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May 03, 2012

Strategy
STRATEGY THEMATIC

Good & Clean 4.0: The Great 50


Investing in cash generative, clean companies is the theme that we have focused on in all our model portfolios. While the Good & Clean (G&C) portfolios have been more tactical and short term in nature, our greatness framework has sought to identify long term bets. Now we replace the existing G&C 3.0: Battleships portfolio with the Great 50 portfolio. The new portfolio marries our greatness framework with the more tactical G&C approach. The first three iterations of the G&C portfolios have generated 20% points of outperformance relative to the BSE200 & the BSE500 over the last 14 months.

Analyst contacts
Gaurav Mehta
Tel: +91 22 3043 3255 gauravmehta@ambitcapital.com

Saurabh Mukherjea, CFA


Tel: +91 22 3043 3174 saurabhmukherjea@ambitcapital.com

Exhibit A: G&C 4.0- The Great 50


Stock Sector Portfolio Weight
(%)

Neither the Nifty50 nor the BSE100 looks attractive


Neither the Nifty50 nor the BSE100 are likely to offer investors compelling upside in the short-medium term as both of these indices are weighed down by large cap stocks which will suffer due to the new realities facing India. For example, Banks and Financial Services, Power, Infra, Construction, Real Estate, Aviation and the heavy engineering component of Capital Goods account for 37% of the BSE100. Most frontline stocks in these sectors will face heavy weather in the year ahead. So how should investors try to make money in the altered realities facing India?

Marrying the tactical with the structural


While the G&C has been a tactical portfolio that provides investment ideas for the next quarter or two, the greatness framework uses multi-year financial analysis to identify outstanding long term plays. In this note we introduce the Great 50, a portfolio which combines the two approaches. To date our portfolios have been unconstrained with respect to sectoral weightings. However, clients have urged us to benchmark the sector weights in our portfolios to the BSE200 to make our portfolios directly relevant to the daily reality facing money managers. Hence, with this portfolio, we move towards benchmarking of sector weights. Our three biggest overweight sectors are FMCG, IT and Auto. Our three biggest underweight sectors are Oil & Gas, Banks and Financial Services.
Exhibit B: Great 50 versus the Nifty 50
Portfolio Nifty Great 50 Source: Bloomberg Median mcap (US $mn) 8,376 2,505 3M ADV (US $mn) 18.1 3.2 Median FY13 P/E 13.3 13.8 Median FY13 P/B 2.1 2.6 Median latest RoE 19.4 22.7 Beta 1.00 0.86

Stock selection for G&C Great 50


Stocks for the Great 50 are chosen using our greatness framework. These stocks are also filtered through our forensic accounting and corporate governance filters. Finally, liquidity (3 month ADV > $1mn) and valuation constraints (ideally the stock has to be cheaper than historical multiples on at least one of the following- P/B, P/E, EV/EBITDA) are also applied. Since our greatness framework is not applicable on banking and financials services (BFSI) firms, we use our sector leads expertise to identify the best stocks from this space. The final portfolio of Great 50 stocks is presented in Exhibit A and as the table above shows, the Great 50 offers exposure to superior firms whose valuations are in-line with the broader market.

Bank of Baroda Banks/ Fin Serv Federal Bank Banks/ Fin Serv Kotak Mah. Bank Banks/ Fin Serv ICICI Bank Banks/ Fin Serv Shriram Trans. Banks/ Fin Serv GlaxoSmith C H L FMCG Nestle India FMCG ITC FMCG Dabur India FMCG Oracle Fin.Serv. IT TCS IT Tech Mahindra IT HCL Technologies IT Hero Motocorp Auto Eicher Motors Auto Tata Motors Auto Hind.Zinc Metals NMDC Metals MRPL Oil & Gas Petronet LNG Oil & Gas HPCL Oil & Gas Cadila Health. Pharma Lupin Pharma Glaxosmit Pharma Pharma Tata Power Co. Utilities Neyveli Lignite Utilities Idea Cellular Telecom Bharti Airtel Telecom Voltas Construction Engineers India Construction Larsen & Toubro Construction Bajaj Electrical Industrials Bharat Electron Industrials Cummins India Capital Goods Alstom Projects Capital Goods Shree Cement Cement ACC Cement Titan Inds. Retail Exide Inds. Auto Anc Apollo Tyres Auto Anc Castrol India Chemicals Asian Paints Chemicals Hathway Cable Media IL&FS Transport Infrastructure Oberoi Realty Realty Prestige Estates Realty Mcleod Russel Agro Gateway Distr. Logistics Coromandel Inter Fertilizers TTK Prestige Cons Durable Source: Ambit Capital research

4.1 4.1 4.1 4.1 4.1 3.7 3.7 3.7 3.7 3.5 3.5 3.5 3.5 3.4 3.4 3.4 2.3 2.3 1.8 1.8 1.8 1.8 1.8 1.8 1.7 1.7 1.6 1.6 1.3 1.3 1.3 1.3 1.3 1.2 1.2 1.0 1.0 1.0 0.9 0.9 0.7 0.7 0.7 0.7 0.4 0.4 0.2 0.2 0.2 0.1

Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

Please refer to disclaimer section on the last page for further important disclaimer.

Strategy

CONTENTS
Section 1: G&C: The journey so far..3 Section 2: Motivation and Methodology, G&C 4.0- The Great 50. 4 Section 3: Sector weights.... 5 Section 4: The greatness framework.......6 Section 5: The Great 50- Portfolio... 8 Appendix 1: Audit of G&C 3.0- Battleships.14

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Section 1: G&C- The journey so far


Investing in clean Indian companies which generate profits and cash on a sustainable basis has been the theme that most of our strategy research has focused on over the past year. For example, on 16th April we published a thematic (Profiting from a changing India) which explained why Investors need to exit the old India story (cash consumptive, capital hungry companies which rely on the Government to get things done) and focus on well managed, cash generative companies which feed off aspirational consumer demand. The G&C portfolios which we have been publishing since March 2011 has been the common thread that has pulled together into a portfolio solution, all our investment themes, namely:

The decline of politically connected companies; The lack of investor interest in firms with dodgy accounting quality and suspect corporate governance; and The structurally high cost of capital in India (and hence the adverse forces bearing down upon highly indebted and non-cash generative firms)

To date, we have had three iterations of these portfolios with the latest one being the G&C 3.0- Battleships portfolio published on Oct 19, 2011. These three portfolios have generated a cumulative outperformance, vis a vis BSE500 and BSE200, of over 19.6% points on a free float market cap basis. For details, please refer to Exhibit 1 below.
Exhibit 1: Good & Clean- Performance Highlights for the first two portfolios
Performance Highlights Run Period Free Float MCap Wtd Returns (%) BSE500 Returns (%) BSE200 Returns (%) Portfolio Alpha (Free Float MCap wt versus BSE500) (%) Portfolio Alpha (Eq Wtd versus BSE500) (%) Portfolio Alpha (Free Float MCap versus BSE200) (%) Source: Ambit Capital research G&C 1.0 17Mar201121Jun2011 0.9 (2.9) (3.5) 5.0 8.9 4.4 G&C 2.0 22Jun201118Oct2011 (1.0) (6.0) (5.9) 3.8 3.3 4.9 G&C 3.0 19Oct201102May2012 15.1 4.2 4.5 10.9 5.7 10.6 Cumulative 17Mar201102May2012 15.0 (4.7) (4.9) 19.7 17.9 19.9

