India Daily, September 26, 2011

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September 26, 2011 India 23-Sep 1-day1-mo 3-mo Sensex 16,162 (1.2) 2.0 (11.4)

Nifty 4,868 (1.1) 2.5 (11.0)

Contents Global/Regional indices Daily Alerts Dow Jones 10,771 0.4 (4.5) (9.7) Nasdaq Composite 2,483 1.1 0.1 (6.4)

Company FTSE 5,067 0.5 (1.2) (11.1) DLF: Progress on one-offs; launches put off Nikkie 8,404 (1.8) (3.8) (12.4) Hang Seng 17,634 (0.2) (10.0) (20.5) • Asset sales - one in the bag; a few more close to closure KOSPI 1,676 (1.3) (5.8) (19.8) • But no launches up to date in 2QFY12E which could raise the bar for Value traded – India 2HFY12E Cash (NSE+BSE) 146 136 138

• Retain NAV-based target of Rs270/share Derivatives (NSE) 2,000 1,703 1,143

Eros International: Time for a valuation check Deri. open interest 1,426 1,468 1,428

• Eros' valuations have caught up with structural and cyclical drivers

• Reiterate ADD with FY2013E TP of Rs270; expect earnings upgrades Forex/money market Sector Change, basis points 23-Sep 1-day 1-mo 3-mo Pharmaceuticals: Rupee at 50: Few to benefit Rs/US$ 49.4 1 329 440 • INR could see further depreciation bias according to our Economy 10yr govt bond, % 8.3 1 8 6 team Net investment (US$mn) 22-Sep MTD CYTD • Ranbaxy and Jubilant likely to report substantial translational losses FIIs (253) 233 286 • SUN, Divis have negligible debt and minimal hedges and therefore MFs 44 (162) (282) stand to benefit the most Top movers -3mo basis Change, % Best performers 23-Sep 1-day 1-mo 3-mo IDEA IN Equity 96.6 1.6 0.7 28.8 UTCEM IN Equity 1162.0 0.6 9.7 21.3 MM IN Equity 775.6 (1.0) 10.1 15.3 GRASIM IN Equity 2348.8 1.5 12.2 12.4 BJAUT IN Equity 1548.6 0.4 3.0 11.6 Worst performers IVRC IN Equity 36.8 (2.3) 14.7 (45.8) EDSL IN Equity 217.1 (2.1) 9.0 (45.3) CRG IN Equity 150.0 (0.1) 9.5 (41.8) HDIL IN Equity 100.1 (3.3) 4.4 (37.9) IBREL IN Equity 74.6 (2.3) (3.1) (31.0)

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES. REFER TO THE END OF THIS MATERIAL.

BUY DLF (DLFU)

Property SEPTEMBER 23, 2011 UPDATE Coverage view: Cautious

Progress on one-offs; launches put off. Recent news reports and the sale of land Price (Rs): 198 parcel in Gurgaon indicate DLF’s intent and progress on asset sales in line with its target Target price (Rs): 270 to sell Rs60-70 bn over the next 2-3 years, which could drive a meaningful reduction in BSE-30: 16,162 D/E ( to 0.6X from 1X). However, with no launches scheduled for 2QFY12E, the risk to FY2012E sales target of 10-12 mn sq. ft has increased. We retain BUY led by a 36% potential return to our March 2013E based NAV of Rs270/share.

Company data and valuation summary DLF Stock data Forecasts/Valuations 2011 2012E 2013E 52-week range (Rs) (high,low)398-173 EPS (Rs) 9.1 11.9 15.7 Market Cap. (Rs bn) 338.6 EPS growth (%) (14.5) 31.3 31.8 QUICK NUMBERS Shareholding pattern (%) P/E (X) 21.8 16.6 12.6 Promoters 78.6 Sales (Rs bn) 95.6 110.9 138.0 • DLF could raise Rs61 FIIs 14.9 Net profits (Rs bn) 15.4 20.2 26.6 bn through asset MFs 0.1 EBITDA (Rs bn) 37.5 47.6 62.1 sale in FY2012-13E Price performance (%) 1M 3M 12M EV/EBITDA (X) 15.1 11.9 9.0 Absolute 12.2 (8.7) (45.9) ROE (%) 5.4 7.5 9.2 • No launches in Rel. to BSE-30 10.0 3.0 (32.9) Div. Yield (%) 1.0 1.3 1.5 2QFY12E till date

Asset sales – one in the bag; a few more close to closure • FY2013E D/E could decline to 0.6X if all Recent news reports raise the question of what is ‘non-core” assets: in our view, the sale of these sell-off deals take assets (along with the land parcel sale in Gurgaon) indicate clear intent and progress in reducing place debt. According to various media reports, DLF is in talks to sell over Rs60 bn of assets in FY2012- 13E, in line with its target of raising Rs60-70 bn over the next 2-3 years. In FY2012E, DLF already raised Rs1.7 bn through land sales in 1QFY12 and a further Rs4.4 bn by selling a 28 acre land parcel in Gurgaon to M3M while talks to sell its stake in Noida IT Park to IDFC for Rs4.4 bn are already in advanced stages and likely to get concluded by end-September 2011. Other deals in the pipeline are (1) IT SEZ in Pune (decision regarding permission for the deal to be declared by Board of Approval), (2) Amanresorts baring Delhi Hotel (have received non-binding bids) and (3) Mumbai NTC Mill Land sale. DLF is also in talks with Shiv Nadar controlled HCL Group to sell its stake in DLF Pramerica though that deal could face regulatory hurdles as per press reports. Assuming transaction margins of 10-50%, FY2012E Net-D/E can go down to 0.69X-0.64X and FY2013E Net- D/E can go down to 0.62X-0.57X versus 0.97X at end-1QFY12. DLF has a further.6 mn sq. ft more of operational IT Parks and IT SEZs in non-Gurgaon areas.

But no launches up to date in 2QFY12E which could raise the bar for 2HFY12E

After launching two plotted developments in 1QFY12 at Gurgaon and Indore, DLF has not launched any projects in 2QFY12E (till date). This indicates (1) that 2QFY12E sales would likely be weak given that of sales of 2.3 mn sq. ft in 1QFY12, only 1.1 mn sq. ft was from existing stock and (2) the sales target of 10-12 mn sq. ft for FY2012E would be at risk and require 6-8 mn sq. ft sales in 2HFY12E which could be a tough task in a challenging macro environment.

Retain NAV-based target of Rs270/share

We maintain our BUY rating with a target price of Rs270 /share at-par with our March 2013-NAV. The positives that we find in DLF are that it has (1) a relatively wide geographical spread, (2) lower regulatory risk versus most Mumbai firms and (3) a relatively balanced portfolio between residential and commercial segments. Key risks include (1) delay in approvals, (2) further inflation- led cost impact and (3) adverse environment causing delay in selling “non-core” assets.

For private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

DLF Property

Better visibility on asset disposal along with progress this quarter

After raising Rs1.7 bn through assets sales in 1QFY12, media reports indicate that further plans to sell assets worth Rs67.4 bn in FY2012-13E are gaining momentum. At end-1QFY12, DLF had raised Rs 32.7 bn from asset disposal since inception of the plan. DLF has set a further target of Rs 60-70 bn through asset disposal over the next 2-3 years though it seems likely that a few of the deals could get concluded in FY2012E itself.

At end-1QFY12, DLF had gross debt (including preference capital) of Rs245 bn with a D/E of 0.97X. Assuming different transaction gross margins (10% - 50%) FY2012E Net-D/E can go down to 0.69X-0.64X and FY2013E Net-D/E can go down to 0.62X-0.57X if the planned transactions take place in FY2012E itself.

DLF’s Rs60-70 bn asset-sale plan is more visible and gaining momentum DLF proposed and concluded assets sales in FY2012

Total deal value DLF's share Expected Asset sales in FY2012 Buyer DLF's share (%) (Rs bn) (Rs bn) timelines Status (as per news reports) Deals concluded in FY2012 Contiguous land parcels Not disclosed 100 1.7 1.7 1QFY12 Concluded in 1QFY12 28 acres land in Gurgaon M3M Developers 100 4.4 4.4 Sep-11 Deal concluded in Sept 2011 Subtotal 6.1 6.1 Expected to get completed in 2QFY12E IT Park in Noida (DLF' stake) IDFC 70 5.0 4.0 Sep-11 Expected to conclude by end-September Expected to get completed in FY2012E Decision pending with the BoA which has met IT SEZ in Pune Blackstone 67 13.4 9.0 Dec-11 on Sep. 19, 2011 and the decision is yet to be made public Amanresorts (a) Not decided 100 16.0 16.0 Dec-11 Received non binding bids Mumbai NTC Mill Land (b) Not decided 100 25.7 25.7 Mar-12 Bankers yet to be appointed Stake sale in DLF Pramerica HCL Group 74 N/A N/A N/A Likely to face regulatory hurdle Subtotal 55.2 50.7 Total in FY2012E 66.2 60.8

Notes: (a) Baring Aman resorts in Delhi (a) Though press reports indicate a deal value of Rs20 bn we estimate it at Rs16 bn (b) Assuming deal happens at a 20% discount to IBREL's Bharat Mills and Poddar Mills transactions (c) IT SEZ in Pune: Total deal value estimated from value of DLF's share

Source: News sources, Company, Kotak Institutional Equities estimates

FY2013E Net-D/E can come down to between 0.62-0.57X FY2012E and FY2013E Net Debt and Net-D/E assuming 100% debt repayment under various assumptions of transaction margin

1QFY2012 FY2012E FY2013E Transaction gross margin 10% 20% 30% 40% 50% 10% 20% 30% 40% 50% Consolidated Net Debt (Rs bn) 245 185 185 185 185 185 179 179 179 179 179 Consolidated Net-D/E (X) 0.97 0.69 0.68 0.66 0.65 0.64 0.62 0.61 0.60 0.58 0.57

Source: News sources, Company, Kotak Institutional Equities estimates

Status of various deals as per press reports

#1 - 28 acres land in Gurgaon to M3M for Rs4.4 bn

DLF has sold a 28 acre plot in Gurgaon to developer M3M for Rs4.4 bn. The 28 acres plot has all approvals in place for the development of a group housing project as per persons involved in the deal. M3M was vying along with Tata Realty and Mahindra for the land parcel and has already paid Rs1.5 bn to DLF. The deal was reportedly sealed on Sept. 8, 2011 (primary source: Economic Times, Sept. 10, 2011).

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3 Property DLF

#2 - IT SEZ in Pune to Blackstone for Rs9 bn

DLF has proposed to sell its stake (67%) in DLF Ackruti Info Parks (Pune), the JV with Ackruti City that owns the IT SEZ in Pune, to Blackstone and the matter has been taken up by the Board of Approval on Sept. 19, 2011 since Balckstone is a foreign investor though the decision is yet to be made public. As per media reports, Blackstone is likely to buy the entire 100% stake (Ackruti City holds the remaining 33% stake) in the 11.83 hectare SEZ.

The department of revenue had earlier opposed the proposal arguing that the sale would amount to the sale of land which is not permitted under the SEZ Act and rules though the law ministry had given its approval subsequently commenting that the change in equity structure and the consequent change in management cannot be considered as a sale of land. The decision has since then been left to the Board of Approval.

The IT SEZ is located in Pune’s Hinjewadi area and has a total area of 5 mn sq. ft of which 1.8 mn sq. ft is currently operational. Its tenants include Cognizant Technologies, TCS, Barclays and Novelis (primary source: Livemint, Sept. 12, 2011).

#3 - Sale of IT Park in Noida to IDFC for Rs4 bn (DLF’s stake)

DLF and 3C Company are looking to sell their stakes in Noida IT Park to Infrastructure Development Finance Company Private Equity for about Rs5 bn (Rs4 bn for DLF’s stake) and is expected to close the deal by end-September though both DLF and 3C have declined to comment on the same. DLF owns about 70% stake in the IT Park and the rest is with 3C Company (primary source: Economic Times, Sept. 21, 2011).

#4 - Amanresorts (baring Aman Hotel in Delhi – formerly known as Lodhi Delhi)

DLF has reportedly received five non binding bids of $400 - $450 mn for its luxury hotel chain Amanresorts including a bid from LVMH Moet Hennessy Louis Vuitton SA (MC). Amanresorts owns and manages 25 small luxury resorts worldwide (according to its website). During its conference call with analysts on June 29, 2011 DLF had expressed interest in selling a part of its stake in Amanresorts baring the hotel in New Delhi.

DLF had bought a controlling stake in Amanresorts in November 2007 for about $400 mn including $150 mn of net-debt and took full ownership during FY2011 after settling litigations with minority share holders (primary source: Bloomberg, Sept. 5, 2011).

#5 - Mumbai NTC Mill Land in Central Mumbai for Rs26 bn (KIE estimate)

DLF has decided to put 17.5 acres of NTC Mill land in Central Mumbai on sale which bankers estimate would fetch between Rs 30-40 bn while consultants are pegging the value at Rs25 bn. In Aug 2010, IBREL had bought 10.8 acres of NTC Mill land for Rs19.8 bn and if we assume a discount of 20% to IBREL’s transaction rate, the value comes to Rs25.7 bn. DLF had bought the land in 2007 for Rs7 bn and is hoping to sell it in FY2012E.

