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BUY LUPIN
CMP : 430 ; Target : 510
Headquartered in Mumbai, India, Lupin Limited today is an innovation
led transnational pharmaceutical company producing a wide range of
quality, affordable generic and branded formulations and APIs for over
70 countries in the world. Lupin remains amongst the prolific R& D
spenders in the industry which we believe bodes
well for its growth.

Lupin can turn out to be a major winner with the recent Japanese
crisis by tapping the opportunity. The Japanese subsidiary Kyowa
pharma to see rise sale of CNS drugs and anti-infective grew by 16% to
Rs. 1,727 Mn during Q3, FY 2010-11 which has 200 brands and adds 11%
-12 % revenue to the company. Kyowa also plans to launch atleast 4 – 5
products every year.
Lupin remains the 5th largest Generic player in the U.S. in terms of
prescriptions (IMS Health). Lupin emerged as the market leader (No. 1
by market share) in 13 out of 29 generic products in
the U.S. and 28 out of these 29 generic products rank in the Top 3
positions by market share

Pharma Major, Lupin Ltd. reported a top-line growth of 17% and net
profit growth of 39% for the third quarter, FY 2010-11.

Key Financial & Performance Highlights
• Net sales grew by 17% to Rs. 14,672 million during Q3, FY 2010-11,
up from Rs. 12,554 million (Q3, FY 09-10)
• Net profits grew by 39% to Rs. 2,240 million during Q3, FY 2010-11,
as compared to Rs 1,606 Mn. (Q3 FY 09-10)
• Earnings before Interest, Tax, Depreciation and Amortization
(EBITDA) grew by 15% to Rs. 3,007 Mn. during Q3, FY 2010-11, from Rs.
2,619 Mn. (Q3 FY 09-10).

Lupin is investing Rs.450 cr on capacity expansion, ramping up sales
force and launching new products.
The company has already expanded its reach from 890 medical
representatives 3 years back to 3,500 at present and is looking to
hire more employees this fiscal in India.
Lupin has got a rich pipeline for various geographies. They have close
to about 145 filing for America as of now; and there could be a few
more by the end of this fiscal targeting annual revenue of $3 billion,
three times that of the revenue in 2010.

Intact growth in FY 2011-12 in the sector due to 1) Visibility
increase in launches in US. 2) OCs launch from Sep 2012E.3) Minimal
threat of generic competition to Suprax.

We believe the recent fall in stock is a good opportunity point as
long term drivers are intact.
We recommend 'BUY' on the stock at CMP 430 with a target price of Rs.
510... Valuing it at 20x FY2012E earnings.

BUY RURAL ELECTRIFICATION CORPORATION LIMITED (REC)

CMP : 240; Target : 300

REC, under Ministry of Power, was incorporated on July 25, 1969 under
the Companies Act 1956. REC a listed Public Sector Enterprise
Government of India with a net worth of Rs. 11,080 Crore as on
31.03.10.

REC provides loan assistance to SEBs/State Power Utilities for
investments in rural electrification schemes through its Corporate
Office located at New Delhi and 17 field units (Project Offices),
which are located in most of the States.

The company has been rated among the top 500 Global Financial Services
brands for 2010 by UK-based plc Brand Finance. REC is also among the
Forbes Global 2000 companies for 2010.

REC registered robust growth in all key parameters during FY10 with
operating income increased to 65.49 bn a growth of 38% from 47.57bn in
FY09.

For the quarter ended December 2010, strong loan growth drove REC's
net interest income (NII) by 36 per cent year-on-year, which, coupled
with net interest margin (NIM) expansion, enabled its net profit to
post a handsome growth of 40 per cent.

While loan growth in the December quarter was healthy, at 21 per cent
on a yearly basis to Rs 75,744 crore

We have a 'BUY' rating on the stock at CMP of 240 due to REC's robust
long-term business outlook and valuations considering compounded
earnings growth of 25 per cent and average return on equity (RoE) of
22 per cent over 2011-12.

BUY AREVA T&D

CMP : 265 ; Target : 440

India Ltd, the Indian subsidiary of AREVA France SA, engages in the
design and manufacture of equipment, systems, and services for
transmission and distribution of electricity in India.
Areva managed to retain its leadership position for the third year has
posted a net profit of Rs. 88.08 crore in Dec 2010 quarter, an
increase of 30% Y-o-Y. Net sales rose to Rs.1327 cr in Dec quarter
compare to Rs.1150 cr in previous year's quarter.
Eight new factories were built at three locations: Vadodora in
Gujarat, and Hosur and Padappai in Chennai in Tamilnadu.
The comply of Areva T&D India's business at global level by the
Consortium of Alstom-Schneider continues to fortify on the stock.
Although the signs of recovery are emerging, the stock is currently
trading at lower valuations that contradict the fundamental.
Building on the strong operating performance with relatively low
interest and depreciation cost as proportion to sales and lower tax
incidence, we expect company to register CAGR of 13.5% respectively.
We expect the stock perform dominant in earning at CMP 265 with a
target price of 440.