The last iteration of G&C - the 'Battleships' portfolio from 19th Oct - has outperformed the BSE500 by over 10.8% points. Now, in this note we retire the Battleships portfolio and introduce G&C 4.0: the Great 50. For constituents and performance of the Battleships portfolio, please refer to Appendix 1 towards the end of this note. Before we delve into the Great 50, it is worth dwelling upon briefly why we are introducing this portfolio in the first place (rather than simply letting G&C 3.0: Battleships run). Between the broken Balance Sheets in Power, Infra, Real Estate, Construction, Aviation sectors plus between the large banks which have loaded up on toxic debt and the heavy engineering component of Capital Goods, up to 37% of the BSE100s market cap (i.e. $145bn of free float market cap) will be under fundamental pressure in FY13. Part of this $145bn will seek a new home. We believe that given the uncertainty in the world around us, this new home will be high quality companies well managed, cash generative and with competitive advantages other than political connectivity. Through this new G&C portfolio, our forensic accounting model and our Greatness model, we will seek to help you find such new homes.

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Section 2: Motivation & Methodology


Since the Battleships note, we have published a series of notes driven by our "greatness" model that seeks to identify structurally strong companies which should serve as great long term investments. Over the last couple of months, we have received client feedback requesting us to use the greatness framework to create a more readily actionable portfolio. It is with this objective in mind that we have married the greatness model with our G&C methodology to construct the Great 50 portfolio. Moreover, to date our portfolios have been unconstrained with respect to sectoral weightings. However, clients have repeatedly urged us to benchmark the sector weights in our portfolios to the BSE200 to make our portfolios directly relevant to the daily reality facing money managers. Hence, with this portfolio, we move towards benchmarking of sector weights rather than running an unconstrained portfolio. Creating the Great 50 portfolios was therefore a two step process: 1. Sector weights- Starting with the BSE200s weights as the reference, we overweight and underweight sectors to reflect our macro view and sector specific themes if any. This is discussed in more detail in the next section. 2. Stock selection- Stocks for the Great 50 are chosen using our greatness framework. These 50 stocks are also filtered through our quantitative forensic accounting model and our qualitative corporate governance filters. Finally, liquidity (3 month ADV has to be more than $1mn with a few exceptions) and valuation constraints (ideally the stock has to be cheaper than historical multiples on at least one of the following- P/B, P/E, EV/EBITDA) are also applied. This is discussed in more detail in section 5.

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Section 3: Sector weights


Starting with the BSE200s sector weights as the reference, we over/underweight sectors to reflect our macro views. While we generally believe that the economy should witness a cyclical improvement going forward (as evinced in our GDP growth expectation of 7.3% for FY13), we also believe that interest rates will stay high (we cannot see how the RBI can cut repo rates by more than 25 bps this point in if oil prices stay where they are). Therefore whilst cyclical sectors might benefit from a macro tailwind, such support is unlikely to be a major boost for these sectors. With that in mind our major underweight sectors are: Banks & Financial Services, Metals and Oil & Gas. Conversely, based on the Indian consumers unflagging appetite for spending money, our biggest overweights are Auto and FMCG. The other big overweight, IT, is a play on the US recovery.
Exhibit 2: Sector weights- Ambit vs benchmark
Sector Agro Auto Auto Anc Banks Cap Goods Cement Chemicals Construction Cons Durable Diversified Finan Serv Fertilizers FMCG Industrials Infrastructure IT Logistics Media Metals Miscellaneous Oil & Gas Pharma Realty Retail Shipping Telecom Textiles Utilities Total Mkt Relative (BSE200) weighting weight 0.2 6.9 1.2 18.3 2.1 1.8 1.5 3.4 0.1 7.6 0.2 10.7 2.3 0.7 10.1 0.2 0.5 6.5 1.0 11.0 5.4 0.6 0.9 0.2 2.5 0.0 4.2 100.0 100% 150% 150% 85% 110% 110% 100% 120% 150% 65% 100% 140% 110% 100% 140% 110% 140% 70% 0% 50% 100% 140% 110% 0% 130% 0% 80% Ambit weight 0.2 10.3 1.8 15.6 2.3 2.0 1.5 4.0 0.1 4.9 0.2 14.9 2.6 0.7 14.1 0.2 0.7 4.5 5.5 5.4 0.9 1.0 3.3 3.4 100.0 Delta btwn Ambit's Ambit sectoral and Mkt stance - Equal weight 3.4 Overweight 0.6 Overweight (2.7) Underweight 0.2 Overweight 0.2 Overweight - Equal weight 0.7 Overweight 0.0 Overweight (2.7) Underweight Cyclical sector Aspirational consumption is an evergreen theme in India Cyclical sector Cyclical sector Cyclical sector BUT faces serious asset quality and liquidity headwinds Cyclical sector with a healthy component (light industrials) and an unheatlhy one (heavy engineering) Cyclical sector but valuations are at historical highs for the leading names Rationale for over/underweight

Cyclical sector BUT it faces major regulatory change (which will pull down returns) Heavily influenced by regulations on prices & subsidies; worth - Equal weight being cautious in the current climate 4.3 Overweight Aspirational consumption is an evergreen theme in India 0.2 Overweight Cyclical sector; however, Heavy Industrials will be held back by policy paralysis The weak INR and the recovery in the US should help the sector Cyclical sector Cyclical sector

- Equal weight Cyclical sector BUT will be held back by policy paralysis 4.0 Overweight 0.0 Overweight 0.2 Overweight (1.9) Underweight

Cyclical sector BUT prone to regular and adverse Govt and regulatory intervention (1.0) Underweight No logical rationale for investing in these companies The extent of Govt intervention in this sector makes it unattractive Robust pipeline and strong domestic demand are structural - Equal weight postives but valuations rich at current levels Cyclical sector Cyclical sector

(5.5) Underweight

0.3 Overweight 0.1 Overweight (0.2) Underweight

Global trade continues to remain weak with no obvious global economic recovery in sight The cancelling of 122 licenses and the pro-M&A regulatory 0.8 Overweight stance should held the leading listed players Indian companies' competitive position slipping due to (0.0) Underweight competition from other South Asian countries Structural problems across the supply chain compounded by (0.8) Underweight policy paralysis

Source: Ambit Capital research, Bloomberg

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Section 4: The greatness framework


The greatness framework The framework essentially hinges on using publicly available historical data to assess which firms have over a sustained period of time (FY06-11) been able to relentlessly and consistently: (a) Invest capital; (b) Turn investment into sales; (c) Turn sales into profit: (d) Turn profit into Balance Sheet strength; (e) Turn all of that into free cashflow; and (f) Invest free cashflows again. Clearly, this approach will have limited value if there is a structural break in the sector or in the company which makes past performance a meaningless guide to future performance. (For identifying structural breaks of this sort (eg. in the Indian boilerturbine-generator sector or in the Indian utilities sector) we look to our sector leads for help.) However, to the extent that such structural breaks tend to be the exception than the rule, the greatness model helps in creating a shortlist of stocks which investors can then analyse in greater detail. Put simply, the greatness model separates the wheat from the chaff. As yet, it does not cook the whole meal for you!

