market outlook 16.11.11

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Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539 1

Market OutlookIndia Research

November 16, 2011

Dealers DiaryIndian markets are expected to open flat with negative bias taking cues from

mixed opening in the Asian markets and modestly positive closing in global

markets on Tuesday. The Indian markets again closed in red yesterday as

concerns prevailed regarding European economies, domestic inflation and a fall

in rupee value to 32-month low, which prompted investors to stay on the

sidelines.

Global markets ended higher in the yesterdays trading session aided by reports

indicating that newly appointed Italian Prime Minister Mario Monti is close to

form a new government. The rebound in the global markets also came in from

better than expected retail sales growth data of US at 0.5% (estimate 0.44%)

and more than expected drop in US producer prices at -0.3% in October amid a

significant decrease in energy prices. GDP data of eurozone for 3QCY2011 wasalso along the expected lines at 0.2% qoq.

Meanwhile, today investors will keenly watch out for CPI and IIP data of US for

October 2011.

Markets TodayThe trend deciding level for the day is 16,964/5,093 levels. If NIFTY trades

above this level during the first half-an-hour of trade then we may witness a

further rally up to 17,09117,299/5,1345,199 levels. However, if NIFTY trades

below 16,964/5,093 levels for the first half-an-hour of trade then it may correct

up to 16,75616,630/5,0284,987 levels.

Indices S2 S1 R1 R2SENSEX 16,630 16,756 17,091 17,299

NIFTY 4,987 5,028 5,134 5,199

News Analysis Tata Motors global wholesale sales increase by 10.5% in October 2011 Hexaware bags US$250mn contract largest contract till date 2QFY2012 Result Review Tech MahindraRefer detailed news analysis on the following pageNet Inflows (November 14, 2011)

` cr Purch Sales Net MTD YTDFII 2,542 2,326 216 1,875 2,390

MFs 386 427 (40) (595) 4,540

FII Derivatives (November 15, 2011)

` cr Purch Sales Net Open InterestIndex Futures 1,850 2,775 (924) 14,958

Stock Futures 1,768 1,911 (142) 28,828

Gainers / Losers

Gainers LosersCompany Price (`) chg (%) Company Price (`) chg (%)Cipla 307 6.5 Lanco Infra 13 (11.9)

Dish TV India 68 2.0 United Spirits 767 (11.1)

NHPC 24 1.9 Shree Renuka Sug 34 (10.8)

Tata Motors 181 1.9 Indian Hotels 60 (10.8)

United Brew 394 1.6 Pantaloon Retail 152 (10.3)

Domestic Indices Chg (%) (Pts) (Close)BSE Sensex (1.4) (236.1) 16,883

Nifty (1.6) (79.9) 5,069MID CAP (2.6) (156.6) 5,907

SMALL CAP (2.8) (184.1) 6,461

BSE HC (0.5) (32.9) 6,041

BSE PSU (1.8) (128.3) 7,108

BANKEX (2.0) (215.2) 10,436

AUTO (1.7) (148.1) 8,809

METAL (1.8) (202.8) 10,824

OIL & GAS (1.5) (129.3) 8,700

BSE IT (0.6) (34.2) 5,749

Global Indices Chg (%) (Pts) (Close)Dow Jones 0.1 17.2 12,096

NASDAQ 1.1 29.0 2,686

FTSE (0.0) (1.6) 5,517

Nikkei (0.7) (61.8) 8,542

Hang Seng (0.8) (159.7) 19,348

Straits Times (0.7) (18.6) 2,812

Shanghai Com 0.0 1.1 2,530

Indian ADRs Chg (%) (Pts) (Close)Infosys 0.3 0.2 $55.6

Wipro 1.1 0.1 $10.1

ICICI Bank (1.9) (0.6) $31.7

HDFC Bank (0.1) (0.0) $29.6

Advances / Declines BSE NSE Advances 629

Declines 2,230 1,290

Unchanged 101 37

Volumes (` cr)BSE 2,229

NSE 9,499


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MarketOutlook|IndiaResearch

November 16, 2011 2

Tata Motors' global wholesale sales increase by 10.5% inOctober 2011Tata Motors (TTMT) reported healthy wholesale volumes for October 2011, drivenby sustained growth momentum on theJaguar and Land Rover (JLR) front. Total