More than four foreign investment bankers including UBS, Morgan Stanley and Deutsche Bank have already given presentations to the company and the appointment process is likely to get completed by September end though DLF has declined to comment on the same.

The company had planned to develop the NTC Mill land into a luxury project with a saleable area of 4.7 mn sq. ft and with a parking space of 0.25 mn sq. ft. DLF had already received in-principle approval for higher FSI granted for parking lots to develop the project (primary source: Economic Times, Sept. 13, 2011).

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH DLF Property

#6 - Stake sale in DLF Pramerica to Shiv Nadar controlled HCL Group for Rs4.5 bn

Shiv Nadar controlled HCL Group is in advanced talks with DLF to acquire a substantial stake in DLF Pramerica Life Insurance Company for around Rs4.5 bn in a two-phase transaction through a privately held company. As per persons familiar with the development, HCL Group will first acquire 44% stake in the insurance JV by buying fresh shares of the company and then at a later stage buy out DLF’s residual 30% stake subject to approval of the IRDA. At present DLF owns 74% stake in the JV with Prudential Financial holding the remaining 26%. In the last three years DLF has invested only Rs2.3 bn in the insurance company and the low capital base has hampered its growth.

The deal is likely to face a regulatory hurdle as current guideline do not allow the original partner in a life insurance JV to sell its stake during the first ten years of operations (primary source: Economic Times, July 13, 2011).

Other non-Gurgaon IT Parks and IT SEZs

As per the company website and Propequity, DLF has 9.6 mn sq. ft more of operational assets in IT Parks and IT SEZs in non-Gurgaon areas besides the projects likely to be sold off in FY2012E. Of the list below (sorted in ascending order of completion dates), projects which are leased by 85-100% and have good corporate tenants are more likely to be sold off.

DLF has 9.6 mn sq. ft of operational IT Parks and IT SEZs in non-Gurgaon areas besides projects likely to be sold off in FY2012E List of DLF's operational IT Parks and IT SEZs

Area operational Rentals Leased/sold Operational IT Parks/ IT SEZs Type Location (mn sq. ft) (Rs/ sq. ft/ mo) (%) Launch Completion Key tenants IBM, Infosys, Virsa, Net Solutions, OuterBay DLF Infocity IT Park Technology Park, Chandigarh 0.7 35-45 99 Jan-05 Jun-07 (HP), Taurusagile IT Sez - Phase I IT SEZ Mt. Poonamallee Road, Chennai 1.3 50 100 Nov-06 Dec-07 DLF IT Park-I IT Park Rajarhat, Kolkata 1.3 35-40 100 Jan-06 Dec-07 IBM, Genpact IT Sez - Phase II IT SEZ Mt. Poonamallee Road, Chennai 2.3 50 100 Jun-07 Dec-09 IT-Sez (IT Park-II) IT Park Rajarhat, Kolkata 1.0 35-45 85 Jan-08 Dec-09 IBM, Tech Mahindra, Orga Systems Cyber City IT SEZ Gachibowli, Hyderabad 3.0 35 99 Apr-07 Mar-10 Cognizant, Satyam, Factet, Unisys, Sristek Total 9.6

Projects likely to be sold off in FY2012E DLF IT Park IT Park Sector 62, Noida 1.2 40-45 94 Mar-05 Dec-08 Genpact Cognizant, TCS, Satyam, Novelis, Eclerx, Dlf Akruti IT Sez IT SEZ Hinjewadi, Pune 1.8 34 98 Sep-07 Oct-09 Barclays Total 3.0

Source: Company, Propequity, Kotak Institutional Equities

Launches lag expectations

In 1QFY12, DLF had launched two plotted developments – (1) plots in Sector 91/92 in Gurgaon (1.1 mn sq. ft) and (2) plots in Indore but has not launched any projects in 2QFY12, indicating that sales are likely to be low in 2QFY12E. The company had sold 2.3 mn sq. ft in 1QFY12, of which only 1.1 mn sq. ft was from existing stock. The company has indicated in its 1QFY12 presentation that it will not launch any projects unless all approvals are in place, however, DLF has to pick up pace in its launches if it has to meet its target of 10-12 mn sq. ft of launches in FY2012E.

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5 Property DLF

Sales declined in 1QFY12 and is likely to be lowed in 2QFY12E due to lack of new launches DLF, leasing and construction status of development properties, March fiscal year-ends (mn sq. ft)

4QFY09 1QFY10 2QFY10 3QFY10 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 Development business Sales status (mn sq. ft) Opening balance 27.5 28.3 30.1 32.8 35.2 38.9 40.2 42.3 44.8 46.4 Add: sales booked during quarter 0.8 2.7 2.7 3.1 3.6 1.9 2.1 2.5 3.8 2.3 Less: handed over/suspended 0.0 0.8 0.0 0.7 0.0 0.5 0.0 0.0 2.2 0.0 Closing balance 28.3 30.1 32.8 35.2 38.9 40.2 42.3 44.8 46.4 48.7 Under Construction (mn sq. ft) Opening Balance 17.3 18.3 25.0 31.6 33.4 38.8 38.3 40.7 40.7 39.4 Add: new launches/additions/suspended 1.0 7.5 6.6 2.6 5.4 0.0 2.4 0.0 0.9 0.0 Less: handed Over 0.0 0.8 0.0 0.7 0.0 0.5 0.0 0.0 2.2 0.0 Closing Balance 18.3 25.0 31.6 33.4 38.8 38.3 40.7 40.7 39.4 39.4

Wt. average rate for Homes (Rs / sq ft) 2,211 5,369 7,328 5,832 4,180 6,074 6,078 6,034 4,980 5,032 Wt. average rate for commercial complexes (Rs/sq ft) 6,946 13,132 12,917 7,065 — 8,965 16,671 12,978 12,265 10,436

Source: Company, Kotak Institutional Equities

Leasing was also subdued in 1QFY12 DLF, leasing and construction status of rental properties, March fiscal year-ends (mn sq. ft)

4QFY09 1QFY10 2QFY10 3QFY10 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 Rental business Lease status (mn sq. ft) Opening balance 17.5 17.5 17.0 16.5 18.7 19.4 20.4 22.1 23.7 23.8 Add: lease booked during quarter (0.1) 0.0 (0.4) 0.4 0.7 1.2 2.0 2.0 1.4 1.0 Less: cancellation/adjustment 0.0 0.6 0.0 0.0 0.0 0.2 0.3 0.3 1.3 0.2 Closing balance 17.4 17.0 16.5 16.9 19.4 20.4 22.1 23.7 23.8 24.5 Under Construction (mn sq. ft) Opening Balance 37.2 17.7 17.1 17.1 17.1 17.1 16.3 15.8 15.7 14.5 Add: new launches/additions 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.9 0.0 -0.2 Less: handed Over 0.4 0.6 0.0 0.0 0.0 0.86 1.3 1.0 1.2 1.9 Less: Suspension/adjustment 19.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Closing balance 17.7 17.1 17.1 17.1 17.1 16.3 15.8 15.7 14.5 12.5

Wt. average lease rate for Office (Rs/sq ft) p 30 45 49 41 48 43 42 43 47 Wt. average lease rate for retail (Rs / sq ft) 152 152 145 141 0 77 64 113 144 236

Source: Company, Kotak Institutional Equities

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH DLF Property

We set our target price at Rs270/share NAV-based valuation, DLF, March fiscal year-ends (Rs bn)

March '13 based NAV Growth rate in selling prices Valuation Methodology 0% 3% 5% 10% Valuation of land reserves 469 567 639 850 Residential 196 247 285 397 Retail 121 147 165 218 Commercial (sold) 80 101 117 164 Commercial (leased) 78 83 86 94 Add: 22 Hotel sites 1X land acquisition cost 25 25 25 25 Add: Construction JV 10X FY2013E P/E 9 9 9 9 Add: Investments in power business 15 15 15 15 Less: Net debt as on March 31, 2013 (222) (222) (222) (222) Less: Land cost to be paid (1) (1) (1) (1) NAV (Rs bn) 296 394 466 677 NAV/share (Rs) 173 229 272 395 Total no. of shares including ESOPs of 17 mn shares (mn) 1,716 Target price/share (Rs) 270

Source: Kotak Institutional Equities estimates

Profit model of DLF March fiscal year-ends, 2008-2013E (Rs mn)

2008 2009 2010 2011 2012E 2013E Total revenues 144,329 100,354 74,229 95,606 110,891 137,989 Land and construction cost (39,998) (32,295) (25,795) (42,999) (45,907) (56,450) Employee costs (2,998) (4,537) (4,668) (5,721) (6,825) (8,651) SG&A costs (4,229) (7,622) (8,650) (9,358) (10,535) (10,763) EBITDA 97,105 55,900 35,116 37,527 47,624 62,124 Other income 2,464 3,960 4,280 5,839 6,436 6,121 Interest (3,100) (5,548) (11,100) (17,056) (18,886) (22,396) Depreciation (901) (2,390) (3,249) (6,307) (6,855) (10,259) Pretax profits 95,568 51,922 25,046 20,002 28,319 35,590 Current tax, deferred tax (17,321) (6,754) (7,022) (4,594) (8,096) (8,941) Net income 78,247 45,168 18,024 15,408 20,224 26,649 Reported net income 78,156 44,682 18,140 15,424 20,224 26,649

EPS (Rs) Primary 47 26 10 9 12 16 Fully diluted 47 26 10 9 12 16

Shares outstanding (mn) Year end 1,705 1,697 1,697 1,698 1,698 1,698 Primary 1,661 1,697 1,697 1,698 1,698 1,698 Fully diluted 1,678 1,714 1,714 1,715 1,715 1,715

Cash flow per share (Rs) Primary 46 18 5 18 9 17 Fully diluted 46 18 5 18 9 17

Growth (%) Net income (adjusted) 302 (43) (59) (15) 31 32 EPS (adjusted) 259 (44) (61) (11) 31 32 DCF/share 1,000 (61) (75) 294 (49) 79 Cash tax rate (%) 18 13 31 23 33 30

Effective tax rate (%) 18 13 28 23 29 25 DPS 4 3 3 2 3 3 Dividend pay-out (%) 9 11 30 22 21 19

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7 Property DLF

Balance Sheet of DLF March fiscal year-ends, 2008-2013E (Rs mn)

2008 2009 2010 2011 2012E 2013E Equity Share capital 12,905 17,354 62,593 21,498 21,498 21,498 Reserves/surplus 183,977 224,184 241,734 241,823 257,208 278,050 Total equity 196,883 241,538 304,327 263,321 278,705 299,547 Deferred tax liability/(asset) 359 (414) 2,515 (1,633) (2,839) (4,738) Liabilities Secured loans 80,534 132,623 193,016 239,903 234,903 224,903 Unsecured loans 42,237 30,578 23,751 — — — Total borrowings 122,771 163,201 216,766 239,903 234,903 224,903 Currrent liabilities 72,157 78,244 87,771 131,014 112,029 122,567 Total capital 396,065 488,906 617,658 638,357 628,550 648,031 Assets Cash 21,421 11,956 9,282 13,461 7,326 3,388 Current assets 244,579 304,268 263,775 319,257 340,721 370,140 Gross block 51,626 84,867 178,845 190,687 195,865 205,182 Less: accumulated depreciation 3,435 5,743 13,265 19,572 22,853 33,113 Net fixed assets 48,191 79,124 165,580 171,115 173,011 172,069 Capital work-in-progress 51,840 56,882 111,288 110,727 83,694 78,636 Total fixed assets 100,031 136,006 276,868 281,841 256,705 250,705 Intangible assets 20,931 22,651 12,680 13,840 13,840 13,840 Investments 9,102 14,025 55,052 9,958 9,958 9,958 Misc. expenses — — — — — — Total assets 396,065 488,906 617,658 638,357 628,550 648,031

Leverage ratios (%) Debt/equity 62.2 67.7 70.6 91.7 85.2 76.3 Debt/capitalization 38.4 40.4 41.4 47.8 46.0 43.3 Net debt/equity 51.4 62.7 67.6 86.5 82.5 75.1 Net debt/capitalization 33.9 38.5 40.3 46.4 45.2 42.9 RoAE 65.9 20.4 6.6 5.4 7.5 9.3 RoACE 35.3 13.8 5.4 5.6 6.3 7.8

Source: Company, Kotak Institutional Equities estimates

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

ADD Eros International (EROS)

Media SEPTEMBER 26, 2011 UPDATE Coverage view: Neutral

Time for a valuation check. We expect a reality check on Eros stock post 39% Price (Rs): 250 outperformance versus BSE-30 Index in the past three months. The structural drivers Target price (Rs): 270 remain intact: (1) C&S TV rights revenues and (2) improved BO performance (Digital BSE-30: 16,162 Cinema); (3) Regional movies and (4) new media revenues could provide impetus in future. However, valuations at ~11X FY2012E and ~8X FY2013E EV/EBIT have caught up; we reiterate our ADD rating with a revised FY2013E TP of Rs270 (Rs250 previously) as upside to current earnings estimates exists. The film business is a robust defensive play in an economic downturn, as seen from the Hollywood experience.