In our 19th January note Tomorrows ten baggers, we had unveiled the greatness framework to study a firms structural strengths, based on which we had identified a set of 25 firms that exhibited the ingredients to be potential 10 baggers over the next 10 years. A basic sketch of the underlying process behind the making of a great firm is recaptured in Exhibit 1 below.
Exhibit 3: The greatness framework

a. Investment (gross block)

b. Conversion of investment to sales (asset turnover, sales)

c. Pricing discipline (PBIT margin)

e. Cash generation (CFO)

d. Balance sheet discipline (D/E, current ratio)

Source: Ambit Capital research

We rank the BSE500 universe of firms (excluding Financial Services firms and excluding firms with insufficient data) on our greatness score which is comprised of six equally weighted headings: Investments, Conversion to sales, Pricing discipline, Balance Sheet discipline, Cash generation & EPS improvement and Return ratio improvement. Under each of these six headings, we further look at two kinds of improvements:

Percentage improvements in performance in FY09-11 versus FY06-08; and Consistency in performance i.e. improvements adjusted for standard deviations.

A complete list of factors that go into quantifying greatness can be found in Exhibit 4 on the next page.

Sectoral leaders and Laggards


Tomorrows ten baggers note was followed by our 19th March note, Indian Leaders and Laggards, where we had used this framework to identify the best and the worst stocks from each sector. Amongst the motivations for that note, an important one was to help active money managers by moving one step closer towards practical portfolio construction. With many investors being required to comply with benchmarks in terms of sectoral representations, the sectoral approach taken in the note highlighted strong companies from each sector. This was aimed at helping investors benefit from the rigour of the greatness model while also respecting sectoral weightages.

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Exhibit 4: Factors used for quantifying greatness


Heading 1 Investments Criteria a. b. 2 Conversion to sales a. b. c. d. 3 Pricing discipline a. b. 4 Balance sheet discipline a. b. c. d. 5 Cash generation and EPS improvement a. b. c. d. 6 Return ratio improvement a. b. c. d. Above median gross block increase (FY09-11 over FY06-08)* Above median gross block increase to standard deviation Improvement in asset turnover (FY09-11 over FY06-08)* Above median asset turnover increase to standard deviation Above median sales increase (FY09-11 over FY06-08)* Above median sales increase to standard deviation Above median PBIT margin increase (FY09-11 over FY06-08)* Above median PBIT margin increase to standard deviation Below median DE decline (FY09-11 over FY06-08)* Below median DE decline to standard deviation Above median current ratio increase (FY09-11 over FY06-08)* Above median current ratio increase to standard deviation Above median CFO increase (FY09-11 over FY06-08)* Above median CFO increase to standard deviation Above median EPS increase (FY09-11 over FY06-08)* Above median EPS increase to standard deviation Improvement in RoE (FY09-11 over FY06-08)* Above median RoE increase to standard deviation Improvement in RoCE (FY09-11 over FY06-08)* Above median RoCE increase to standard deviation

Source: Ambit Capital research. * Rather than comparing one annual end point to another annual end point (say, FY06 to FY11), we prefer to average the data out over FY06-FY08 and compare that to the averaged data from FY09-11. This gives a more consistent picture of performance (as opposed to simply comparing FY06 to FY11).

The final steps


Having identified the sectoral weights for our portfolio in the previous section, we use the greatness framework to identify the best stocks from each sector. The final steps for arriving at the Great 50 portfolio are discussed in the next section.

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Section 5: Great 50 - The portfolio


Starting with sector weights from Section 3, we move towards the eventual portfolio construction by using our greatness framework to identify the best stocks from each sector. We also run these stocks through our forensic accounting model while checking them for corporate governance irregularities as well. Since the greatness model is not applicable to the Banking and Financials Services (BFSI) firms, we use our sector leads expertise to identify the best stocks from this space. Finally, we subject these stocks to liquidity and valuation constraints. While a 3month ADV of at least US$1mn is what we look for in general, we relax the constraint somewhat in a few cases (like the Real Estate sector, for example) where other liquid alternatives are not available or are not worthy of a place in the portfolio (due to deficient accounting or due to weak financials). Moving on to valuations, recognising that good quality stocks are unlikely to be cheap, we keep the valuation constraint relatively undemanding i.e. we look for stocks that trade below their five year historical averages on at least one of the following three multiples- P/E, P/B, EV/EBITDA.