BUY SYNDICATE BANK

CMP : 110 ; Target : 160
Syndicate Bank was established in 1925 spanning over 80 years of
pioneering expertise, the Bank has created for itself a solid customer
base comprising customers of two or three generations.

Syndicate Bank recorded 57% increase in its operating profit for the
nine months ended December 2010. The operating profit was Rs2078 crore
for the period ended December 2010 as against Rs1321 crore recorded
during the corresponding period of the previous - year.
Net Interest Income increased from Rs1880 crores for the nine months
ended December 2009 to Rs3222 crore for December 2010 registering
growth of 71%.

The Global Business of the Bank was at Rs.2, 25,910 crore as on
31.12.2010 as against Rs1, 91,619 crores as on 31.12.2009 registering
a growth of 18%.

Syndicate loan books expected to grow by 20%. Thus the stock looks
attractive investment opportunity.

Since its 52 week high of Rs 164 has been declining in a well defined
channel lows and highs. At its current low of Rs 110, the stock has
underperformed Sensex & Bankex & the close to its book level.
The stock is cheap at 1.4x estimated FY12 book value. Thus studying
all the aspect we recommend a strong BUY with the target of 160.

BUY KAMANWALA HOUSING CONSTRUCTION
CMP : 40 ; Target : 90
Kamanwala Housing Construction Limited (KHCL), a company with a 25-
year track record, based at Mumbai is into construction and
development of commercial and residential buildings.
It owns the famous Filmistan studio in partnership and has been in
news recently that it is selling the land for a whooping amount of Rs.
600 cr. Kamanwala completed a commercial project "Pinnacle Corporate
Park" at Mumbai's most developing commercial hub Bandra Kurla Complex.
Kamanwala's Savoy Residence, a residential project of 60000 sq ft. in
Santacruz West has been completed. Work at Savoy chambers, a
commercial project of 67000 sq.ft in Santacruz West is completed.
Kamanwala is constructing 5 towers residential project in Malad
West .They are developing SRA project at Mahim. Kamanwala owns 125000
sq ft of land in Oshiwara area. They are soon starting with
development of 35 acres of land in Hyderabad. Kamanwala holds huge
land in Noida and Turbhe as well.
With total land asset of more than Rs.1000 cr, market is severely
undervalued at 40 with market capital of Rs.55 cr.
Considering the zeroing of debt the company has undertaken, completion
of its various projects and its land bank, we recommend a STRONG BUY
on Kamanwala with it more than doubling to 90 in 9 months.

BUY NEYVELI LIGNITE CORPORATION LIMITED (NLC)
CMP : 107 ; Target : 150
NLC is a government-owned lignite mining Indian company, which is
wholly owned by the Union Government (49%) and administered via coal
ministry. It is recently announced as "Navratna" by Government of
India in April 2011. NLC Neyveli spreads over an area of around 54
square km, comprising Neyveli Township and temporary colonies around
32 blocks. The company runs the biggest open-pit lignite mines in
India and mines around 24 million tonnes of lignite annually for fuel,
with an installed capacity of 2490 MW of electricity per annum.
NLC now elaborated its project to Rajasthan also in mining as well as
thermal stations, 3 big mines also supplies a huge amount of sweet
water to Chennai. The Tamil Nadu electricity board has a JV with the
Neyveli Lignite Cooperation (NLC) for two projects – A 1000-MW coal-
based project at Tuticorin in southy Tamil Nadu at the cost of Rs 4000
crore and the Jayamkondam lignite power project at a cost of Rs 5000
crore for 1000 – MW power plant.The company has also planned to
develop clean coal technologies like extraction of coal bed methane
(CBM) and Underground coal gasification for which several steps have
been taken.
Neyveli Lignite is an open-cast mechanized lignite mine. The Company
has 50 percent joint venture with Tamil Nadu Electricity Board.
Recently, the company announced its plans to invest about $8.2 billion
on power generation and mining capacity augmentation by 2017. The plan
also includes development of power projects using other fuel feed. Of
the proposed investment, $2.04 billion has already been spent on
ongoing projects.
Strong expansion & diversification plans to explore coal-based, wind
and solar power generation projects will add on strength to the
cashbook.

BUY FIRSTSOURCE SOLUTION LTD

CMP : 20 ; Target : 40

Formerly known as ICICI OneSource, incorporated in 2001, Firstsource
Solutions Limited provides a range of business process outsourcing
services.
It offers business process management services to the banking,
financial services and insurance (BFSI); telecommunications and media;
and healthcare industries. Firstsource has a "rightshore" delivery
model with operations in India, U.S., UK and Philippines.