Company data and valuation summary Eros International Stock data Forecasts/Valuations 2011 2012E 2013E 52-week range (Rs) (high,low)268-124 EPS (Rs) 11.8 15.8 19.9 Market Cap. (Rs bn) 24.2 EPS growth (%) 19.0 34.0 25.9 Shareholding pattern (%) P/E (X) 21.2 15.8 12.6 Promoters 78.1 Sales (Rs bn) 7.1 8.7 11.3 FIIs 8.7 Net profits (Rs bn) 1.1 1.5 1.9 MFs 1.9 EBITDA (Rs bn) 1.6 2.1 2.8 Price performance (%) 1M 3M 12M EV/EBITDA (X) 14.8 11.2 8.1 Absolute 26.8 51.6 0.0 ROE (%) 24.9 20.2 20.5 Rel. to BSE-30 24.4 71.1 0.0 Div. Yield (%) 0.0 0.0 0.0

Eros’ valuations have caught up with structural and cyclical drivers Exhibit 1 presents the valuation of Eros stock; the gap versus Indian regional print and C&S TV stocks has bridged led by robust structural drivers (1) C&S TV rights revenues (high competitive intensity in weak economic environment) and (2) improved BO performance of Hindi movies (Digital Cinema in Tier-II/III cities). Additionally, Eros stock has also been helped by robust BO performance of the Indian film industry in general during the current economic downturn, which has adversely impacted the Indian media industry; the film industry is a robust defensive play in an economic downturn, as witnessed in Hollywood (Exhibit 2). However, current valuations must be seen in the context of the inherent nature and emerging stage of Indian film business: (1) Exhibit 3 presents the free cash flows of Eros and compares it to Indian regional print media. Eros will continue to invest in scaling-up the legacy/core (Hindi films) and new (regional films) business for some time (FY2012E-13E). (2) The street also seems enthused by Eros’ FY2012E film slate thus far, with above normal performance (Exhibit 4); however, the law of averages may catch up. Eros has de-risked its business model to a large extent with the pre-sale of film rights, resulting in profits even for films with average BO performance. However, the quantum of profits is dependent on the performance of the film slate. Reiterate ADD with FY2013E TP of Rs270; expect earnings upgrades We highlight that our ratings on Eros stock changed to ADD (BUY previously) with the shift in KIE ratings system to absolute upside ratings. We reiterate our positive view on Eros, but for relatively fair valuations as the structural drivers remain intact: (1) the slowdown in C&S TV advertising has not impacted Eros given higher competitive intensity and (2) shifting consumption patterns in Tier- II/III towns of India (expanded film distribution through Digital Cinema). The company is also investing in future growth drivers: (1) regional films and (2) new media.

We leave our earnings estimates unchanged but highlight likely upsides: (1) robust performance of the film slate thus far in FY2012E and (2) tail revenues (ancillary/new media) from the FY2012E film slate in FY2013E. Eros is finalizing its FY2013E film slate but it is likely to be larger in volume and value terms; we increase our FY2013E TP to Rs270 (Rs250 previously).

For private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

Media Eros International

Indian regional print and broadcasting valuation comparables

Price Mcap EV Sales EV/EBITDA (X) P/E (X) Valuation Discount 25-Sep (Rs bn) (Rs bn) (Rs bn) 2011 2012E 2013E 2011E 2012E 2013E TP (Rs) EV/E (X) (%) Eros International 250 24 23 7 14.8 10.9 8.1 18.5 15.8 12.6 267 9.0 Regional print Jagran Prakashan 106 33 32 11 9.3 8.6 7.1 15.5 15.2 12.6 160 10.8 17 DB Corp Limited 225 41 41 13 10.3 10.1 8.4 16.0 17.4 14.5 330 12.4 27 Average 9.8 9.4 7.8 15.7 16.3 13.5 11.6 22 Broadcasting Zee Entertainment 114 111 101 30 13.3 12.0 9.4 19.6 18.3 14.8 160 13.3 32 Sun TV Network 291 114 106 20 9.6 8.5 7.1 14.8 13.5 11.4 440 10.7 16 Average 11.5 10.2 8.2 17.2 15.9 13.1 12.0 25

Notes: (a) For Eros International and Sun TV Network, EBITDA corresponds to EBIT as these companies account for film costs under amortization.

Source: Company data, Kotak Institutional Equities estimates

Trends in US box-office revenues, CY1988-2010 (US$ bn)

12.0 10.6 10.6 9.6 9.6 10.0 9.1 9.2 9.3 8.8 9.2 8.1 7.5 8.0 6.9 7.3 5.8 6.2 5.0 5.0 5.2 5.3 6.0 4.5 4.8 4.6 4.9 4.0

2.0

- 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Source: National Association of Theatre Owners, Kotak Institutional Equities

Free cash flows of Eros and regional print, FY2011 (Rs bn)

EROS DBCL JAGP Comments Reported free cash flows Operating cash flow 3.9 3.3 2.7 Working capital changes (1.4) (0.6) (0.4) Capital expenditure (3.1) (1.4) (1.4) Reported free cash flow (0.5) 1.4 1.0 Adjusted free cash flows Adjusted WC change (0.3) - - WC increase in line with revenues Adjusted Capex - (0.4) (0.3) Maintenance capex only Adjusted free cash flow 0.6 2.3 2.0 Enterprise value 23 41 32 EV/FCF (X) 38 18 16

Source: Company data, Kotak Institutional Equities estimates

10 KOTAK INSTITUTIONAL EQUITIES RESEARCH Eros International Media

Release slate of Eros for FY2012E-13E

Film Talent/(Director) Production House Release Status Chalo Dilli Lara Dutta, Vinay Pathak (Prashant Shah) Bheegi Basanti Productions 1QFY12 Superhit Ready Salman Khan, Asin (Aneez Bazmi) T-Series 1QFY12 Blockbuster Always Kabhi Kabhi Ali Fazal, Zoa Morani (Roshan Abbas) Red Chillies Entertainment 1QFY12 Flop Murder 2 Emraan Hashmi, Jacqueline Fernandez (Mohit Zuri) Vishesh Films 2QFY12 Superhit Zindagi Na Milegi… Hritik, Katrina, Farhan, Abhay (Zoya Akhtar) Excel Entertainment 2QFY12 Superhit Bol Atif Aslam, Iman Ali Shoman Productions 2QFY12 Flop Mausam Shahid Kapoor, Sonam Kapoor (Pankaj Kapoor) Cinergy/Vistaar Religare 2QFY12 Released RA.One Shahrukh Khan, Kareena Kapoor (Anubhav Sinha) Red Chillies Entertainment 3QFY12 Post production Rockstar Ranbir Kapoor, Nargis Fakri (Imtiaaz Ali) Shree Ashtavinayak Films 3QFY12 Post production Desi Boyz Akshay, John, Deepika, Chitrangada (Rohit Dawan) Next Gen Films 3QFY12 Post production Agent Vinod Saif Ali Khan, Kareena Kapoor (Sriram Raghavan) Illuminati Films 4QFY12 Photography Untitled Shahid Kapoor, Priyanka Chopra (Kunal Kohli) Kunal Kohli Productions 4QFY12 Photography Rana Rajnikanth, Deepika Padukone (K S Ravikumar) Ocher Studios/Next Gen Films FY2013 Photography Cocktail Saif Ali Khan, Deepika Padukone Illuminati Films FY2013 Photography

Source: Industry data, Company data, Kotak Institutional Equities

Operating and financial performance of EROS, March fiscal year-ends, 2008-11E

2008 2009 2010 2011 New releases Blockbuster/Success Om Shanti Om Yuvraaj Love Aaj Kal Golmaal-3 Heyy Baby De Dana Dan Housefull Partner Kambakht Ishq Cheeni Kum Mee Shivaji Raje… Average Provoked U Me Aur Hum Aladin Anjaana Anjaani Dus Kahaniyaan Billu Karthi Calling Karthik Paathshaala Sunday Heroes Tera Mera Ki Rishta No Problem One Two Three Hashar… A Love Story Heer Ranjha… Haapus Shikshancha Aicha Gho Ideachi Kalpana Failure Journey Bombay to Goa Drona Veer Toonpur Ka Superhero Gandhi My Father Mr Black Mr White Vaada Raha… Akrosh Buddha Mar Gaya Dhoom Dhadakka Milenge Milenge Pankh Nanhe Jaisalmer Money Hai Toh Honey Hai Meri Life Main Uski Wife The Great Indian Butterfly No Smoking Hi Jack London Calling Tere Ishq Nachiya Bombay to Bangkok Haal-E-Dil Chintuji Game Black & White God Tussi Great Ho Shree Siddhivinayak Aa Dekhen Zara Mitti Overseas Bhool Bhulaiyaan Sarkaar Raaj Wanted Dabangg Aur Papu Pass Ho Gaya Krazzy 4 Khatta Meetha Jai Jagannath Bhootnath Benny and Babloo Kaisey Kahein Mehbooba A Flat Darling Ek Vivaah Aisa Bhi Khuda Kasam Dahek K Kompany Speed Kaash Mere Hote Digital prints (#) Hey Baby 340 Yuvraaj 640 Kambakht Ishq 651 Housefull 878 Love Aaj Kal 489 Anjaana Anjaani 654 Financial performance (Rs mn) Revenues 4,747 6,265 6,409 7,070 Gross profit 861 1,724 1,605 2,110 Gross margin (%) 18 28 25 30 EBIT 551 1,279 1,130 1,561 EBIT margin (%) 12 20 18 22 Adj. margin (%) 18 16 18 22

Notes: (a) Operating margin adjusted for sale of C&S TV rights of blockbuster film 'Om Shanti Om' being sold in FY2009 versus FY2008.

Source: Company data, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 11 Media Eros International

Trends in peak UFO Moviez digital prints, calendar year-ends, 2006-10 (#)

2006 2010 Movie Date Digital prints Movie Date Digital prints Dhoom 2 24-Nov 163 Dabangg 10-Sep 788 Krrish 23-Jun 87 Golmaal 3 5-Nov 735 Lage Raho Munnabhai 1-Sep 136 Raajneeti 4-Jun 732 Fanaa 26-May 48 Housefull 30-Apr 747 Rang De Basanti 27-Jan 31 My Name is Khan 12-Feb 581 Don 20-Oct 171 Tees Maar Khan 24-Dec 884 Kabhi Alvida Naa Kehna 11-Aug 98 Once Upon A Time In Mumbai 30-Jul 622 Phir Hera Pheri 9-Jun 66 Anjaana Anjaani 1-Oct 525 Vivah 10-Nov 49 Kites 21-May 649 Bhagam Bhaag 22-Dec 168 I Hate Luv Stories 2-Jul 556 Golmaal 14-Jul 87 Khatta Meetha 23-Jul 705 Malamaal Weekly 10-Mar 25 Raavan 18-Jun 579 Jaanemann 20-Oct 104 Badmaash Company 7-May 425 Omkara 28-Jul 82 Peepli Live 13-Aug 288 36 China Town 5-May 33 Veer 22-Jan 667 Taxi No. 9211 24-Feb 42 Atithi Tum Kab Jaoge 5-Mar 460 Baabul 8-Dec 135 Lafange Parindey 20-Aug 464 Apna Sapna Money Money 10-Nov 106 We Are Family 3-Sep 396 Pyare Mohan 21-Apr 32 Action Replay 9-Apr 544 Chup Chup Ke 9-Jun 29 Ishqiya 29-Jan 237 Kabul Express 15-Dec 35 Band Baaja Baaraat 10-Dec 269 Hum Ko Deewana Kar Gaye 14-Apr 33 Aisha 6-Aug 282 Pyaar Ke Side Effects 15-Sep 19 Karthil Calling Karthik 26-Feb 252 Gangster 28-Apr 28 Jhootha Hi Sahi 15-Oct 201 Corporate 7-Jul 17 Paathshala 9-Apr NA Average 73 525

Source: UFO Moviez, Kotak Institutional Equities

Hindi-speaking market GRPs of films in Hindi GE channels (%)

3QFY10 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 Bindass 4 2 2 2 1 1 1 1 Colors 29 30 25 26 35 37 40 34 Imagine 12 10 8 13 9 6 8 6 SAB 12 12 10 10 8 6 5 5 Sahara One 7 12 10 14 11 13 15 15 Sony TV 22 16 14 21 15 11 16 13 Star One 13 11 9 7 5 4 7 9 Star Plus 14 15 19 21 13 16 19 17 Zee TV 22 19 12 7 14 13 21 21 Total 134 127 109 120 110 107 133 120

Source: TAM Media Research, Kotak Institutional Equities

12 KOTAK INSTITUTIONAL EQUITIES RESEARCH Eros International Media

Breakdown of certified films in India by language (#)

2010 Hindi 215 Marathi 116 Telugu 181 Bengali 110 Tamil 202 Kannada 143 Malayalam 105 Bhojpuri 67 Gujarati 62 Oriya 26 Punjabi 15 Others 32 Total 1,274