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Exhibit 5: The Great 50 portfolio
Sr. Ticker No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 BOB IN FB IN KMB IN Company Bank of Baroda Federal Bank Kotak Mah. Sector Banks/ Diversified Finan Serv Banks/ Diversified Finan Serv Banks/ Diversified Finan Serv Banks/ Diversified Finan Serv Banks/ Diversified Finan Serv FMCG FMCG FMCG FMCG IT IT IT IT Auto Auto Auto Metals Mining Oil & Gas Oil & Gas Oil & Gas Pharma Pharma Utilities Utilities Telecom Telecom Construction Construction Construction Industrials Industrials Capital Goods Capital Goods Cement Cement Retail Auto Anc Auto Anc Chemicals Chemicals Infrastructure Realty Realty Agro Logistics Fertilizers Consumer Durable Mcap 3M ADV Stock Stock 3 yr (US$ (US$ weight weight price mn) mn) (portfolio) (sector) CAGR 5,606 1,358 8,204 19,132 2,437 2,188 8,416 36,110 3,615 4,111 46,833 1,666 6,781 8,464 1,155 17,039 10,121 13,206 2,035 1,908 1,906 2,803 4,615 3,475 4,618 2,618 5,029 22,799 693 1,587 14,042 368 2,207 2,573 481 1,845 4,300 4,081 2,014 836 2,358 6,426 500 675 1,651 684 567 311 1,399 768 9.2 3.0 13.0 92.8 4.2 1.2 2.9 36.2 2.6 6.6 38.6 3.7 9.9 17.7 1.1 71.7 2.5 2.3 0.8 7.1 5.5 1.6 6.8 1.3 10.7 0.7 9.0 40.6 9.9 1.6 62.9 0.5 2.0 2.6 2.3 0.8 12.0 16.0 3.3 5.1 0.9 6.1 2.4 0.5 0.6 0.7 2.4 0.9 1.0 10.7 4.1 4.1 4.1 4.1 4.1 3.7 3.7 3.7 3.7 3.5 3.5 3.5 3.5 3.4 3.4 3.4 2.3 2.3 1.8 1.8 1.8 1.8 1.8 1.8 1.7 1.7 1.6 1.6 1.3 1.3 1.3 1.3 1.3 1.2 1.2 1.0 1.0 1.0 0.9 0.9 0.7 0.7 0.7 0.7 0.4 0.4 0.2 0.2 0.2 0.1 20% 20% 20% 20% 20% 25% 25% 25% 25% 25% 25% 25% 25% 33% 33% 50% 50% 33% 33% 33% 33% 33% 33% 50% 50% 50% 50% 33% 33% 33% 50% 50% 50% 50% 50% 50% 100% 50% 50% 50% 50% 32% 30% 40% 19% 35% 49% 38% 35% 28% 42% PBIT Asset RoE D/E EPS Latest FY13 Margin Turn. Chg* Chg* Chg* D/E P/E Chg* Chg* 7.6 (8.3) (5.8) (4.9) 1.7 4.4 26.2 1.6 (2.2) 3.8 NA NA NA NA NA 1.4 0.5 1.9 2.0 13.9 0.2 2.8 (3.0) 1.7 2.4 (4.9) (6.5) 4.0 0.6 (2.5) 0.7 3.1 2.0 6.2 3.6 1.7 (7.0) (1.5) 3.1 (3.2) 2.6 1.4 (4.8) 3.4 3.4 8.1 0.6 0.1 5.1 1.4 7.2 3.1 13.6 (22.1) 16.1 15.0 14.6 (29.0) 2.9 4.9 NA NA NA NA NA 1.3 0.5 (0.3) 0.1 (0.7) (1.8) (0.0) (1.1) (1.3) 0.7 (1.6) (1.0) 1.2 0.9 1.2 (0.6) 0.1 (0.2) 0.3 0.0 0.1 0.0 (0.1) 1.9 6.8 (0.8) 4.9 0.1 0.8 (0.1) 0.3 0.0 3.6 0.7 (0.6) 2.3 0.8 (0.1) (6.8) (5.0) (0.5) 0.2 0.0 3.0 2.3 NA 170% NA NA NA 26% 69% 45% NA NA NA NA NA (1.0) (0.3) (0.1) 0.6 (0.5) (0.3) 0.5 0.1 0.5 (0.9) 1.1 (0.2) (0.9) (0.1) 1.1 2.3 0.4 0.2 (1.0) 1.6 0.1 0.9 1.2 (0.3) (1.2) 1.3 0.1 (1.3) (0.0) (1.3) 0.8 (0.1) (1.0) 0.0 1.0 (1.1) 0.0 2.2 (0.4) 0.5 0.3 (0.1) 0.4 (0.3) 5.0 8.5 20.1 13.3 8.0 23.9 32.0 26.6 24.9 18.8 19.4 10.0 13.5 16.5 14.2 7.6 8.7 9.3 8.9 9.3 8.0 18.0 20.3 24.0 12.4 9.5 19.6 14.8 12.8 12.7 14.1 10.9 12.5 20.8 18.5 18.2 15.3 28.9 15.4 8.1 20.6 29.0 6.8 12.4 12.8 9.0 11.1 9.8 26.4 FY13 P/B 1.0 1.2 3.0 1.5 1.7 7.2 19.5 9.4 9.0 2.8 6.2 1.8 3.0 10.1 2.8 2.5 1.4 2.3 1.4 2.0 0.7 4.5 5.0 7.2 1.5 1.1 1.8 2.0 2.2 3.7 2.4 2.4 1.8 5.8 3.6 3.9 2.7 11.3 3.5 1.4 14.8 10.0 2.7 1.1 2.0 1.4 1.5 1.6 2.6 9.9

ICICIBC IN ICICI Bank SHTF IN SKB IN NEST IN ITC IN OFSS IN TCS IN HCLT IN HMCL IN EIM IN TTMT IN HZ IN MRPL IN PLNG IN HPCL IN CDH IN LPC IN GLXO IN TPWR IN NLC IN IDEA IN VOLT IN ENGR IN LT IN BJE IN BHE IN KKC IN ABBAP IN SRCM IN ACC IN TTAN IN EXID IN APTY IN CSTRL IN APNT IN HATH IN ILFT IN OBER IN PEPL IN MCLR IN GDPL IN CRIN IN TTKPT IN Shriram Trans Glaxo Cons Nestle India ITC Oracle Fin TCS HCL Tech Hero Moto Eicher Motors Tata Motors Hind.Zinc MRPL Petronet LNG HPCL Lupin Glaxo Pharma Tata Power Neyveli Lig. Idea Cellular Voltas Engineers Ind L&T Bajaj Elect. BEL Cummins Ind. Alstom Proj. Shree Cement ACC Titan Inds. Exide Inds. Apollo Tyres Castrol India Asian Paints IL&FS Trans. Oberoi Realty Prestige Est. Mcleod Russel Gateway Dist. Coromandel TTK Prestige

NA 225% (0.6) (0.2) (0.0) 0.1 (0.2) 0.3 (0.1) (1.4) 2.6 (0.2) (0.1) (0.9) 0.1 0.9 75% 94% 43% 75% 70% 39% 78% 48% 28% 13% 93% 62% 56% 12%

DABUR IN Dabur India

(0.1) 151% 0.4 249%

57% (14.7) 27% (16.6) 50% 25% 81% (2.0) 10.0 (1.3) (1.2)

TECHM IN Tech Mah

33% 125%

34% (36.4) -4% (13.1) 7% 37% 3% 51% 55% 23% 4% -4% 9% 19% 36% 8% (2.3) (2.1) (1.9) 6.3 3.8 (0.3) 3.5 3.7 (7.7) (2.1) 17.8 (6.2)

NMDC IN NMDC

Cadila Health. Pharma

0.0 123% (0.2) 112% (0.8) 0.7 0.2 (1.9) 0.1 1% 95% 43% 24% 81%

BHARTI IN Bharti Airtel

-6% (14.6)

(0.1) 106% (0.5) 152% 0.5 129% (1.5) 126% (0.1) (0.0) 9% 89%

64% (11.2) 15% (11.0) 49% 4% 52% 23% 83% 34% 55% 44% 59% 6.7 10.2 6.8 (9.1) (0.6) 4.4 5.1 33.7 7.6 8.6 (0.9) (9.2) 21.1 (2.1) 17.9 20.9

(0.1) 108% (0.2) 224% (0.2) 9% (1.0) 156% (0.4) 306% 0.1 138% (0.6) 115% (0.2) 133% 0.2 (0.7) (0.8) 0.5 0% -39% -32% 19% 0.8 320%

Hathway Cable Media

100% -11% 100% -17% 50% 100% 100% 100% 1% 52% 30% 60% 50% -28%

0.3 226.6

(0.5) 224% (0.2) 283% (1.1) 306%

100% 224%

Source: Bloomberg, Ambit Capital research. * Chg indicates change in FY09-FY11average over FY06-08 average