global sales grew by 10.5% yoy (down 10.7% mom) to 95,789 units. Global

commercial volumes posted modest growth of 6% yoy (down 16.5% mom), driven

mainly by domestic sales. However, global passenger vehicle volumes grew by

healthy 14.5% yoy (down 5.3% mom) on the back of strong growth momentum

witnessed atJLR. Wholesale volumes of JLR posted robust 38.8% yoy (down 5.4%

mom) growth to 26,158 units. Jaguar sales registered 62.5% yoy growth to 5,231

units, led by introduction of Jaguar XF 2.2diesel model. Land Rover sales also

posted strong 33.9% yoy growth on the back of the recently launched Range

RoverEvoque.JLR products continued to witness strong volume traction in China

and Russia, which has managed to offset the subdued performance in Europe, USand UK. We expectJLR to maintain its volume growth going ahead on the back of

strength of its recently introduced models. We maintain our Neutral rating on the

stock.

Hexaware bags US$250mn contract largest contract till dateHexaware Technologies (Hexaware) has bagged a contract worth US$250mn

(~`1,265cr) from a UK-based client for a period of five years, starting January 1,

2012. This is from an existing client of the company and Hexaware will garner

US$60mn worth of incremental business through this contract (annually

US$12mn). Additional revenue from this engagement will begin to accrue from

1QCY2012. This is a single largest contact ever signed by the company.

Under the contract, Hexaware is expected to ramp up its team, servicing the client

with a peak strength of 800 personnel (from 600 currently), operating in dedicated

global delivery centers. As part of this engagement, Hexaware will continue to offer

services that will cut across verticals, including enterprise solutions, application

management services and remote infrastructure and testing services. On the

margin front, management indicated that there is no one-time cost incurred by the

company for this deal and the companys operating margin will be maintained.

The ramp up of this deal is expected to start from early 2012, the peak of which is

expected to reach by 4QCY2012. So, we expect this deal to garner additional

US$9mn-10mn incremental revenue in CY2012 for Hexaware. We have changed

our CY2012 estimates for Hexaware, which are as follows:


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November 16, 2011 3

Exhibit 1:Change in estimatesCY2012E

Parameter Earlier Revised Variation(` cr) Estimates estimates (%)Net revenue 1,653 1,690 2.2EBITDA 278 286 2.9

Other income 56 56 0.4

PBT 318 325 2.1

Tax 73 75 2.1

PAT 245 250 2.1Source: Company, Angel Research

We continue to remain positive on Hexaware and recommend an Accumulaterating on the stock with a revised target price of `94.Result ReviewsTech MahindraTech Mahindra reported a muted set of 2QFY2012 results, which were broadly

in-line with our expectations. USD revenue came in at US$296.2mn, up merely

2.2% due to a 5.5% qoq decline in revenue from BT. The only growth driver was

non-BT business revenue, which grew by 7.3% qoq. Volume growth was flat qoq.

In INR terms, revenue came in at `1,333cr, up 3.2% qoq. EBITDA margin declinedby 337bp qoq to 15.3% because of wage hikes given during the quarter and

volume decline from BT. PAT, excluding share from Satyam, came in at `139cr,

negatively impacted by 1) higher interest cost of `72.1cr (vs. `22.3cr in

1QFY2012) because it includes MTM loss of `52cr derived from foreign currency

loans and 2) higher depreciation of `50.7 vs. `33.4cr in 1QFY2012 as the

company discarded an overseas facility, which was no longer required. These

negative impacts on PAT were partially offset by higher other income of `92.7 in

2QFY2012 vs. 46.0cr in 1QFY2012. PAT, including share from Satyam, came in

at `240cr. Overall, results were a mixed bag. The only growth driver for the

company was the non-BT business. The stock is currently under review.


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November 16, 2011 4

Economic and Political News Macquarie cuts India's FY2013 growth forecast to 6.9%

CBI to give 2G case file to Subramanian Swamy in two days Petrol prices slashed by`2.2 for Delhi and by`1.85 for rest of India, effective

from tonight

Corporate News

Godrej Consumer mulls price hikes to offset input costs Kingfisher seeks funds, interest concession from banks SAIL, Oman Oil to set up `15,000cr steel plant Uninor's `8,250cr rights issue proposal approvedSource: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar

17/11/2011 United Breweries Ltd.


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November 16, 2011 5

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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