Source: CBFC, Kotak Institutional Equities

Financial summary of EROS, March fiscal year-ends, 2008-14E (Rs mn)

2008 2009 2010 2011 2012E 2013E 2014E Profit model (Rs mn) Net sales 4,747 6,265 6,409 7,070 8,741 11,286 12,896 EBIT 551 1,279 1,130 1,561 2,133 2,843 3,133 Other income 6 13 63 91 214 215 248 Interest expense (28) (61) (127) (125) (125) (125) (125) D&A expenses (18) (50) (44) (38) (36) (59) (58) Pretax profits 511 1,181 1,022 1,489 2,185 2,874 3,199 Extraordinaries 149 (160) 101 30 — — — Tax incidence (233) (291) (296) (337) (575) (796) (930) Minority interest (16) (14) (5) (10) (80) (151) (152) Reported PAT 411 716 821 1,172 1,531 1,927 2,116 Adjusted PAT 330 836 750 1,149 1,531 1,927 2,116 EPS (Rs/share) 4.5 11.5 10.3 13.9 16.5 20.8 22.8

Balance sheet (Rs mn) Total equity 814 1,580 2,376 6,705 8,236 10,163 12,280 Deferred Tax 88 280 498 677 985 1,402 1,877 Minority interest 22 40 42 51 131 282 434 Total borrowings 1,239 2,118 2,178 1,986 1,986 1,986 1,986 Currrent liabilities 5,887 7,189 4,959 4,225 5,177 6,382 8,082 Total capital 8,050 11,207 10,053 13,645 16,516 20,216 24,658 Cash and equivalents 1,182 361 1,072 1,508 727 1,547 1,991 Loans and advances 3,060 5,148 3,709 4,454 6,480 7,470 9,473 Other current assets 2,329 3,423 2,469 2,332 2,979 3,513 4,020 Total fixed assets 1,419 2,195 2,723 3,797 4,775 6,131 7,620 Investments 60 80 80 1,555 1,555 1,555 1,555 Total assets 8,050 11,207 10,052 13,645 16,516 20,216 24,658

Free cash flow (Rs mn) Operating cash flow, excl. WC 2,619 3,027 3,087 3,932 4,979 6,429 7,320 Working capital 579 (1,844) 210 (1,402) (1,721) (319) (810) Capital expenditure (2,736) (2,702) (2,554) (3,059) (4,127) (5,330) (6,139) Free cash flow 463 (1,519) 743 (530) (869) 780 371 Adjusted FCF (117) 326 533 872 852 1,099 1,181

Source: Company data, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 13

CAUTIOUS Pharmaceuticals

India SEPTEMBER 23, 2011 UPDATE BSE-30: 16,162

Rupee at 50: Few to benefit. The INR overall has depreciated close to 12% vis-à-vis the USD from its recent lows of 44.07. Due to pharma companies being net exporters, the overall perception is that they stand to benefit handsomely. However, we note that gains will be subdued for certain companies due to (1) high forex debt taken to enjoy lower interest rates, which is largely unhedged, (2) import of raw materials and (3) hedges on net exposure. Impact on our universe: (1) We expect those with negligible forex debt and minimal hedges such as SUN, Divis to benefit the most; (2) Ranbaxy and Jubilant have high forex debt making them most likely to report large translational losses and higher interest costs and (3) DRL, Cadila are hedged to the tune of 60/50% of their net exposure, implying subdued operational gains. QUICK NUMBERS

INR could see further depreciation bias according to our Economy team • Ranbaxy and Jubilant likely to The INR has depreciated close to 12% from its recent lows of 44.07 to the USD. Our economics report substantial research team believes there is a risk of INR/USD breaching the 50 mark in the near term, however, translational losses from a medium-term perspective, the team expects to see the Rupee to settle at 46-49 unless there is an absolute meltdown in global markets. • SUN, Divis have negligible debt and Ranbaxy and Jubilant likely to report substantial translational losses minimal hedges and The low overall cost of borrowings for Ranbaxy and Jubilant suggest that they have low financial therefore stand to hedges for their overseas borrowings and are relying on (1) natural business hedges (revenues in benefit the most US$) or (2) stable exchange rates. Since the latter no longer holds now, we expect both to report large translational losses on loans and higher interest cost. Their predicament will be further • DRL, Cadila exacerbated due to (1) multi-year hedges taken by Ranbaxy (US$700-750 mn outstanding as of hedged—subdued June 2011) which means Ranbaxy will lose through (a) MTM losses on the outstanding derivatives operational gains position (reported below PAT) and (b) realized losses as and when these hedges are realized, reported in other operating income, although on unhedged position it will gain operationally and (2) although Jubilant has not hedged itself as its debt provides a natural hedge, we expect net exports which will benefit from recent volatility to be lower than its outstanding forex debt of US$600 mn. We estimate its FY2012E exports at around US$600 mn (70% of total sales), however, net of imports, we believe the number will be lower. Glenmark has recently converted a majority of its debt (Rs16.5 bn outstanding currently) to foreign debt to lower its interest cost. However, it expects its operational gains on net exports to be nullified by higher interest costs, while translational losses/gains on foreign debt will be routed through balance sheet as per IFRS requirements

SUN, Divis have negligible debt and minimal hedges and therefore stand to benefit the most

We expect companies with low debt and minimal hedges such as SUN, Divis to benefit handsomely. We also expect companies such as Biocon and Cipla who have minimal debt and hedges to benefit as their hedges allow them to benefit from recent weakness— (1) Biocon has taken hedges for next two years in the range of Rs47-52; if the Rupee crosses Rs52, they will not benefit. Biocon pays a premium for these hedges, which is reported in its interest cost. Biocon follows this strategy as it suffered large MTM losses of Rs1.5 bn on its earlier derivatives position in FY2009. (2) Cipla’s hedges are small as it covers net exports on a month-to-month basis. As of June 2011, its outstanding hedges were US$190 mn, equivalent to three months of exports only.

For private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

Pharmaceuticals India

DRL, Cadila hedged—subdued operational gains

Both DRL and Cadila have forex debt accounting for as majority of their total debt. Therefore, they hedge their net exposure. DRL and Cadila are hedged to the tune of 60% and 50% of their net exposure at rates varying between 45-47 and 47-48, respectively therefore liming their operational gains in the near term.

Hedging policies of pharma companies

Debt Forign currency debt Hedges Net impact Hedging policy (Rs mn) (%) Low foreign debt and minimal hedges As a policy, a portion of SUN's net exports is hedged for 6 months -1 year. SUN expects to benefit positively from recent SUN Negligible debt Minimal Positive slide in rupee Divis Negligible debt No Positive

Low foreign debt and hedges Will gain positively till Rs52. 100% of net exports is hedged for this year and 70% of net exposure is hedged for next year at rates varying between 47-52. Between 47-52, hedges are realised at prevailing rates. These hedges are expensive and Biocon 2,578 75% is US$ debt Yes Positive (till Rs52) hedging cost is reported in interest cost As of June, 2011 the outstanding amount of forward contracts is Majority is forex debt about US$ 190 mn.The company continues to follow the practice Cipla 4,500 and is hedged Yes Positive of covering net export billing on a month to month basis

Foreign debt and no hedges

Gain on net exports will be nullified through higher interest cost (although spreads have been locked in), and translational losses Glenmark 16,500 65% is US$ debt No Status quo on forex debt will be routed through balance sheet

Likely to report translational losses and gains on loans which will be reported in exceptional item. Also interest cost is likely to go Jubilant 33,640 80% of total debt No Negative up. Our net exports for FY2012E is lower than forex debt

Foreign debt and hedges Ranbaxy reports forex items in 3 lines- (1) It will report forex gain in other operating income (2) will report losses on loans line due US$750 to translational losses and also likely to show higher interest cost mn (3) will lose through translational losses on derivatives position derivativ (US$700-750 mn open) and (4) realised losses on derivatives es unwound depending on the currency rate on date at which outstand derivative position is unwound. These hedges are at lower than Ranbaxy 28,350 67% of total debt ing Negative Rs46 DRL has hedged its net exposure (net of debt) to the extent of 60% at rates between 45-47 which means it will benefit only to the extent of 40% of its net exposure. Below EBITDA line, other Will gain on only income will include forex losses or gain based on MTM position Dr Reddys 23,940 70% is US$ debt Yes 40% of net exposure of outstanding current liabilities and assets Cadila has hedged its net exposure (net of debt) to the extent of 50% at rates between 47-48 which means it will benefit only to the extent of 50% of its net exposure. Cadila reports forex gains on operational account in other income and forex loss in other expenses while translational losses on loans are reported in Will gain on only interest cost. We also expect interest cost to increase as 50- Cadila 10,973 50-60% is US$ debt Yes 50% of net exposure 60% of its debt is US$ debt

Source: Kotak Institutional Equities estimates, Company

KOTAK INSTITUTIONAL EQUITIES RESEARCH 15

KOTAK INSTITUTIONAL EQUITIES RESEARCH Kotak Institutional Equities: Valuation summary of key Indian companies India Daily Summary - September 26, 2011 Daily 26, India Summary- September