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Strategy
Exhibit 6: Great 50- Valuation perspective
Sr. No. Ticker 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 SHTF IN HCLT IN NEST IN TTMT IN MRPL IN PLNG IN HPCL IN NMDC IN ENGR IN LT IN TPWR IN NLC IN BHE IN ABBAP IN SRCM IN CSTRL IN ILFT IN GDPL IN TTKPT IN BOB IN FB IN KMB IN OFSS IN TECHM IN ICICIBC IN HZ IN IDEA IN BHARTI IN BJE IN EXID IN TTAN IN PEPL IN MCLR IN TCS IN SKB IN HMCL IN EIM IN CDH IN LPC IN GLXO IN VOLT IN KKC IN ACC IN APTY IN APNT IN DABUR IN OBER IN HATH IN CRIN IN ITC IN Company Shriram Trans. HCL Technologies Nestle India Tata Motors MRPL Petronet LNG HPCL NMDC Engineers India Larsen & Toubro Tata Power Co. Neyveli Lignite Bharat Electron Alstom Projects Shree Cement Castrol India IL&FS Transport Gateway Distr. TTK Prestige Bank of Baroda Federal Bank Kotak Mah. Bank Oracle Fin.Serv. Tech Mahindra ICICI Bank Hind.Zinc Idea Cellular Bharti Airtel Bajaj Electrical Exide Inds. Titan Inds. Prestige Estates Mcleod Russel TCS GlaxoSmith C H L Hero Motocorp Eicher Motors Cadila Health. Lupin Glaxosmit Pharma Voltas Cummins India ACC Apollo Tyres Asian Paints Dabur India Oberoi Realty Hathway Cable Coromandel Inter ITC Current valuation FY12 EV/ FY12 P/E FY12 P/B Ebitda 9.2 2.1 DNA 16.0 38.9 8.9 20.9 9.3 11.3 9.6 13.1 15.7 13.9 11.3 14.8 28.8 39.2 23.2 7.7 12.5 34.9 6.1 9.9 24.3 20.6 10.6 14.8 9.3 36.7 24.5 14.8 22.8 36.4 21.5 10.6 23.3 27.9 18.9 17.1 21.7 25.2 26.8 23.3 24.3 18.1 11.3 35.1 29.7 18.7 DNA 10.7 31.6 3.5 25.4 3.5 1.6 2.4 0.7 2.8 4.5 2.8 1.7 1.2 2.1 4.1 4.6 16.8 1.3 1.8 14.3 1.2 1.3 3.4 3.4 2.1 1.7 1.7 2.0 2.3 2.8 4.0 15.1 1.6 1.7 7.9 8.6 12.4 3.4 5.6 6.2 8.1 2.5 6.6 3.1 1.6 12.2 11.3 2.3 2.7 3.1 10.4 10.0 23.0 5.5 9.0 6.6 11.4 5.5 8.7 11.1 8.7 9.7 6.3 11.1 8.9 15.4 7.5 7.9 23.5 DNA DNA DNA 16.1 10.9 DNA 7.0 7.4 8.0 8.6 13.9 25.8 13.2 8.0 16.9 19.7 13.7 7.8 15.6 18.0 18.1 14.3 19.4 10.4 3.8 22.6 22.6 14.5 16.0 9.0 20.8 Cheap wrt history? (1 for Yes) P/E 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 1 1 1 0 1 0 1 1 1 0 1 0 0 0 0 0 0 0 0 NA 0 0 P/B EV/Ebitda 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 0 0 0 1 0 1 1 1 1 0 1 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 NA NA NA 0 0 NA 0 1 1 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 Overall cheap on how many counts? 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0

Source: Ambit Capital research, Bloomberg

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Exhibit 7: The Great 50- Forward looking data
Sr. No. Ticker 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 BOB IN FB IN KMB IN ICICIBC IN SHTF IN SKB IN NEST IN ITC IN DABUR IN OFSS IN TCS IN TECHM IN HCLT IN HMCL IN EIM IN TTMT IN HZ IN NMDC IN MRPL IN PLNG IN HPCL IN CDH IN LPC IN GLXO IN TPWR IN NLC IN IDEA IN BHARTI IN VOLT IN ENGR IN LT IN BJE IN BHE IN KKC IN ABBAP IN SRCM IN ACC IN TTAN IN EXID IN APTY IN CSTRL IN APNT IN HATH IN ILFT IN OBER IN PEPL IN MCLR IN GDPL IN CRIN IN TTKPT IN Company Bank of Baroda Federal Bank Kotak Mah. Bank ICICI Bank Shriram Trans. GlaxoSmith C H L Nestle India ITC Dabur India Oracle Fin.Serv. TCS Tech Mahindra HCL Technologies Hero Motocorp Eicher Motors Tata Motors Hind.Zinc NMDC MRPL Petronet LNG HPCL Cadila Health. Lupin Glaxosmit Pharma Tata Power Co. Neyveli Lignite Idea Cellular Bharti Airtel Voltas Engineers India Larsen & Toubro Bajaj Electrical Bharat Electron Cummins India Alstom Projects Shree Cement ACC Titan Inds. Exide Inds. Apollo Tyres Castrol India Asian Paints Hathway Cable IL&FS Transport Oberoi Realty Prestige Estates Mcleod Russel Gateway Distr. Coromandel Inter TTK Prestige Mcap (US$ mn) 5,606 1,358 8,204 19,132 2,437 2,188 8,416 36,110 3,615 4,111 46,833 1,666 6,781 8,464 1,155 17,039 10,121 13,206 2,035 1,908 1,906 2,803 4,615 3,475 4,618 2,618 5,029 22,799 693 1,587 14,042 368 2,207 2,573 481 1,845 4,300 4,081 2,014 836 2,358 6,426 500 675 1,651 684 567 311 1,399 768 3-month ADV (US$ mn) 9.2 3.0 13.0 92.8 4.2 1.2 2.9 36.2 2.6 6.6 38.6 3.7 9.9 17.7 1.1 71.7 2.5 2.3 0.8 7.1 5.5 1.6 6.8 1.3 10.7 0.7 9.0 40.6 9.9 1.6 62.9 0.5 2.0 2.6 2.3 0.8 12.0 16.0 3.3 5.1 0.9 6.1 2.4 0.5 0.6 0.7 2.4 0.9 1.0 10.7 Next 2 years estimated EPS CAGR (%) 8 21 16 17 11 28 32 19 19 2 16 16 26 19 38 14 11 8 2 4 (8) 8 18 17 (2) 3 67 55 (10) 12 9 11 14 5 DNA 51 11 23 29 12 11 17 DNA 11 48 21 17 24 15 35 Next 2 years estimated BVPS CAGR (%) 16 10 15 7 21 30 64 15 22 19 23 22 26 23 21 43 18 28 11 21 5 24 23 15 10 6 12 DNA 12 24 14 16 DNA 14 DNA 14 11 31 18 17 18 24 5 18 19 9 15 21 18 46

Source: Ambit Capital research, Bloomberg

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Exhibit 8: The Great 50- Business activity description
Sr. No. Ticker 1 BOB IN Company Bank of Baroda Business activity description Bank of Baroda owns and operates commercial banks in India. The Group's banks provide the traditional forms of banking services, including CD's, Credit Card services and a variety of car loans, in addition to gold banking and a range of insurance services. Federal Bank Limited operates branches and regional offices throughout India. The Bank offers a wide range of financial services, including merchant banking, international banking and foreign exchange, leasing facilities, money markets and agricultural advances. Kotak Mahindra Bank Limited is a full service commercial bank. The Bank offers a wide range of products and services including personal, commercial, and corporate banking services, including deposit accounts, loans, and investments. ICICI Bank Limited operates a network of bank's located throughout India. The Group specializes in retail and corporate banking, in addition to Forex and treasury operations. ICICI Bank also provides a wide variety of investment banking, insurance and financial services to its clients.

