RIL will reduce from 55.0% to 52.7% post merger. The merger is likely to create an entity operating two of the world's largest and most complex refineries owning 1.24 million barrels per day (mnbpd) of crude processing capacity, the largest refining capacity at any single location in the world. The merged entity would emerge as the world's 5th largest producer of Polypropylene.

* Synergies from the merger: RIL expects the merger to provide synergies in crude procurement and product placement. However, we believe synergies are likely to be lower as the companies would be sharing facilities. Nonetheless, RIL expects the merger to be Earnings accretive. The merger would do away the holding company discount for RPL. Other benefits such as strong Cash flow and Balance Sheet along with lower cost of capital for RIL also exist. However, RIL has clarified that it would not be eligible to benefit from the Depreciation tax shield of RPL.

* Merger - An Earnings Accretive move: We believe the RIL-RPL merger is likely to be Earnings accretive for RIL shareholders. FY2010 EPS is likely to be higher by 1.66% due to
the merger.

To see full report: RIL

>Ranbaxy Laboratories (ANGEL BROKING)

Ranbaxy Laboratories - BUY
Event Update

Price: Rs170
Target : Rs277
Time : 12 months

*USFDA invokes AIP: The USFDA has invoked Application Integrity Policy (AIP) on Ranbaxy's Paonta Sahib facility citing that the company has falsified data and results in approved and pending ANDA filed from the facility. Prior on September 16, 2008, the USFDA had issued two warning letters and instituted an Import Alert barring entry of all finished drug products and active pharmaceutical ingredients (API) from Ranbaxy's Dewas, Paonta Sahib facilities due to violation of US current Good Manufacturing Practices requirements. That action barred commercial importation of 30 different generic drugs into the US and continues to be in effect. However, we expect this latest action by the USFDA to have limited impact on Ranbaxy’s US Sales as most of the approved drugs from this facility were already under the import ban list. Further, no other products from Ranbaxy's other manufacturing facilities are included in the AIP except products, which used clinical data from the Paonta facility.

* No Quality concerns: USFDA has however, clarified that it has no evidence that these drugs do not meet their quality specifications and has not identified any health risks associated with the currently marketed products from Paonta faicilities.

*No early resolution in sight: The latest USFDA action against Ranbaxy indicates that there appears to be no near-term closure to the investigation, and we believe it will continue over a longer period of time. However, Daiichi Sankyo and Ranbaxy have formed a team to resolve the issue. Notable, earlier this month, Ranbaxy had received approval for Imitrex from its Ohm facility in the US, which in our view was a positive development for it.

To see full report: Ranbaxy

>Sunil Hitech Engineers (ANGEL BROKING)

Sunil Hitech Engineers
Initial Coverage..........

Price Rs63
Target Price Rs111
Investment Period 12 months

* Substantial Power capacity addition to throw up immense opportunities: India's Eleventh Five-Year Plan Target for Power generation capacity addition stands at 78,577MW. Even after providing for slippages, actual capacity addition is expected to be in excess of 50,000MW. The power capacity addition is expected to throw up opportunities in excess of Rs1,00,000cr for players in the BOP space over FY2007-12E.

* Robust Order Book Position: During 9MFY2009, the company received orders worth Rs887cr. As of December 31, 2008, SHEL had a strong Order Book position of Rs1,298cr or 4x its FY2008 Revenue. This strong Order Book position provides high Revenue visibility for the company over the next two years.

* Proven execution capabilities: In its two-decade long presence in the BOP space, the company has established a strong track record of timely and successful execution of projects. The company has personnel from reputed companies like BHEL on its Board, which gives a fair idea of its excellent execution capabilities. Its clients include NTPC, BHEL and various state electricity boards (SEBs).

To see full report: Sunil Hitech

>Derivative report(Angel)

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Derivative report(Angel)