Tata -September Daily Summary India Motors 147 ADD 488,276 9,876 3,325 27.2 23.1 23.9 737.9 (15.0) 3.6 5.4 6.4 6.1 4.2 4.8 4.5 2.5 1.9 1.5 2.6 2.0 2.0 66.1 34.2 27.3 180 22.6 53.3 Automobiles Cautious 2,379,788 48,135 88.4 (4.3) 11.4 11.9 12.4 11.1 7.9 8.2 7.3 3.8 3.1 2.6 2.5 2.0 2.0 31.7 25.2 23.4 Banks/Financial Institutions Andhra Bank 121 BUY 67,821 1,372 560 22.6 24.2 27.5 5.0 6.9 13.5 5.4 5.0 4.4 — — — 1.0 0.9 0.8 4.5 4.9 5.5 23.2 19.4 19.2 190 56.8 1.9 Axis Bank 1,087 BUY 446,202 9,025 411 82.5 98.9 119.7 33.0 19.8 21.1 13.2 11.0 9.1 — — — 2.3 2.0 1.7 1.3 1.5 1.9 19.3 19.7 20.3 1,700 56.4 48.4 Bank of Baroda 776 BUY 304,760 6,164 393 108.0 109.5 129.1 29.1 1.4 17.9 7.2 7.1 6.0 — — — 1.6 1.3 1.1 2.5 2.5 3.0 25.9 20.4 20.5 1,250 61.1 7.2 Bank of India 301 BUY 164,686 3,331 547 45.5 54.0 70.7 37.4 18.7 30.9 6.6 5.6 4.3 — — — 1.0 0.9 0.8 2.7 3.2 4.2 17.3 17.2 19.5 470 56.2 6.1 Canara Bank 434 BUY 192,262 3,889 443 90.9 86.3 108.7 23.3 (5.0) 25.9 4.8 5.0 4.0 — — — 1.1 0.9 0.8 2.5 2.8 2.8 23.2 17.7 19.0 600 38.2 7.6 Corporation Bank 425 BUY 62,933 1,273 148 95.4 93.4 114.1 16.3 (2.1) 22.2 4.5 4.5 3.7 — — — 0.9 0.8 0.7 4.7 4.6 5.6 21.9 18.1 19.2 630 48.3 0.8 Federal Bank 360 BUY 61,543 1,245 171 34.3 44.5 56.2 26.3 29.8 26.1 10.5 8.1 6.4 — — — 1.2 1.1 1.0 2.4 3.1 3.9 12.0 14.2 16.0 500 39.0 3.7 HDFC 625 REDUCE 916,813 18,544 1,467 24.1 27.8 31.9 22.4 15.6 14.6 25.9 22.4 19.6 — — — 5.3 4.7 3.6 1.4 1.7 2.0 21.7 22.1 21.5 730 16.8 34.6 HDFC Bank 456 ADD 1,061,645 21,473 2,326 16.9 21.9 27.6 31.0 29.5 26.5 27.0 20.9 16.5 — — — 4.2 3.6 3.1 0.7 0.9 1.2 16.7 18.6 20.2 560 22.7 34.0 ICICI Bank 844 BUY 971,848 19,657 1,152 44.7 58.0 63.1 23.9 29.7 8.8 18.9 14.6 13.4 — — — 1.8 1.6 1.5 1.7 2.1 2.2 9.7 11.7 11.8 1,100 30.4 78.8 IDFC 109 BUY 164,974 3,337 1,509 8.8 9.9 12.0 4.6 12.8 21.6 12.5 11.1 9.1 — — — 1.6 1.3 1.2 2.0 1.8 2.2 14.7 13.1 13.9 150 37.2 22.7 India Infoline 71 SELL 23,226 470 327 7.4 4.8 6.5 (9.3) (34.5) 33.8 9.6 14.7 11.0 — — — 1.4 1.2 1.1 4.3 1.4 1.9 12.9 8.7 10.3 70 (1.5) 1.2 Indian Bank 200 BUY 85,975 1,739 430 38.8 42.0 50.9 10.5 8.2 21.2 5.2 4.8 3.9 — — — 1.1 0.9 0.8 3.7 3.9 4.8 22.3 20.4 21.0 300 50.0 1.7 Indian Overseas Bank 95 BUY 58,843 1,190 619 17.3 21.1 30.8 33.6 22.0 45.4 5.5 4.5 3.1 — — — 0.7 0.6 0.5 5.2 4.5 4.9 12.7 13.3 17.0 190 99.8 1.7 IndusInd Bank 254 BUY 118,355 2,394 466 12.4 15.2 18.2 45.2 22.6 19.9 20.5 16.7 14.0 — — — 3.2 2.8 2.5 0.8 1.0 1.2 20.8 17.7 17.9 325 28.0 3.6 J&K Bank 787 ADD 38,158 772 48 126.9 141.8 152.8 20.1 11.8 7.7 6.2 5.5 5.1 — — — 1.1 1.0 0.8 3.3 3.7 4.0 19.0 18.4 17.3 950 20.7 0.7 LIC Housing Finance 206 ADD 97,840 1,979 475 20.5 22.9 27.5 47.2 11.4 20.4 10.0 9.0 7.5 — — — 2.5 2.1 1.7 2.1 2.4 2.9 25.8 23.7 23.9 260 26.2 21.5 Mahindra & Mahindra Financial 660 BUY 67,649 1,368 102 45.2 56.4 69.2 26.1 24.8 22.7 14.6 11.7 9.5 — — — 2.7 2.4 2.0 1.5 1.9 2.3 22.0 21.4 22.3 825 24.9 1.2 Muthoot Finance 169 BUY 62,917 1,273 371 15.7 21.6 26.7 108.4 37.1 23.7 10.8 7.8 6.3 — — — 4.7 2.1 1.6 — — — 51.5 36.7 28.1 230 35.8 — Oriental Bank of Commerce 280 BUY 81,722 1,653 292 51.5 55.6 65.4 13.7 8.0 17.6 5.4 5.0 4.3 — — — 0.8 0.7 0.6 3.7 4.0 4.7 15.5 13.9 14.7 430 53.5 3.9 PFC 150 BUY 198,056 4,006 1,320 22.8 23.4 28.3 11.1 2.4 21.3 6.6 6.4 5.3 — — — 1.3 1.0 0.9 2.6 3.1 3.8 18.4 17.0 16.7 225 50.0 15.6 Punjab National Bank 970 BUY 307,355 6,217 317 140.0 163.0 201.5 13.0 16.5 23.6 6.9 6.0 4.8 — — — 1.5 1.3 1.1 2.3 3.4 4.2 24.4 23.5 24.2 1,500 54.6 6.9 Reliance Capital 402 REDUCE 98,981 2,002 246 9.3 16.5 24.8 (25.3) 77.0 50.4 43.2 24.4 16.2 — — — 1.4 1.4 1.3 0.9 1.6 2.5 3.3 5.7 8.3 470 16.9 20.5 Rural Electrification Corp. 174 BUY 171,362 3,466 987 26.0 29.0 32.5 28.1 11.5 12.3 6.7 6.0 5.3 — — — 1.3 1.2 1.0 4.3 4.8 5.4 21.5 20.8 20.4 240 38.3 11.7 Shriram Transport 603 REDUCE 134,553 2,722 223 55.1 65.6 75.3 40.8 19.0 14.8 10.9 9.2 8.0 — — — 2.8 2.3 2.0 1.1 2.2 2.5 28.1 26.8 25.2 700 16.1 8.2 SKS Microfinance 285 RS 21,018 425 74 15.7 (39.1) 3.9 (41.8) (349.4) (109.9) 18.2 (7.3) 73.6 — — — 1.2 1.4 1.3 — — — 8.3 (17.4) 1.9 — — 8.9 State Bank of India 1,950 BUY 1,238,407 25,049 635 130.2 195.6 256.1 (9.9) 50.3 30.9 15.0 10.0 7.6 — — — 1.9 1.7 1.4 1.7 1.8 1.9 12.6 17.8 20.0 2,750 41.0 114.9 Union Bank 243 BUY 127,308 2,575 524 39.5 50.2 60.4 (3.9) 27.1 20.5 6.2 4.8 4.0 — — — 1.1 1.0 0.8 3.8 4.9 5.8 20.9 21.9 22.5 425 75.0 4.9 Yes Bank 267 BUY 92,844 1,878 347 21.5 26.2 32.3 43.2 22.1 23.3 12.4 10.2 8.3 — — — 2.4 2.0 1.7 0.9 1.1 1.4 21.7 21.7 22.2 420 57.0 16.3 Banks/Financial Institutions Attractive 7,440,057 150,487 20.1 20.0 22.9 12.2 10.1 8.2 ——— 1.9 1.7 1.4 1.8 2.1 2.4 16.0 16.6 17.5 Cement ACC 1,069 SELL 200,891 4,063 188 55.6 60.1 72.7 (33.2) 8.2 20.9 19.2 17.8 14.7 11.8 9.9 7.8 2.9 2.7 2.4 3.3 2.2 2.2 17.5 17.3 18.1 980 (8.3) 6.3 Ambuja Cements 145 SELL 220,440 4,459 1,522 7.9 7.8 9.8 (1.5) (0.5) 25.5 18.4 18.5 14.7 11.2 10.2 7.9 2.8 2.6 2.3 1.4 1.5 1.7 16.6 14.8 16.9 135 (6.8) 5.9 Grasim Industries 2,349 BUY 215,385 4,356 92 233.3 259.5 289.3 (22.5) 11.2 11.5 10.1 9.1 8.1 6.3 5.4 4.5 1.5 1.3 1.1 1.5 1.5 1.5 15.8 15.3 15.0 2,900 23.5 3.6 India Cements 71 ADD 21,932 444 307 1.9 8.3 9.2 (81.2) 339.0 10.4 37.8 8.6 7.8 14.1 5.7 5.1 0.5 0.5 0.5 2.2 4.5 4.5 1.4 6.2 6.5 82 14.8 1.7 Shree Cement 1,804 REDUCE 62,829 1,271 35 57.2 83.1 132.9 (72.5) 45.5 59.8 31.6 21.7 13.6 7.0 6.6 4.6 3.3 3.0 2.6 0.6 0.6 0.6 10.7 14.5 20.7 1,730 (4.1) 1.2 UltraTech Cement 1,162 ADD 318,434 6,441 274 44.9 73.1 85.9 (49.2) 63.0 17.5 25.9 15.9 13.5 12.6 8.4 7.0 2.6 2.2 1.9 0.4 0.5 0.5 16.7 17.3 17.3 1,220 5.0 3.6 Cement Neutral 1,039,911 21,034 (23.5) 23.6 18.8 17.7 14.3 12.1 9.4 7.5 6.1 2.2 1.9 1.7 1.5 1.3 1.4 12.3 13.5 14.2

Source: Company, Bloomberg, Kotak Institutional Equities estimates

2 17 17 India India DailySummary - September 26,2011 Kotak Institutional Equities: Valuation summary of key Indian companies