2 3 4 5 6

FB IN KMB IN ICICIBC IN SHTF IN SKB IN

Federal Bank Kotak ICICI Bank

Shriram Transport Shriram Transport Finance Co. Ltd. provides hire purchase finance for trucks. Glaxo SmithKline Consumer Healthcare Limited manufactures and sells malted milk food products. The Group's GlaxoSmith C H L products, which include energy & protein products, cereals, baby foods, ghee & butter, are sold under the "Horlicks", "Boost", "Viva", "Brylcream", "Eno", "Maltova" and "Gopika" brand names. Nestle India Ltd. manufactures brand name milk products and other food products. The Company's products include Everyday dairy whitener, milk powder and ghee, Milkmaid sweetened condensed milk and Cerelac weaning foods. Nestle India Nestle's beverages include Nescafe and Sunrise coffee and Nesfit enriched glucose powder. Nestle also manufactures Maggi noodles, soups and sauces. ITC Limited, a member of BAT Group of UK, is a holding company, which has a diversified presence in Cigarettes, ITC Hotels, Paperboards & Specialty Papers, Packaging, Agri Business, Packaged Foods & Confectionery, Branded Apparel, Greeting Cards and other FMCG products. Dabur India Ltd. manufactures soaps, detergents, hair oils, tooth powders, antacids and processed foods. The Company Dabur India sells its products worldwide. Oracle Financial Services Software Ltd. provides comprehensive information technology solutions to the financial services industry worldwide. The Company provides transaction processing and accounting software for banks, Oracle Fin.Serv. investment managers and mutual funds. Oracle Financial also provides internet delivery of financial services as well as business intelligence and analytical applications. Tata Consultancy Services, a division of Tata Sons Limited, is a global IT services organization that provides a comprehensive range of IT services to its clients in diverse industries. The Company, caters to finance and banking, TCS insurance, telecommunication, transportation, retail, manufacturing, pharmaceutical, and utility industries. Tech Mahindra Ltd. develops and markets computer software. The Company markets software for telecommunications Tech Mahindra equipment manufacturers, telecom service providers, software vendors, and systems integrators. HCL Technologies Limited provides software development and related engineering services. The Group's technologies utilize a variety of technologies, including Internet and e-commerce, networking, internet telephony, embedded HCL Technologies software, ASIC/VLSI design and testing, satellite and wireless communications, and component based object technologies, including COM, DCOM and COBRA. Hero Motocorp Ltd. designs, manufactures and distributes motorcycles. The Company's products also include motorcycle Hero Motocorp parts and accessories. Eicher Motors Ltd. manufactures light commercial vehicles which are sold domestically and are also exported to other Eicher Motors countries. Eicher Motors also manufactures tractors, two-wheelers and automotive gears. Tata Motors Limited manufactures cars and commercial automotive vehicles in India. The Company designs, Tata Motors manufactures and sells heavy commercial, medium commercial and small commercial vehicles including trucks, tankers, vans, buses, ambulances and minibuses. Tata also manufactures small cars and sports utility vehicles. Hindustan Zinc Limited specializes in the exploration, mining and smelting of zinc, lead and other non-ferrous metals. Hind.Zinc The Company's products include zinc ore, lead zinc concentrate, zinc metal, lead metal, cadmium metal, silver metal and sulfuric acid. NMDC Limited explores for minerals. The Company is exploring for iron ore, copper, rock phosphate, lime stone, NMDC dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, and beach sands. Mangalore Refinery and Petrochemicals Limited refines oil and produces petroleum and petrochemicals. The Company MRPL is a subsidiary of ONGC. Mangalore Refinery operates a refinery in Mangalore city that produces premium diesel and unleaded petrol of high octane. Petronet LNG Ltd. was formed by the Government of India to import liquefied natural gas (LNG) into the country. The Petronet LNG Company is a joint venture between GAIL, ONGC, IOC and BPCL. Petronet LNG has also selected GAZ de France as a strategic partner. The Company has set up LNG receiving ports in Dahej (Gujarat) and Kochi (Kerala). Hindustan Petroleum Corporation Limited refines crude oil and manufactures petroleum and petroleum products. The Company's products, which are sold via outlets throughout India, include lube products, lubricating oil, aviation fuel, HPCL hydraulic brake fluid, greases, liquefied petroleum gas and insecticides. The Government of India is the majority shareholder in the company. Cadila Healthcare Ltd. manufactures, and markets healthcare solutions ranging from formulations, active Cadila Health. pharmaceutical ingredients, vaccines, diagnostics, health and dietetic foods, animal healthcare to cosmeceuticals. The Company's products are available in tablets, capsules, injections, liquids, dry syrups, powders, granules, and ointments. Lupin Limited manufactures bulk actives and formulations. The principal bulk actives manufactured by it include Rifampicin, Pyrazinamide, Ethambutol (anti-TB), Cephalosporins (anti-infectives) and cardiovasculars. The company also Lupin possesses competencies in phytomedicines, in which medicines are made out of plant and herbal resources supported by the discipline of modern medicine. Glaxosmithkline Pharmaceuticals Ltd. manufactures and distributes a wide variety of pharmaceutical drugs, veterinary products and laboratory chemicals. The Company's products include "Phexin" capsules, "Betnesol" tablets and injections, Glaxosmit Pharma "Becoride" asthma treatment, "Betnovate" ointment, "Cetzine" antihistamine, "Zucox" and "Rizap" anti-tuberculosis products. Tata Power Company Limited generates and supplies electricity in Mumbai and its suburbs. The Company also constructs and operates independent power plants as well as captive power plants for industrial concerns. Tata Power Tata Power Co. also provides various services related to electricity distribution, erects and commissions transmission lines, and is diversifying into the telecommunications market. Neyveli Lignite Corporation Limited generates and distributes power, mines and processes lignite, manufactures fertilizers & chemicals and processes and sells clay of all kinds. The Company's other activities include the briquetting Neyveli Lignite and carbonization of lignite and its main products include electric power, lignite, nekolin, pulverized nekolin, urea, coke fines and leco.