INVESTMENT VIEW:-
Firstsource Recognized with Top Honors at the International Quality
and Productivity Council (IQPC) Conference
Leadership position in the healthcare industry
About 40% of the revenue comes from its healthcare vertical catering
mainly to US markets
Divestment of Stake
ICICI bank is likely to reduce its stake in FSL from 19.4% to 5%;
ICICI bank is looking to sell it at 5% premium to the market price.
Stable relationships with existing clients
The Company works with more than 1000 clients. 7 of the top 10 clients
have grown during the quarter.
Foreign Exchange Hedges
Outstanding FX hedge sat $ 31million and £ 35million for USD and GBP
respectively.
Employee Strength
26,668 (as of 31st Dec, 2010) added 1,759 employees in this quarter.
FSL gave net sales of Rs.182.96 cr in December 2010 quarter compare to
Rs.175 cr in previous year.
Inspite of Q3 being a seasonally weaker Quarter, Strong performance
both on revenues and profitability. We recommend a Buy on FSL at CMP
20 with a target price of 40 within 9 months.

BUY HOTEL LEELA

CMP : 40 ; Target : 60

India's fifth-biggest luxury hotel chain founded in 1957. Leela Group
is engaged in the business of ready-made garments and luxury hotels
and resorts.
Hotel Leelaventure, plans to raise funds through divest as much as
14.95% stake through a fresh issue of shares to unnamed investor(s)
and besides monetise its land bank by selling non-core assets
including a major portion of a commercial office space next to its
hotel in Chennai. It expects to generate about Rs 950 crore from such
sale of land and joint development, which would be used for reducing
its debt. The other decision to sell a stake will bring around Rs 270
crore ($60 million) additionally as cash into the firm, according to
estimates based on current market price. The strategic or financial
investor will pick just a tad less than 15% stake that would trigger
an open offer...
India is one of the fastest growing tourist markets in the world
inherently rooted concept of hospitality in form of "Ätithi Devo
bhava" . At present, your Company operates six hotels at the locations
viz. Mumbai, Bangalore, Goa, Kovalam, Udaipur and Gurgaon comprising
1523 guest rooms and 90 serviced apartments.
Hotel Leela is expected to commence to aided by addition of 260 rooms
in Delhi and 332 rooms in Chennai properties.
With an ever increasing demand in tourism business synergizing with
growth plans of Leela, we recommend a BUY at current level of 40 with
target of 60.

SELL BAJAJ AUTO

CMP : 1300; Target : 1100

BAL, the 2nd largest manufacturer of two-wheelers in India, reported
less growth compared to its peers, with production constraints,
diminishing brand image and market acceptance, coupled with
detoriating quality & inability to achieve target sale, the stock
looks struggling.

Two wheeler auto industry is going through a turmoil with declining
demand reasoned because of increasing interest rate & restrained
financial availability. Supply of two wheelers is on an increase with
players like Honda, Hero Honda, TVS, M&M expanding their capacities.
Bajaj is to be most affected with this gap in demand and supply as its
brand preference has fallen from 2nd position to 5th position in
market.
Bajaj reported sale of 322235 two wheeler units, which includes export
of 158422 units in April 2011 month. Last year in same month, Bajaj
saw sale of 276095 units with export of 113911. This implies that the
domestic sale of Bajaj remained stagnant with around 163000 units over
the year showing no growth. Hero Honda, market leader in two wheeler,
showed growth of whooping 40% in domestic market in the same time
frame. Hero Honda is venturing into exports as well.
With Government withdrawing DEPB benefit scheme for exporters, Bajaj
auto will face severe problems in terms of their export profit. Rajiv
Bajaj, MD, Bajaj Auto, stated his concern regarding the fall in export
to take place due to withdrawing of DEPB scheme and increasing
competition from China market in exports. He also shard his worry
about further slowdown expected in two wheelers.

With increase in competition, fall in demand, pressure rising due to
high input cost, tightening of export policies, Bajaj Auto is losing
grounds from domestic as well as export market. We recommend a STRONG
SELL on Bajaj Auto with target of 1100.

DISCLAIMER:- Smart Profit has taken due care and caution in
compilation of data for its reports. The market view and investment
tips expressed on Smart Profit are in no way a guarantee either
express or implied. However, Smart Profit does not guarantee the
accuracy, adequacy or completeness of any information and is not
responsible for any errors or omissions or for the results obtained
from the use of such information.

SUMAN JAIN
(CEO)
Email: sumanjain@smartprofit.in
Tel : 9820041126
ANKITA JAIN
(Director)
Email: ankita@smartprofit.in
Tel : 9819854402
DIPAK MANGELA
(Research Analyst)
Email: dipak.mangela@smartprofit.in
Tel : 9820260291
MANSINGH RAI
(Customer Care Executive)
Email: mansingh.rai@smartprofit.in
Tel : 9320907684
SHAILESH GOWDA
(Customer Care Executive)
Email: shailesh.gowda@smartprofit.in
Tel : 9967394114

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