O/S Target 23-Sep-11 Mkt cap. shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X)Dividend yield (%) RoE (%)price Upside ADVT-3mo Company Price (Rs) Rating (Rs mn) (US$ mn) (mn) 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E2013E 2011E 2012E2011E 2012E 2013E (Rs) (%) (US$ mn) Consumer products Asian Paints 3,090 SELL 296,430 5,996 96 80.8 94.6 111.4 13.0 17.1 17.7 38.2 32.7 27.7 25.5 20.8 17.0 14.5 11.2 9.0 1.0 0.9 1.1 43.9 40.0 36.8 2,900 (6.2) 5.1 Colgate-Palmolive (India) 983 SELL 133,688 2,704 136 29.6 34.1 38.8 (4.9) 15.0 14.1 33.2 28.9 25.3 28.9 25.2 21.1 34.8 35.4 28.3 2.2 3.0 2.8 113.4 121.6 124.2 900 (8.4) 2.2 Dabur India 103 SELL 178,737 3,615 1,740 3.3 3.7 4.4 12.8 14.1 18.8 31.4 27.6 23.2 25.4 20.9 17.6 13.6 10.5 8.3 1.1 1.3 1.5 51.2 43.8 40.6 110 7.1 2.9 GlaxoSmithkline Consumer (a) 2,372 ADD 99,758 2,018 42 71.3 83.2 104.0 28.8 16.7 25.0 33.3 28.5 22.8 23.9 20.6 17.2 10.7 9.1 7.6 2.1 1.6 2.0 32.2 33.5 35.5 2,900 22.3 1.0 Godrej Consumer Products 415 ADD 134,144 2,713 324 14.9 18.4 22.7 31.3 23.4 23.8 27.9 22.6 18.2 23.7 16.6 12.7 7.8 5.5 4.4 1.2 0.8 0.8 35.9 28.7 27.0 510 23.0 2.4 Hindustan Unilever 331 ADD 715,097 14,464 2,159 9.9 11.3 13.3 4.8 14.1 17.7 33.5 29.4 25.0 28.5 24.9 20.3 27.1 23.5 20.3 2.3 2.8 3.3 66.3 85.9 87.5 370 11.7 18.7 ITC 192 ADD 1,472,001 29,773 7,681 6.4 8.0 9.1 20.7 24.9 13.1 29.9 23.9 21.2 19.8 16.1 14.0 8.8 7.5 6.6 2.3 2.0 2.3 33.2 35.5 34.4 230 20.0 33.2 Jubilant Foodworks 891 SELL 58,295 1,179 65 11.2 16.6 24.1 99.6 48.6 45.1 79.5 53.5 36.9 48.5 29.7 20.8 30.4 19.4 12.7 — — — 46.6 44.2 41.6 750 (15.8) 31.3 Jyothy Laboratories 165 ADD 13,296 269 81 10.5 9.4 11.8 (5.0) (10.1) 25.2 15.7 17.5 14.0 13.0 11.7 9.7 2.0 1.9 1.7 3.5 2.8 3.5 12.3 11.1 12.9 220 33.4 0.4 Marico 145 ADD 88,951 1,799 612 4.2 5.4 7.1 10.9 27.3 32.6 34.5 27.1 20.4 23.0 18.5 14.1 9.5 7.4 5.8 0.5 0.6 0.9 32.8 31.3 32.2 185 27.2 1.5 Nestle India (a) 4,311 SELL 415,667 8,408 96 86.8 103.6 123.2 16.7 19.3 18.9 49.7 41.6 35.0 33.1 27.1 22.3 48.6 35.3 26.6 1.1 1.4 1.7 116.5 98.3 86.8 3,500 (18.8) 2.2 Tata Global Beverages 87 ADD 53,832 1,089 618 4.0 6.0 7.1 (34.6) 52.6 17.6 22.0 14.4 12.3 8.5 7.2 6.0 1.1 1.0 1.0 2.3 3.5 4.1 6.5 9.6 10.8 120 37.9 4.5 Titan Industries 224 ADD 198,553 4,016 888 4.9 7.4 8.8 71.7 51.5 17.8 45.5 30.0 25.5 33.3 20.9 17.2 18.3 13.0 9.9 0.6 1.0 1.3 47.8 50.5 44.0 240 7.3 20.3 United Spirits 780 ADD 97,938 1,981 126 29.5 39.2 50.6 8.3 32.8 29.0 26.4 19.9 15.4 14.4 11.0 9.5 2.3 2.0 1.8 0.4 0.3 0.5 9.1 10.7 12.5 1,100 41.1 5.0 Consumer products Neutral 3,956,388 80,024 16.3 21.8 17.2 33.1 27.1 23.2 23.1 18.7 15.7 10.2 8.6 7.4 1.8 1.8 2.1 30.8 31.9 32.0 Constructions IVRCL 37 BUY 9,813 198 267 5.9 5.7 6.6 (25.2) (4.1) 15.6 6.2 6.5 5.6 5.7 5.5 5.3 0.5 0.5 0.4 1.1 1.1 1.1 8.2 7.3 7.9 75 104.1 5.1 Nagarjuna Construction Co. 66 BUY 16,858 341 257 6.4 5.9 7.7 (29.7) (7.8) 30.8 10.3 11.2 8.5 8.3 7.8 7.2 0.7 0.7 0.7 3.0 3.0 3.0 7.1 6.3 7.8 100 52.2 1.4 Punj Lloyd 55 REDUCE 18,745 379 340 (1.5) 5.5 7.4 (56.6) (467.8) 34.9 (37.2) 10.1 7.5 12.7 5.6 5.0 0.6 0.6 0.6 (0.1) 0.9 1.2 (1.7) 6.1 7.7 65 17.8 7.7 Sadbhav Engineering 133 BUY 19,986 404 150 7.8 10.8 11.9 51.0 38.9 10.6 17.2 12.4 11.2 10.2 8.2 7.5 3.1 2.5 2.1 0.4 0.4 0.4 18.1 20.4 18.6 180 35.0 0.2 Construction Attractive 65,401 1,323 (1.1) 67.6 23.4 16.9 10.1 8.2 8.8 6.4 5.9 0.8 0.8 0.7 1.1 1.3 1.4 4.8 7.6 8.7 Energy Aban Offshore 362 BUY 15,746 318 44 116.2 95.3 107.2 9.0 (18.0) 12.4 3.1 3.8 3.4 6.7 6.6 6.3 0.7 0.7 0.6 1.0 1.1 1.2 29.2 19.4 18.0 700 93.4 8.7 Bharat Petroleum 657 ADD 237,658 4,807 362 38.9 54.0 55.1 (32.5) 38.9 1.9 16.9 12.2 11.9 10.8 7.6 7.2 1.6 1.5 1.4 2.1 2.7 2.7 9.2 11.8 11.2 780 18.7 7.6 Cairn india 277 REDUCE 526,926 10,658 1,902 33.3 45.8 49.7 501.1 37.4 8.6 8.3 6.1 5.6 6.0 4.3 3.4 1.3 1.1 1.0 — 1.8 5.4 16.9 19.8 19.2 295 6.5 13.1 Castrol India (a) 511 SELL 126,323 2,555 247 19.8 21.9 22.3 28.5 10.8 1.6 25.8 23.3 22.9 16.6 15.6 15.1 24.5 22.3 21.2 2.9 3.3 3.5 100.2 100.2 94.7 425 (16.8) 1.8 GAIL (India) 422 BUY 535,172 10,825 1,268 28.2 34.3 36.0 13.8 21.8 4.9 15.0 12.3 11.7 9.5 9.0 8.0 2.6 2.2 1.9 1.8 2.1 2.4 17.5 18.4 16.5 560 32.7 9.8 GSPL 101 SELL 56,877 1,150 563 9.0 8.5 8.4 23.1 (6.1) (0.1) 11.2 12.0 12.0 7.2 7.0 6.8 2.5 2.1 1.8 1.0 1.7 2.5 25.5 19.1 16.4 92 (9.0) 5.3 Hindustan Petroleum 372 ADD 126,010 2,549 339 40.8 20.3 33.9 (20.8) (50.4) 67.3 9.1 18.4 11.0 4.1 5.0 3.5 0.8 0.8 0.7 3.8 1.7 2.8 9.0 4.1 6.5 430 15.7 8.5 Indian Oil Corporation 313 BUY 760,191 15,376 2,428 32.4 28.4 32.1 (34.0) (12.5) 12.9 9.7 11.0 9.8 9.0 7.8 6.8 1.3 1.2 1.1 3.0 2.8 3.1 13.3 10.8 11.3 385 23.0 4.4 Oil India 1,309 BUY 314,833 6,368 240 120.0 171.7 190.1 4.2 43.1 10.7 10.9 7.6 6.9 5.5 3.1 2.5 1.9 1.6 1.4 2.9 4.2 4.6 16.2 20.1 19.4 1,750 33.7 1.7 Oil & Natural Gas Corporation 258 BUY 2,205,613 44,612 8,556 24.7 37.2 40.8 7.4 50.8 9.7 10.5 6.9 6.3 3.9 2.9 2.3 1.5 1.3 1.2 3.4 4.7 5.4 14.3 19.1 18.3 380 47.4 28.7 Petronet LNG 165 SELL 123,750 2,503 750 8.1 11.5 11.4 50.3 41.3 (0.7) 20.4 14.4 14.5 11.7 9.4 9.6 4.1 3.4 2.8 1.2 1.8 1.8 20.9 24.6 20.2 125 (24.2) 11.0 Reliance Industries 771 BUY 2,297,159 46,464 2,981 62.0 69.2 71.1 24.8 11.7 2.7 12.4 11.1 10.8 6.8 6.0 5.4 1.4 1.2 1.1 1.0 1.2 1.3 13.0 13.1 12.0 1,000 29.8 87.4 Energy Attractive 7,326,258 148,185 11.5 24.5 7.8 10.9 8.8 8.1 6.1 4.9 4.2 1.5 1.3 1.2 2.1 2.7 3.4 13.8 15.2 14.7 Industrials ABB 752 SELL 159,249 3,221 212 3.0 21.1 27.3 (82.2) 606.1 29.6 251.8 35.7 27.5 182.9 24.0 18.0 6.6 5.7 4.8 0.3 0.4 0.4 2.6 17.1 19.1 700 (6.9) 1.7 BGR Energy Systems 335 Reduce 24,201 489 72 44.8 40.4 39.0 60.0 (9.7) (3.5) 7.5 8.3 8.6 5.1 4.6 4.3 2.5 2.1 1.7 3.0 2.4 2.3 39.0 27.4 21.9 400 19.3 5.1 Bharat Electronics 1,538 ADD 123,024 2,488 80 107.3 121.7 135.5 11.6 13.5 11.3 14.3 12.6 11.3 6.4 5.3 3.9 2.4 2.1 1.8 1.4 1.6 1.6 18.2 17.6 17.1 1,875 21.9 1.3 Bharat Heavy Electricals 1,599 REDUCE 782,767 15,833 490 122.8 126.6 137.4 39.7 3.0 8.5 13.0 12.6 11.6 8.6 7.9 7.2 3.9 3.2 2.6 1.9 1.7 1.8 33.3 27.6 24.6 1,800 12.6 31.6 Crompton Greaves 150 BUY 96,225 1,946 642 14.3 10.6 13.5 11.5 (25.8) 26.7 10.5 14.1 11.1 6.8 7.8 5.9 2.9 2.5 2.1 1.6 1.1 1.2 31.7 19.1 20.5 210 40.0 17.1 Larsen & Toubro 1,451 REDUCE 883,594 17,872 609 67.7 79.6 98.2 18.1 17.5 23.4 21.4 18.2 14.8 15.3 11.6 9.9 3.3 2.8 2.4 1.0 1.0 1.0 17.0 16.6 17.2 1,800 24.0 62.1 Maharashtra Seamless 360 BUY 25,363 513 71 46.1 41.6 46.7 19.3 (9.7) 12.3 7.8 8.6 7.7 4.1 4.2 3.4 1.0 0.9 0.9 2.3 2.3 2.6 13.3 11.1 11.5 460 27.9 0.1 Siemens 855 SELL 288,390 5,833 337 22.4 28.9 32.5 39.5 28.8 12.3 38.1 29.6 26.4 22.5 18.9 16.5 8.9 7.2 6.0 0.6 0.7 0.8 25.2 26.9 24.8 830 (3.0) 3.1 Suzlon Energy 38 SELL 67,028 1,356 1,746 (6.0) 1.8 3.2 (4.6) (129.2) 80.6 (6.4) 21.8 12.1 19.9 7.5 6.4 1.0 1.0 0.9 — 0.5 0.5 (15.8) 4.4 7.7 40 4.2 18.8 Tecpro Systems 232 ADD 11,712 237 50 27.0 29.4 32.7 24.2 8.9 11.4 8.6 7.9 7.1 5.4 5.6 4.9 1.8 1.5 1.3 — — — 26.8 20.5 19.6 300 29.3 0.2

KOTAK INSTITUTIONAL EQUITIES RESEARCH Thermax 496 REDUCE 59,086 1,195 119 31.6 33.0 35.1 44.3 4.4 6.3 15.7 15.0 14.1 10.5 9.4 8.8 4.5 3.7 3.2 1.8 2.0 2.0 31.5 27.2 24.3 550 10.9 1.8 Voltas 117 ADD 38,713 783 331 9.8 9.7 10.5 (14.3) (1.1) 8.8 12.0 12.1 11.1 7.2 6.9 5.7 2.8 2.4 2.0 1.7 2.6 (0.0) 26.1 21.6 19.9 150 28.2 3.9 Industrials Cautious 2,559,353 51,767 25.5 20.5 16.0 19.4 16.1 13.9 12.4 10.0 8.7 3.4 2.9 2.5 1.3 1.2 1.2 17.7 18.0 17.8 Infrastructure Container Corporation 917 ADD 119,211 2,411 130 63.5 70.0 77.9 4.9 10.3 11.2 14.4 13.1 11.8 9.3 8.2 7.1 2.4 2.1 1.8 1.6 1.8 2.0 17.6 16.9 16.6 1,150 25.4 0.8 GMR Infrastructure 28 RS 103,971 2,103 3,667 (0.0) (0.4) 0.5 (102.0) 3,980.8 (243.5) (3,270.7) (80.1) 55.9 12.9 11.2 9.0 1.0 1.0 1.0 — — — (0.0) (2.0) 2.8 — — 2.5 Gujarat Pipavav Port 66 BUY 27,807 562 424 (1.2) 1.2 2.6 (65.8) (201.6) 115.2 (54.6) 53.8 25.0 28.1 16.6 11.2 3.8 3.5 3.1 — — — (9.1) 9.4 13.6 78 18.8 0.6 GVK Power & Infrastructure 17 RS 26,215 530 1,579 1.0 1.0 0.3 (0.6) 1.6 (73.4) 16.9 16.6 62.6 17.9 16.5 19.5 0.8 0.7 0.8 — 1.8 2.1 4.7 4.6 1.2 — — 3.3 IRB Infrastructure 165 ADD 54,757 1,108 332 13.6 11.3 11.0 17.4 (16.9) (2.6) 12.1 14.6 15.0 8.1 8.2 7.0 2.2 1.6 1.3 0.9 — — 19.3 12.6 9.6 185 12.3 6.1 Mundra Port and SEZ 150 ADD 301,911 6,107 2,017 4.6 6.8 10.5 36.3 50.3 53.2 32.9 21.9 14.3 26.6 17.8 12.7 6.9 5.5 4.2 — — — 23.2 28.0 33.5 175 16.9 5.5 Infrastructure Cautious 633,872 12,821 12.1 19.6 39.6 27.6 23.1 16.5 15.3 12.5 10.1 2.3 2.1 1.9 0.4 0.4 0.5 8.5 9.2 11.6

Source: Company, Bloomberg, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH Kotak Institutional Equities: Valuation summary of key Indian companies India Daily Summary - September 26, 2011 Daily 26, India Summary- September