NEST IN

8 9

ITC IN DABUR IN

10

OFSS IN

11 12

TCS IN TECHM IN

13

HCLT IN

14 15 16

HMCL IN EIM IN TTMT IN

17 18 19

HZ IN NMDC IN MRPL IN

20

PLNG IN

21

HPCL IN

22

CDH IN

23

LPC IN

24

GLXO IN

25

TPWR IN

26

NLC IN

Ambit Capital Pvt Ltd

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Sr. No. Ticker 27 28 IDEA IN BHARTI IN Company Idea Cellular Bharti Airtel Business activity description Idea Cellular Limited offers cellular services, SMS services, and mobile communication devices. Bharti Airtel Limited, a part of Bharti Enterprises, provides telecommunications services throughout India. The Company provides GSM Mobile Services, broadband, fixed line telephone services, long distance services (international & national) and enterprise services. Voltas Limited offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, machine tools, mining and construction equipment, materials handling, water management, building management systems, indoor air quality and chemicals. Engineers India Limited is a design and engineering company in the field of petroleum refineries, petrochemicals, oil and gas processing, offshore structures and platforms, fertilizers, metallurgy and power. EIL provides services such as design, engineering, procurement, construction management, commissioning assistance and project management. Larsen & Toubro Ltd manufactures engineering equipment, undertakes large scale engineering projects, and acts as the Indian representative for a number of overseas manufacturers of heavy machinery. The Company's products include bulldozers, road rollers, dairy machinery, chemical and pharmaceutical plants, switchgears, food processing machinery and feed milling plants. Bajaj Electricals Limited manufactures electric fans and general lighting items, such as lamps, special lamps, fluorescent tubes, and lighting fixtures. The Company also manufactures consumer durables like small electrical appliances. Bharat Electronics Ltd. manufactures electronic communication equipment, night vision equipment such as image converter tubes, night vision binoculars, and goggles, periscopes, gunsights and tank electronics. The Company's electronic communication products include HF/VHF transmitters, receivers, microwave radio relays, radars and other electronic components required by defense services. Cummins India Limited manufactures internal combustion engines, including diesel, reciprocating piston, gas turbine and gasoline engines. The Company also manufactures generating sets and public transport-type passenger motor vehicles, including luxury coaches and air-field buses. In addition, Cummins India Ltd. operates a computerized and fully-equipped research and development facility. Alstom Projects India Limited supplies power generation services and equipment. The Company provides energy generation through hydro power, gas turbine-based combined power plants, and steam power plants. The Company also designs, manufactures, and supplies large scale transportation systems, electricity transmission systems, and energy management systems. Shree Cement Ltd. manufactures cement and cement products. The Company sells its products primarily in Northern India under its own brand names. ACC Limited manufactures a range of cements and blended cements. The Company also manufactures gypsum and refractory products such as Brown Tabular Alumina. The Company provides turnkey and application consulting services for setting up and operating cement plants and refractories. The Company owns cement plants throughout India. Titan Industries Ltd. manufactures and retails jewelry and watches. The Company produces quartz analog electronic watches, watch movements, step motors and watch cases. Exide Industries Ltd. manufactures a wide range of lead and electric storage batteries. The Company's batteries find application in automobiles, railways, aircrafts, power stations, telephone exchanges, and other uses. Apollo Tyres Limited manufactures tires and tubes for cars, trucks, farm equipment and light commercial vehicles. The Company also manufactures automobile flaps and retreading materials. Castrol (India) Limited manufactures and markets automotive and industrial lubricants and specialty products. The Company's products include lubricating oils, greases and brake fluids. The Company also manufactures cable filling compounds, jellies, waxes and other items. Asian Paints Limited manufactures a wide range of decorative paints, varnishes, enamels, and black & synthetic resins. The Company, through its subsidiaries, also manufactures specialty industrial chemicals and vinyl pyridine latex products which are used in the manufacture of rubber tires. Hathway Cable and Datacom Limited is a cable television service provider. The Company offers analog and digital cable television services. Hathway also provides cable broadband services as well. IL&FS Transportation Networks Ltd. designs, develops, maintains and operates toll highways. The Company acquires projects either through competitive bidding or negotiated contracts. IL&FS also provides traffic inspection and emergency, rescue and search services on its highways. Oberoi Realty LTD., is a real estate development company operating in Mumbai, focused on premium developments. The Company's main focus is residential projects but they also have a diversified portfolio of projects covering segments of the real estate market, which target the upper end of the respective income or market segment. Prestige Estates Projects Ltd. develops real estate. The Company builds residential projects including apartments, villas, plotted developments and integrated townships; commercial projects including corporate office buildings and technology parks; hotels and resorts; and retail buildings. McLeod Russel India Ltd. cultivates, manufactures, and markets tea. The Group owns tea estates in Assam and Dooars.

29

VOLT IN

Voltas

30

ENGR IN

Engineers India

31

LT IN

Larsen & Toubro

32

BJE IN

Bajaj Electrical

33

BHE IN

Bharat Electron

34

KKC IN

Cummins India

35

ABBAP IN

Alstom Projects

36 37 38 39 40 41

SRCM IN ACC IN TTAN IN EXID IN APTY IN CSTRL IN

Shree Cement ACC Titan Inds. Exide Inds. Apollo Tyres Castrol India

42 43 44

APNT IN HATH IN ILFT IN

Asian Paints Hathway Cable IL&FS Transport

45

OBER IN

Oberoi Realty

46 47 48 49 50

PEPL IN MCLR IN GDPL IN CRIN IN TTKPT IN

Prestige Estates Mcleod Russel Gateway Distr.

Gateway Distriparks Limited provides integrated logistics services both in domestic and international areas. The Company offers cargo loading and unloading, transportation, and cargo storage management services to shipping lines, freight forwarders, and buying houses. Coromandel International Ltd. manufactures fertilizers and pesticides. The Company produces both chemical and Coromandel Inter organic fertilizers, insecticides, fungicides, herbcides, and plant biostimulant. TTK Prestige Limited manufactures a range of domestic appliances. The Group's products include pressure cookers and TTK Prestige non-stick cookware, stainless steel and glass vacuum flasks, and gas stoves.

Source: Bloomberg

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Appendix 1: Audit of G&C 3.0-Battleships


Exhibit 9: The 'Battleships' portfolio launched on Oct 19, 2011
Bloomberg code Company Prices (`) Performance Initial Current (%) Price Price 181 304.5 68.0 1,342 230 1,648 886 2,727 2,062 7,008 1,588 1,245 315 204 2,325 160 98 221 474 202 145 427 642 48 264 503 818 755 800 816 451 68 911 22 70 308 249 105 299 240 345 55 1,957.6 319.2 2,266.1 1,184.6 3,592.7 2,592.8 8,792.4 1,962.7 1,517.0 378.1 244.6 2,755.0 180.1 109.6 243.5 505.0 215.0 152.0 443.3 657.6 49.3 267.5 501.0 798.7 724.2 758.2 766.6 420.8 63.2 840.0 19.4 60.3 262.2 208.1 85.8 231.9 176.4 237.4 29.0 45.8 38.5 37.5 33.7 31.7 25.7 25.5 23.6 21.9 20.0 19.8 18.5 12.8 11.7 10.1 6.6 6.4 5.0 3.7 2.4 1.9 1.4 (0.3) (2.4) (4.1) (5.2) (6.0) (6.7) (7.2) (7.8) (9.8) (13.3) (14.8) (16.4) (18.4) (22.6) (26.6) (31.3) (47.6) 15.1 4.2 10.9 5.0 3.8 19.7
th

FF Mkt cap (US$ mn) (Intial) 6,229 239 120 325 576 157 628 1,234 103 190 72 19,429 1,093 485 2,527 1,919 688 184 153 396 1,401 323 7,217 1,563 119 788 2,098 1,156 1,246 514 233 160 310 547 64 284 189 967 420 616

