Saturday, October 31, 2009

VARIOUS Research Reports

A look into this week's performance and why it happened so in TELECOM stocks and results impact of CAPITAL GOODS, PHARMA & AUTO Stocks by Mohan Gundu the Senior Research Head at CLSA

The strength of earnings continues into 2QFY10. The good news is that profits continue to grow strongly despite the pre-crisis base. The overall strength of earnings is being driven by margins, which have been the main source of surprise for consensus in general.

The market is up 100% since its low in March 2009,and is now up 92% reforms are moving slower than expected by certain quarters. The central bank has been sending signals on a possible exit policy same time equity supply is burgeoning.

History shows that the first rate rise in a tightening cycle usually causes equities to correct moderately. The reaction of markets to Australia’s rate rise earlier this month suggests
that same thing could happen this time too.

While we have remained cautious on Indian telecoms due to competition, the extent of
pricing pressure has surprised us negatively, leading to a further reduction in our EPS and
target prices. Our EPS estimates are now 21-53% below consensus for FY3/11 and our
target prices imply a 12-27% downside from current levels.

We continue to believe Punj Lloyd is the only Indian mid-cap E&C company that has the
necessary skill sets/ desire to leapfrog into the next level occupied by L&T. However, the company is trying to make this jump in too short a time with aggressive bidding size/ geography/ pricing of orders. SABIC was a legacy order but Ensus/ONGCs Heera are results of aggressive bids not paying off.

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All opinions are based on my technical study; however, I do not vouch for the accuracy or the completeness of the matter. I am not liable for any potential damages that may be incurred while acting upon any information mentioned in this report. The views expressed are not of binding nature. The report is intended for a restricted audience & I am not soliciting any action based on it. Please exercise discretion and due diligence in making your decisions. Investments in Capital Markets are not my obligation or guarantee and are subject to investment risks. In no event will I be liable for any damages, including without limitation direct or indirect, special, incidental or consequential damages, losses or expenses arising in connection with this report or use thereof or inability to use by any party, or in connection with any failure of performance, error, omission, interruption, defect, delay in operation even if I am thereof, advised of the possibility of such damages, losses or expenses.