O/S Target 23-Sep-11 Mkt cap. shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X)Dividend yield (%) RoE (%) price Upside ADVT-3mo Company Price (Rs) Rating (Rs mn) (US$ mn) (mn) 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E (Rs) (%) (US$ mn) Media DB Corp 214 BUY 39,304 795 183 14.1 13.0 15.5 32.7 (8.1) 19.9 15.2 16.6 13.8 9.9 9.7 8.1 4.7 4.2 3.7 1.9 2.8 3.7 35.0 26.9 28.6 330 53.9 0.8 DishTV 77 ADD 81,569 1,650 1,062 (1.8) 0.0 1.3 (27.5) (101.9) 3,944.0 (42.9) 2,318.7 57.3 38.1 17.5 11.8 38.8 38.2 22.9 — — — (62.3) 1.7 49.9 100 30.2 7.5 Eros International 250 ADD 24,211 490 97 11.8 15.8 19.9 19.0 34.0 25.9 21.2 15.8 12.6 14.8 11.2 8.1 3.6 2.9 2.3 — — — 24.9 20.2 20.5 250 0.1 2.6 Hindustan Media Ventures 136 BUY 9,976 202 73 7.3 9.0 12.1 198.7 22.8 35.0 18.6 15.1 11.2 8.9 7.8 5.7 2.5 2.1 1.9 — — 2.2 22.3 15.1 17.7 220 61.8 0.1 HT Media 141 ADD 33,053 669 235 7.7 8.9 11.0 26.3 15.3 23.6 18.2 15.8 12.8 8.5 7.2 5.5 2.4 2.2 2.1 1.4 2.8 4.3 15.0 14.4 16.6 190 35.1 0.5 Jagran Prakashan 105 BUY 33,117 670 316 6.8 7.0 8.4 17.2 1.7 20.5 15.3 15.0 12.5 9.2 8.5 7.0 4.8 4.3 3.9 3.2 3.8 4.8 31.5 30.0 32.7 160 52.8 0.5 Sun TV Network 290 BUY 114,283 2,312 394 19.6 21.6 25.4 48.6 10.0 17.9 14.8 13.4 11.4 8.8 7.8 6.7 4.7 4.2 3.8 3.0 4.1 5.5 36.6 34.7 36.6 440 51.7 8.9 Zee Entertainment Enterprises 114 BUY 111,044 2,246 978 5.8 6.2 7.7 10.0 6.4 23.3 19.4 18.3 14.8 12.9 11.9 9.4 2.6 2.5 2.4 1.2 1.2 1.4 14.2 14.3 16.9 160 41.0 5.7 India Daily Summary -September Daily Summary India Media Neutral 446,557 9,032 50.5 19.3 27.1 22.7 19.0 15.0 12.1 10.3 8.1 4.1 3.8 3.4 1.6 2.1 2.8 18.1 19.8 22.9 Metals & Mining Coal India 366 ADD 2,309,263 46,708 6,316 17.3 25.5 29.4 13.6 47.6 15.1 21.1 14.3 12.4 12.5 8.8 7.4 6.6 5.1 4.1 1.4 2.1 2.4 35.1 40.3 36.4 470 28.6 30.2 Hindalco Industries 134 ADD 256,405 5,186 1,915 12.8 18.3 17.6 (36.0) 43.3 (4.0) 10.5 7.3 7.6 5.9 5.7 6.0 0.9 0.8 0.7 1.1 1.1 1.1 9.7 11.4 10.0 175 30.7 26.5 Hindustan Zinc 126 BUY 531,928 10,759 4,225 11.6 13.1 14.7 21.8 12.7 11.8 10.8 9.6 8.6 7.0 5.3 3.9 2.4 1.9 1.6 0.8 0.8 0.8 24.3 22.2 20.4 160 27.1 2.7 Jindal Steel and Power 524 REDUCE 489,573 9,902 934 40.2 43.5 52.9 5.1 8.2 21.6 13.0 12.1 9.9 9.8 9.1 7.7 3.5 2.7 2.1 0.3 0.3 0.3 30.9 25.5 24.4 595 13.5 20.5 JSW Steel 633 SELL 142,956 2,892 226 78.6 70.2 107.5 (2.2) (10.7) 53.1 8.0 9.0 5.9 6.2 6.6 5.6 0.9 0.8 0.7 1.9 1.9 1.9 13.6 9.3 12.9 660 4.3 33.8 National Aluminium Co. 63 SELL 162,366 3,284 2,577 4.1 5.0 4.8 36.3 20.5 (4.1) 15.2 12.6 13.1 7.0 5.5 5.3 1.5 1.4 1.3 2.4 2.4 2.4 9.9 11.1 10.0 65 3.2 0.6 Sesa Goa 207 SELL 185,292 3,748 895 47.0 40.1 41.6 59.8 (14.6) 3.7 4.4 5.2 5.0 3.6 3.9 3.0 1.4 1.2 0.9 1.9 1.9 2.0 36.8 22.1 17.9 230 11.1 16.4 Sterlite Industries 123 BUY 412,251 8,338 3,361 15.2 17.0 19.0 26.2 12.0 11.5 8.1 7.2 6.5 5.0 3.8 3.2 1.0 0.9 0.8 0.9 0.9 0.9 13.0 13.0 12.8 185 50.8 17.2 Tata Steel 433 BUY 420,426 8,504 971 75.3 68.7 76.9 (2,258.1) (8.8) 12.0 5.7 6.3 5.6 5.7 5.9 5.0 1.2 0.9 0.8 2.7 1.8 1.8 24.7 15.5 15.7 625 44.4 48.2 Metals & Mining Attractive 4,910,460 99,322 39.1 16.1 12.9 11.9 10.2 9.0 7.5 6.5 5.5 2.3 1.9 1.6 1.4 1.6 1.8 19.0 18.5 17.8 Pharmaceutical Apollo Hospitals 520 ADD 72,267 1,462 139 13.2 17.8 21.4 21.0 34.5 19.9 39.3 29.2 24.4 17.9 13.6 11.2 3.8 2.8 2.5 — — — 9.8 10.7 10.5 650 24.9 1.0 Biocon 337 BUY 67,300 1,361 200 18.4 19.4 21.4 23.9 5.6 10.3 18.3 17.3 15.7 10.5 10.0 9.1 3.3 2.9 2.6 — — — 19.4 17.9 17.4 445 32.2 2.9 Cipla 284 REDUCE 227,909 4,610 803 12.3 14.5 16.5 (10.0) 17.5 13.7 23.0 19.6 17.2 19.9 14.2 11.7 3.4 3.0 2.7 1.0 1.1 1.2 15.4 16.0 16.5 310 9.2 8.0 Cadila Healthcare 807 ADD 165,273 3,343 205 34.7 39.4 47.7 40.6 13.4 21.0 23.2 20.5 16.9 20.1 16.8 13.0 7.6 5.9 4.7 0.8 1.0 1.2 37.5 32.5 30.9 1,045 29.5 2.4 Dishman Pharma & chemicals 62 REDUCE 5,030 102 81 9.8 8.0 8.7 (31.8) (18.3) 8.0 6.3 7.7 7.1 8.2 6.2 5.7 0.6 0.5 0.5 — — — 9.6 7.2 7.3 70 13.2 0.2 Divi's Laboratories 719 ADD 95,348 1,929 133 32.4 36.7 45.0 25.7 13.5 22.4 22.2 19.6 16.0 18.3 14.0 11.5 5.3 4.5 3.9 — — — 25.9 25.0 26.2 830 15.5 2.5 GlaxoSmithkline Pharmaceuticals (a) 2,005 REDUCE 169,800 3,434 85 68.3 78.2 88.6 15.5 14.6 13.3 29.4 25.6 22.6 19.4 17.2 14.8 8.7 8.0 7.4 2.0 2.5 2.8 30.9 32.6 33.9 2,220 10.7 1.4 Glenmark Pharmaceuticals 323 ADD 87,264 1,765 270 17.0 26.2 23.5 33.6 54.5 (10.3) 19.0 12.3 13.7 21.1 14.1 12.0 4.3 3.2 2.6 — — — 20.6 29.8 21.2 395 22.4 4.3 Jubilant Life Sciences 201 REDUCE 32,083 649 159 14.4 16.5 22.7 (45.6) 14.5 37.6 14.0 12.2 8.9 11.1 8.9 7.5 1.4 1.3 1.2 1.0 1.0 1.5 12.3 11.7 14.2 205 1.8 1.3 Lupin 476 ADD 213,160 4,311 448 19.2 20.6 26.3 25.6 7.2 27.5 24.7 23.0 18.1 20.7 17.9 13.2 6.4 5.2 4.2 0.6 0.7 0.9 29.5 25.3 26.2 530 11.4 9.7 Ranbaxy Laboratories 473 SELL 200,005 4,045 423 40.6 16.9 20.8 475.0 (58.3) 22.7 11.6 27.9 22.7 14.3 24.2 18.8 3.5 3.1 2.7 — — — 34.5 11.9 12.8 435 (8.0) 7.4 Sun Pharmaceuticals 469 ADD 486,007 9,830 1,036 17.5 20.4 24.3 34.4 16.3 19.2 26.8 23.0 19.3 22.7 18.2 14.7 4.7 4.0 3.4 0.7 0.9 1.1 21.0 20.2 20.7 560 19.3 10.4 Pharmaceuticals Cautious 2,147,802 43,443 30.2 3.5 3.6 22.4 21.6 20.9 16.9 14.5 13.7 3.6 3.1 2.9 0.7 0.8 0.9 16.0 14.2 14.0 Property DLF 198 BUY 338,628 6,849 1,715 9.1 11.9 15.7 (14.5) 31.3 31.8 21.8 16.6 12.6 15.1 11.9 9.0 1.3 1.2 1.1 1.0 1.3 1.5 5.4 7.5 9.2 270 36.7 36.8 Housing Development & Infrastructure 100 BUY 44,545 901 445 19.8 28.7 34.3 24.0 44.8 19.7 5.1 3.5 2.9 5.2 3.6 3.1 0.5 0.4 0.3 — 1.0 1.5 10.0 12.3 12.7 150 49.9 19.9 Indiabulls Real Estate 75 RS 29,987 607 402 4.0 8.5 15.4 (1,095.5) 114.1 81.5 18.8 8.8 4.8 13.3 10.7 4.6 0.3 0.2 0.2 — 0.7 0.9 1.4 2.9 5.0 — — 8.5 Mahindra Life Space Developer 297 BUY 12,124 245 41 24.9 30.8 37.5 30.2 23.7 21.6 11.9 9.6 7.9 9.0 6.5 4.8 1.2 1.1 1.0 1.7 1.5 1.7 10.4 11.6 12.7 450 51.5 0.2 Oberoi Realty 220 BUY 72,595 1,468 330 15.7 20.0 28.0 14.8 27.6 39.7 14.0 11.0 7.9 10.2 7.0 4.3 2.2 1.9 1.5 0.5 0.7 1.1 19.9 18.2 21.3 315 43.1 0.3 Phoenix Mills 218 BUY 31,555 638 145 6.3 7.4 10.7 53.0 17.2 44.1 34.4 29.4 20.4 25.4 21.2 15.9 2.0 1.9 1.8 0.8 0.9 0.9 5.8 6.6 8.9 300 37.7 0.3 Puravankara Projects 66 ADD 13,979 283 213 5.5 9.0 10.9 (18.9) 62.8 21.5 11.9 7.3 6.0 16.9 9.3 7.8 0.9 0.8 0.7 1.5 2.3 3.1 8.0 12.0 13.1 80 22.1 0.0 Sobha Developers 220 BUY 21,525 435 98 18.8 20.6 27.2 33.8 9.2 32.2 11.7 10.7 8.1 10.6 9.6 6.8 1.1 1.1 0.9 1.4 1.6 1.8 10.2 10.3 12.4 370 68.6 0.9 Unitech 27 RS 71,556 1,447 2,616 2.3 2.6 2.7 (23.4) 12.8 4.9 11.8 10.4 10.0 13.6 11.0 9.0 0.6 0.6 0.5 — 0.7 1.1 5.4 5.7 5.4 — — 17.9 Property Cautious 669,878 13,549 5.3 44.3 29.6 15.6 10.8 8.4 12.7 9.1 6.8 1.0 0.9 0.8 0.8 1.1 1.4 6.1 8.1 9.5

Source: Company, Bloomberg, Kotak Institutional Equities estimates

2 19 19 India India DailySummary - September 26,2011 Kotak Institutional Equities: Valuation summary of key Indian companies