TTMT IN Equity VST IN Equity SOBHA IN Equity EIM IN Equity JUBI IN Equity TTKPT IN Equity OFSS IN Equity BOS IN Equity BDE IN Equity FAG IN Equity PSYS IN Equity ITC IN Equity SKB IN Equity PIDI IN Equity PWGR IN Equity TTAN IN Equity CSTRL IN Equity VTEX IN Equity GDPL IN Equity GSFC IN Equity BPCL IN Equity CUBK IN Equity @ ONGC IN Equity RBXY IN Equity HCBA IN Equity CDH IN Equity BOB IN Equity # SIEM IN Equity FB IN Equity @ IH IN Equity AKZO IN Equity SJVN IN Equity GPPV IN Equity CRIN IN Equity ENIL IN Equity ARVND IN Equity SRF IN Equity NMDC IN Equity BIOS IN Equity MGFL IN Equity # G&C 3.0 Battleships Portfolio BSE500 G&C 3.0 Battleships Alpha G&C 2.0 Alpha G&C 1.0 Alpha

Tata Motors VST Inds. Sobha Developer. Eicher Motors Jubilant Food. TTK Prestige Oracle Fin.Serv. Bosch Blue Dart Exp. Fag Bearings Persistent Sys ITC GlaxoSmith C H L Pidilite Inds. Power Grid Corpn Titan Inds. Castrol India Vardhman Textile Gateway Distr. GSFC BPCL City Union Bank ONGC Ranbaxy Labs. Novartis India Cadila Health. Bank of Baroda Siemens Federal Bank Indian Hotels Akzo Nobel SJVN Guj Pipavav Port Coromandel Inter Ent.Network Arvind Ltd SRF NMDC Biocon Manappuram Finance Ltd Free float mkt cap weighted returns Returns Free float mkt cap weighted basis

Cumulative Alpha (G&C 1, 2 and 3)

Source: Ambit Capital research, Bloomberg. # indicates that the stock was added later, effective 24 Jan close; @ indicates that the stock was added later, effective 21st Feb close

Ambit Capital Pvt Ltd

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Institutional Equities Team


Saurabh Mukherjea, CFA Research Analysts Aadesh Mehta Anand Mour Ankur Rudra, CFA Ashvin Shetty Bhargav Buddhadev Chhavi Agarwal Dayanand Mittal Gaurav Mehta Hardik Shah Harshit Vaid Jatin Kotian Krishnan ASV Nitin Bhasin Pankaj Agarwal, CFA Parita Ashar Rakshit Ranjan, CFA Ritika Mankar Mukherjee Ritu Modi Shariq Merchant Sales Name Deepak Sawhney Dharmen Shah Dipti Mehta Pramod Gubbi, CFA Sarojini Ramachandran Production Sajid Merchant Kausalya Vijapurkar Production Editor (022) 30433247 (022) 30433284 sajidmerchant@ambitcapital.com kausalyavijapurkar@ambitcapital.com Regions India / Asia India / Asia India / Europe India / Asia UK Desk-Phone (022) 30433295 (022) 30433289 (022) 30433053 (022) 30433228 +44 (0) 20 7614 8374 E-mail deepaksawhney@ambitcapital.com dharmenshah@ambitcapital.com diptimehta@ambitcapital.com pramodgubbi@ambitcapital.com sarojini@panmure.com Industry Sectors Banking / NBFCs FMCG Technology / Telecom / Education Automobile Power / Capital Goods Construction / Infrastructure Oil & Gas Derivatives Research Technology / Education Services Power / Capital Goods Metals & Mining / Healthcare Banking Construction / Infrastructure / Cement NBFCs Metals & Mining / Media / Telecom Mid-Cap Economy Cement / Infrastructure Consumer Desk-Phone (022) 30433239 (022) 30433169 (022) 30433211 (022) 30433285 (022) 30433252 (022) 30433203 (022) 30433202 (022) 30433255 (022) 30433291 (022) 30433259 (022) 30433261 (022) 30433205 (022) 30433241 (022) 30433206 (022) 30433223 (022) 30433201 (022) 30433175 (022) 30433292 (022) 30433246 E-mail aadeshmehta@ambitcapital.com anandmour@ambitcapital.com ankurrudra@ambitcapital.com ashvinshetty@ambitcapital.com bhargavbuddhadev@ambitcapital.com chhaviagarwal@ambitcapital.com dayanandmittal@ambitcapital.com gauravmehta@ambitcapital.com hardikshah@ambitcapital.com harshitvaid@ambitcapital.com jatinkotian@ambitcapital.com vkrishnan@ambitcapital.com nitinbhasin@ambitcapital.com pankajagarwal@ambitcapital.com paritaashar@ambitcapital.com rakshitranjan@ambitcapital.com ritikamankar@ambitcapital.com ritumodi@ambitcapital.com shariqmerchant@ambitcapital.com Head of Equities (022) 30433174 saurabhmukherjea@ambitcapital.com

Ambit Capital Pvt Ltd

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Explanation of Investment Rating


Investment Rating Expected return (over 12-month period from date of initial rating) >5% <5%

Buy Sell
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Neither AMBIT Capital nor its affiliates or their respective directors, employees, agents or representatives, shall be responsible or liable in any manner, directly or indirectly, for views or opinions expressed in this Report or the contents or any errors or discrepancies herein or for any decisions or actions taken in reliance on the Report or inability to use or access our service or this Research Report or for any loss or damages whether direct or indirect, incidental, special or consequential including without limitation loss of revenue or profits that may arise from or in connection with the use of or reliance on this Research Report or inability to use or access our service or this Research Report. Conflict of Interests 15. In the normal course of AMBIT Capitals business circumstances may arise that could result in the interests of AMBIT Capital conflicting with the interests of clients or one clients interests conflicting with the interest of another client. AMBIT Capital makes best efforts to ensure that conflicts are identified and managed and that clients interests are protected. AMBIT Capital has policies and procedures in place to control the flow and use of non-public, price sensitive information and employees personal account trading. Where appropriate and reasonably achievable, AMBIT Capital segregates the activities of staff working in areas where conflicts of interest may arise. However, clients/potential clients of AMBIT Capital should be aware of these possible conflicts of interests and should make informed decisions in relation to AMBIT Capitals services. 16. AMBIT Capital and/or its affiliates may from time to time have investment banking, investment advisory and other business relationships with companies covered in this Research Report and may receive compensation for the same. Research analysts provide important inputs into AMBIT Capitals investment banking and other business selection processes. 17. AMBIT Capital and/or its affiliates may seek investment banking or other businesses from the companies covered in this Research Report and research analysts involved in preparing this Research Report may participate in the solicitation of such business. 18. In addition to the foregoing, the companies covered in this Research Report may be clients of AMBIT Capital where AMBIT Capital may be required, inter alia, to prepare and publish research reports covering such companies and AMBIT Capital may receive compensation from such companies in relation to such services. However, the views reflected in this Research Report are objective views, independent of AMBIT Capitals relationship with such company. 19. In addition, AMBIT Capital may also act as a market maker or risk arbitrator or liquidity provider or may have assumed an underwriting commitment in the securities of companies covered in this Research Report (or in related investments) and may also be represented in the supervisory board or on any other committee of those companies. Additional Disclaimer for U.S. Persons 20. The research report is solely a product of AMBIT Capital 21. AMBIT Capital is the employer of the research analyst(s) who has prepared the research report 22. Any subsequent transactions in securities discussed in the research reports should be effected through THINKEQUITY LLC. or another U.S. broker-dealer. 23. The research analyst(s) preparing the research report is resident outside the United States and is/are not associated persons of any U.S. regulated broker-dealer and that therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.

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