O/S Target 23-Sep-11 Mkt cap. shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X)Dividend yield (%) RoE (%) price Upside ADVT-3mo Company Price (Rs) Rating (Rs mn) (US$ mn) (mn) 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E (Rs) (%) (US$ mn) Sugar Bajaj Hindustan 41 REDUCE 9,307 188 228 1.9 3.7 1.6 (28.7) 90.5 (57.3) 21.1 11.1 25.9 17.0 5.6 5.4 0.3 0.3 0.3 1.4 1.4 1.4 1.7 2.7 1.1 60 47.2 1.8 Balrampur Chini Mills 50 BUY 12,285 248 247 6.7 4.0 7.7 111.0 (40.5) 94.0 7.4 12.5 6.4 10.8 8.6 5.7 0.8 0.8 0.7 1.6 1.5 1.5 11.6 6.5 11.9 80 60.8 1.7 Shree Renuka Sugars 57 BUY 37,944 767 670 10.5 6.4 5.0 214.7 (39.4) (21.0) 5.4 8.9 11.3 8.3 6.5 5.3 1.5 1.3 1.2 1.8 1.8 1.8 34.4 16.1 11.4 75 32.5 9.5 Sugar Cautious 59,536 1,204 122.4 (24.7) (7.4) 7.4 9.8 10.6 10.6 6.5 5.4 0.9 0.8 0.7 1.7 1.7 1.7 11.6 8.1 7.0 Technology HCL Technologies 388 SELL 273,575 5,533 705 22.9 29.5 32.8 30.4 28.9 11.3 17.0 13.2 11.8 10.3 7.9 7.0 3.2 2.8 2.4 1.9 2.1 2.1 21.0 22.6 21.7 375 (3.4) 9.9 Hexaware Technologies 75 ADD 21,693 439 290 3.0 7.5 7.3 (36.8) 154.4 (3.4) 25.3 9.9 10.3 18.6 8.5 7.1 2.2 2.0 1.8 2.0 4.0 4.4 9.3 21.3 18.6 80 7.1 3.1 Infosys Technologies 2,339 BUY 1,342,471 27,154 574 119.7 134.3 160.3 10.5 12.1 19.4 19.5 17.4 14.6 13.1 11.5 9.4 5.2 4.4 3.7 2.6 1.8 2.1 28.0 27.1 27.2 2,900 24.0 74.9 Mahindra Satyam 71 SELL 83,026 1,679 1,176 4.2 6.7 7.0 68.9 58.4 4.7 16.8 10.6 10.1 12.3 6.3 4.8 4.8 3.3 2.5 — — — 27.6 37.1 28.2 70 (0.8) 10.5 Mindtree 354 ADD 14,555 294 41 24.7 35.2 37.2 (52.7) 42.4 5.8 14.3 10.1 9.5 8.0 6.2 4.9 1.9 1.6 1.5 0.7 1.0 3.2 14.4 17.2 16.1 375 6.0 2.2 Mphasis BFL 334 SELL 70,445 1,425 211 51.8 38.6 30.0 18.8 (25.5) (22.2) 6.5 8.7 11.1 5.5 6.5 7.0 2.1 1.8 1.6 1.2 1.3 1.5 38.6 22.3 14.8 300 (10.3) 3.5 Patni Computer Systems 292 ADD 38,948 788 133 42.6 25.9 27.2 16.5 (39.3) 5.2 6.9 11.3 10.7 3.7 4.0 2.7 1.2 1.1 1.1 22.6 1.8 1.9 18.4 8.2 10.2 300 2.6 1.3 Polaris Software Lab 127 REDUCE 12,682 257 100 19.3 18.8 19.0 25.7 (2.6) 0.7 6.6 6.8 6.7 3.5 2.7 2.3 1.2 1.1 0.9 2.9 3.1 3.2 20.2 16.8 14.8 130 2.2 2.2 TCS 990 ADD 1,938,215 39,203 1,957 44.5 52.8 61.1 26.8 18.6 15.6 22.2 18.8 16.2 16.8 13.7 11.4 7.7 6.3 5.2 1.8 2.1 2.5 37.8 36.9 35.2 1,160 17.1 44.9 Tech Mahindra 626 SELL 78,882 1,596 126 48.8 72.1 75.5 (25.2) 47.8 4.7 12.8 8.7 8.3 8.8 8.8 7.8 2.4 2.0 1.8 0.6 0.6 1.6 20.5 26.0 23.8 600 (4.2) 3.5 Wipro 340 ADD 833,133 16,851 2,454 21.6 22.4 24.5 14.5 3.9 9.1 15.7 15.1 13.9 11.5 10.2 9.0 3.5 3.0 2.5 1.3 1.4 1.6 24.3 21.1 19.7 370 9.0 11.8 Technology A ttractive 4,707,624 95,219 17.1 13.1 13.0 18.3 16.2 14.3 13.1 11.2 9.5 4.8 4.0 3.4 2.0 1.8 2.1 26.2 24.9 23.8 Telecom Bharti Airtel 375 ADD 1,424,100 28,805 3,798 15.9 18.2 28.0 (32.6) 14.5 53.7 23.6 20.6 13.4 10.2 7.9 6.0 2.9 2.6 2.1 — — — 13.3 13.3 17.4 460 22.7 48.1 IDEA 97 ADD 318,934 6,451 3,303 2.7 2.7 5.1 (0.5) (1.4) 89.2 35.5 36.0 19.0 11.3 8.6 6.5 2.6 2.4 2.1 — — — 7.6 7.0 12.0 115 19.1 18.1 MTNL 33 SELL 21,042 426 630 (10.4) (9.1) (8.4) (33.7) (11.9) (8.1) (3.2) (3.7) (4.0) 0.7 1.0 1.2 0.2 0.2 0.2 — — — (6.1) (5.7) (5.5) 35 4.8 0.8 Reliance Communications 79 SELL 168,469 3,408 2,133 6.3 2.6 5.2 (71.1) (59.4) 103.2 12.5 30.9 15.2 6.0 6.5 5.5 0.4 0.4 0.4 — — — 3.2 1.3 2.7 80 1.3 18.1 Tata Communications 192 REDUCE 54,734 1,107 285 15.2 15.7 15.9 8.2 3.5 1.5 12.7 12.2 12.1 5.9 5.6 5.2 0.7 0.7 0.7 3.9 4.4 4.7 5.5 5.5 5.4 205 6.7 1.3 Telecom Cautious 1,987,279 40,196 (42.4) 2.1 62.3 24.7 24.2 14.9 9.3 7.7 6.0 1.7 1.6 1.4 0.1 0.1 0.1 6.8 6.5 9.5 Utilities Adani Power 85 REDUCE 202,345 4,093 2,393 2.4 11.0 15.0 200.7 368.5 35.8 35.9 7.7 5.6 36.1 7.5 4.9 3.2 2.1 1.5 — — — 8.5 33.5 31.8 100 18.3 3.5 CESC 278 BUY 34,701 702 125 37.7 42.5 51.3 9.1 12.7 20.8 7.4 6.5 5.4 5.4 5.8 5.5 0.7 0.7 0.6 1.8 1.9 2.2 10.5 10.7 11.5 440 58.4 2.0 JSW Energy 56 REDUCE 91,184 1,844 1,640 5.1 4.8 4.7 12.9 (6.2) (1.8) 10.8 11.6 11.8 11.9 7.9 6.2 1.6 1.4 1.3 (1.8) — — 16.1 13.0 11.3 60 7.9 1.8 Lanco Infratech 16 BUY 36,124 731 2,223 2.0 3.0 3.4 (5.8) 47.2 16.6 8.1 5.5 4.7 8.4 7.8 7.4 0.9 0.7 0.6 — — — 12.2 15.0 14.6 45 176.9 8.5 NHPC 24 ADD 290,297 5,872 12,301 1.3 1.8 2.1 (27.2) 36.0 16.3 17.5 12.9 11.1 13.0 9.8 7.9 1.1 1.0 0.9 1.7 2.1 2.4 6.3 8.0 8.8 30 27.1 2.3 NTPC 167 REDUCE 1,376,993 27,852 8,245 11.0 11.2 12.0 5.3 1.4 6.8 15.1 14.9 14.0 12.6 12.1 11.4 2.0 1.8 1.7 2.3 2.0 2.1 13.7 12.8 12.6 180 7.8 10.0 Reliance Infrastructure 428 BUY 113,620 2,298 265 58.0 64.1 76.3 (6.5) 10.5 19.0 7.4 6.7 5.6 7.2 3.8 2.8 0.5 0.5 0.4 2.2 2.4 2.6 6.4 11.2 12.2 920 114.8 14.8 Reliance Power 82 SELL 229,595 4,644 2,805 2.7 2.9 2.9 (5.0) 7.6 (0.5) 30.2 28.1 28.2 162.7 69.5 14.6 1.4 1.3 1.3 — — — 4.9 4.9 4.7 88 7.5 6.2 Tata Power 991 BUY 244,539 4,946 247 76.5 75.9 87.6 21.5 (0.7) 15.4 13.0 13.1 11.3 10.5 8.7 8.1 1.7 1.5 1.4 1.4 1.5 1.7 13.8 12.3 12.9 1,350 36.3 8.7 Utilities Cautious 2,619,398 52,981 5.1 18.9 13.4 15.2 12.8 11.3 13.8 10.4 8.6 1.5 1.4 1.3 1.6 1.6 1.7 10.1 10.9 11.3 Others Carborundum Universal 304 SELL 28,443 575 93 18.3 18.9 21.0 67.7 3.7 10.6 16.7 16.1 14.5 12.0 10.2 9.0 3.3 2.9 2.5 1.3 1.3 1.4 20.7 18.4 17.8 290 (4.7) 0.2 Havells India 360 REDUCE 44,888 908 125 24.5 25.8 28.8 334.1 5.1 11.5 14.7 13.9 12.5 9.7 9.0 7.8 6.3 4.5 3.4 0.7 0.8 0.8 53.9 37.6 30.9 370 2.8 3.3 Jaiprakash Associates 67 BUY 143,216 2,897 2,126 6.0 6.3 7.2 230.2 3.9 15.6 11.2 10.8 9.3 11.6 10.0 9.6 1.3 1.2 1.1 — — — 13.3 11.7 12.3 115 70.7 22.4 Jet Airways 260 BUY 22,467 454 86 (10.1) (69.1) 7.0 (91.0) 588 (110.1) (25.9) (3.8) 37.3 9.7 11.7 7.5 1.4 2.2 2.1 — — — (5.0) - - 500 92.1 11.9 SpiceJet 23 BUY 10,151 205 441 2.5 (3.0) 3.3 (1.8) (220.2) (210.4) 9.2 (7.7) 6.9 13.5 (17.8) 9.4 3.2 3.2 2.2 — — — (961) (41.6) 37.7 50 117.4 2.4 Tata Chemicals 323 REDUCE 82,388 1,666 255 26.2 32.9 38.8 (0.7) 25.4 17.9 12.3 9.8 8.3 7.5 5.2 4.5 1.5 1.3 1.2 3.1 3.7 4.6 16.9 18.6 19.5 365 12.9 2.8 United Phosphorus 146 BUY 67,354 1,362 462 12.3 15.9 19.8 3.9 28.8 24.3 11.8 9.2 7.4 7.2 5.0 4.2 1.8 1.6 1.3 1.4 2.1 2.4 18.0 18.5 19.8 220 50.8 3.8 Others 398,908 8,069 233.8 (5.8) 57.1 14.1 14.9 9.5 10.1 8.9 7.7 1.7 1.6 1.4 1.0 1.3 1.6 12.1 10.4 14.4 KS universe (b) 43,348,473 876,789 18.2 17.3 16.1 14.7 12.6 10.8 9.6 8.0 6.9 2.3 2.0 1.8 1.6 1.8 2.1 15.4 15.8 16.2 KS universe (b) ex-Energy 36,022,215 728,605 20.3 15.2 18.7 15.9 13.8 11.6 11.2 9.5 8.0 2.5 2.2 1.9 1.5 1.6 1.8 16.0 16.1 16.7 KS universe (d) ex-Energy & ex-Commodities 30,071,843 608,249 18.8 14.7 20.0 16.7 14.6 12.2 12.6 10.5 8.8 2.6 2.3 2.0 1.6 1.6 1.8 15.5 15.7 16.5

Notes: (a) For banks we have used adjusted book values.

KOTAK INSTITUTIONAL EQUITIES RESEARCH (b) 2010 means calendar year 2009, similarly for 2011 and 2012 for these particular companies. (c) EV/Sales & EV/EBITDA for KS universe excludes Banking Sector. (d) Rupee-US Dollar exchange rate (Rs/US$)= 49.44

Source: Company, Bloomberg, Kotak Institutional Equities estimates

Disclosures

Kotak Institutional Equities Research coverage universe (IMP: Our ratings definitions have changed as of September 6, 2011) Distribution of ratings/investment banking relationships Percentage of companies covered by Kotak Institutional Equities, 70% within the specified category.

60% Percentage of companies within each category for which Kotak Institutional Equities and or its affiliates has provided investment 50% banking services within the previous 12 months.

40% * The above categories are defined as follows: Buy = We expect 34.3% this stock to outperform the BSE Sensex by 10% over the next 12 30% 27.1% 27.1% months; Add = We expect this stock to outperform the BSE Sensex by 0-10% over the next 12 months; Reduce = We expect this stock to underperform the BSE Sensex by 0-10% over the 20% next 12 months; Sell = We expect this stock to underperform the 11.4% BSE Sensex by more then 10% over the next 12 months. These 10% ratings are used illustratively to comply with applicable 4.8% 3.6% 1.8% regulations. As of 30/06/2011 Kotak Institutional Equities 0.0% 0% Investment Research had investment ratings on 166 equity securities. BUY ADD REDUCE SELL

Source: Kotak Institutional Equities As of June 30, 2011

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 17.5% returns over the next 12 months.

ADD. We expect this stock to deliver 7.5-17.5% returns over the next 12 months.

REDUCE. We expect this stock to deliver 0-7.5% returns over the next 12 months.

SELL. We expect this stock to deliver less than 0% returns over the next 12 months.

Our target prices are also on a 12-month horizon basis.

Other definitions

Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following designations: Attractive, Neutral, Cautious.

Other ratings/identifiers

NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s) and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

21 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Corporate Office Overseas Offices

Kotak Securities Ltd. Kotak Mahindra (UK) Ltd Kotak Mahindra Inc Bakhtawar, 1st Floor 6th Floor, Portsoken House 50 Main Street, Suite No.310 229, Nariman Point 155-157 The Minories Westchester Financial Centre Mumbai 400 021, India London EC 3N 1 LS White Plains, New York 10606 Tel: +91-22-6634-1100 Tel: +44-20-7977-6900 / 6940 Tel:+1-914-997-6120

1. Note that the research analysts contributing to this report may not be registered/qualified as research analysts with FINRA; and

2. Such research analysts may not be associated persons of Kotak Mahindra Inc and therefore, may not be subject to NASD Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Kotak Securities Limited and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We along with our affiliates are leading underwriter of securities and participants in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationships with a significant percentage of the companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. Investors should assume that Kotak Securities Limited and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may participate in the solicitation of such business. Our research professionals are paid in part based on the profitability of Kotak Securities Limited, which include earnings from investment banking and other business. Kotak Securities Limited generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, Kotak Securities Limited generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein.

This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of Kotak Securities Limited. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Kotak Securities Limited does not provide tax advise to its clients, and all investors are strongly advised to consult with their tax advisers regarding any potential investment.

Certain transactions -including those involving futures, options, and other derivatives as well as non-investment-grade securities - give rise to substantial risk and are not suitable for all investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only. We endeavor to update on a reasonable basis the information discussed in this material, but regulatory, compliance, or other reasons may prevent us from doing so. We and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material, may from time to time have “long” or “short” positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. For the purpose of calculating whether Kotak Securities Limited and its affiliates holds beneficially owns or controls, including the right to vote for directors, 1% of more of the equity shares of the subject issuer of a research report, the holdings does not include accounts managed by Kotak Mahindra Mutual Fund. Kotak Securities Limited and its non US affiliates may, to the extent permissible under applicable laws, have acted on or used this research to the extent that it relates to non US issuers, prior to or immediately following its publication. Foreign currency denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies affectively assume currency risk. In addition options involve risks and are not suitable for all investors. Please ensure that you have read and understood the current derivatives risk disclosure document before entering into any derivative transactions.

This report has not been prepared by Kotak Mahindra Inc. (KMInc). However KMInc has reviewed the report and, in so far as it includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. Any reference to Kotak Securities Limited shall also be deemed to mean and include Kotak Mahindra Inc.