13th May 2011

Aditya Birla Money

Weekly Picks - A short-term POSITIONAL bet for Investor-Trader / Trader-Investor Strategy: Take advantage of the technical selling in the market and identify scrip which are mispriced; capitalise on the directional as well as the consolidating market; Capture the sectoral rotation in the market. Stock selection basis: While selecting the stocks, emphasis is given on fundamentals, and prospective event flow in the market. This is supported and endorsed by technical indicators and derivative data. Time horizon and potential returns: The product carries two-to-three trading/investment ideas with a time horizon ranging from one to eight weeks targeting a potential return of ~4-8% for the large caps and ~8-12% for the mid-cap during the given timeframe. Execution: While the stock fundamentals are sound, stop loss is recommended for the leveraged traders based on the individual's risk appetite at the support level indicated in the technical view. The trade should be closed once the target is achieved or eight weeks, whichever happens earlier. Frequency: After weekly closing.

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Aditya Birla Money

Bharti Airtel (Target ~4%)

CMP ` 367.8

Bharti Airtel - Technical Perspective

Bharti Airtel is the largest telecom operator in India and the 5th largest in the world with presence over 19 countries across Asia and Africa. Bharti is the best positioned telecom operator to benefit from the changes in the current telecom regulatory environment, stabilising domestic market and tremendous opportunities in Africa.

Result Analysis: During Q4FY11, Bharti Airtels topline registered a growth of 3.2% to ` 162.65 bn from ` 157.56 bn on QoQ basis and increase of 51.3% on YoY basis (not comparable because of Zains inclusion) led by India & South Asia markets grew by 3.8% on QoQ and Africa business posted $924 mn revenues, with a marginal increase of 1.4%. EBITDA improved by 3.2% (excluding one-time branding exp of ` 3.4 bn in Q3) to ` 54.49 bn from ` 53.21 bn (QoQ), with a margin contradiction of 26 bps to 33.5%. Interestingly, Indian mobile business EBITDA margin declined by 130 bps to 33.3%, in the meantime, African business margin has improved dramatically by 550 bps to 26.4%. Adjusted PAT declined by 14.7% to ` 14 bn from ` 16.42 bn on QoQ basis on account of higher income tax (27.3% vs 21.7%). On operational front, Indian operations ARPU declined slightly to ` 194 from ` 198 and African ARPU remained at $7.2 vs $7.3 on QoQ basis. At the CMP of ` 367.8, Bharti trades at 13.3x on its FY13E consolidated EPS of ` 27.6 (Bloomberg Consensus). Considering the stabilising operating performance in domestic and improving African business, upbeat 3G prospects and strong presence in under penetrated telemedia business make us believe Bharti as a good bet for the investors. Recently, the stock has corrected from its recent highs of ~390, provides an opportunity for the investors to enter into it. The stock after falling sharply from its recent high of 390 took support at the extended falling trend line near 350 and bounced back strongly in the last few days This indicates that uptrend from the February lows is still in force and leaves scope for gains towards the resistance near 377 and last months high of 390 in the forthcoming trading sessions Weekly MACD (12/26/9) is exhibiting positive momentum and prices honored the 100-day EMA in prior fall which would be supportive for the said argument On the downside, immediate support is seen at 363 and then at prior swing low of 346 Only an early fall below the later will turn the sentiments weak negating the upside potential

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Aditya Birla Money

Power Grid (Target ~4%)

CMP ` 101.4

Power Grid - Technical Perspective

125 120 115 110 105

Power Grid Corporation of India Ltd (PGCIL) is India's largest electric power transmission company owning and operating more than 95% of India's interstate and inter-regional electric power transmission system. Power grid is present in Transmission, Consultancy, and Telecom etc.

100 Pole & Flag 95 90

PGCILs business model is with minimal risk and stable profitability since there is no variability in the tariff computation. Hence volatility in earnings is significantly lower as compared to a power generation firm. Company is planning to leverage its transmission towers by leasing the space to telecom

service providers which could further boost its earnings PGCIL is a monopoly player in the power transmission sector. As per the CERC norms, PGCIL earns RoE / profits on the regulated equity / capitalized Assets (~16% regulated returns). The capitalization is expected to pick up over the next 5 years, in line with the capacity addition in the power sector (100GW planned for the XIIth 5-year plan; the estimated capex for PGCIL in this plan is estimated at ` 1100bn against ` 550bn in the XIth plan). At ` 101.4/share, PGCIL is valued at 1.9xP/B & 15.3xP/E on FY12E consensus estimates, which is reasonable on an absolute basis (given the higher RoEs).
M J J A S O N D 2010 M A M J J A S O N D 2011 M A M J J

Powergrid has been rising in a well defined rising channel formed joining pivotal highs and lows since its low of 91 in Dec 2010. After a sharp up move in Jan from 98 t0 107 Powergrid has been consolidating since last 6 weeks Confluence of rising trendline and crucial moving averages (21, %%, 100) at 100 is providing strong support to prices Having consolidated the gains, Powergrid now seems set to resume its uptrend towards the upper band of the channel at 110 The sharp rise and consolidation thereafter can also be seen as Bullish Pole and Flag patter implying that an up move equivalent to the height of the pole could be witnessed towards 110 RSI has been able to hold above the bullish range at 40 indicating that the uptrend is still intact. Daily momentum is about to give a positive crossover from oversold zone adding strength to our bullish stance. Weekly MACD has crossed the zero line from below implying strengthening upward momentum Immediate support is placed at 100/98 and resistance is placed at 108/110

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Aditya Birla Money

Weekly Spotlight MIS for last eight weeks

Return at high price (%) 17.3 16.0 8.5 10.6 6.9 9.6 9.1 0.6 2.4 4.6 3.5 3.9 0.3 1.0 0.8 4.2

Current Nifty Level: 5544.8

Return at Closing Price (%) 12.1 12.5 (4.8) (9.4) (1.5) (1.5) (3.0) (9.4) (2.6) (5.4) (3.9) (6.8) (3.6) (3.3) 0.9 2.9 Nifty Level 5,373.7 5,373.7 5654.3 5654.3 5826.1 5826.1 5827.1 5828.1 5824.6 5824.6 5884.7 5884.7 5749.5 5749.5 5749.5 5749.5 Target Achieved / Calls open Achieved Achieved Achieved Achieved Achieved Achieved Achieved Call Open Call Open Achieved Call Open Call Open Call Open Call Open Call Open Achieved

Reco Date 18-Mar-11 18-Mar-11 25-Mar-11 25-Mar-11 1-Apr-11 1-Apr-11 8-Apr-11 8-Apr-11 15-Apr-11 15-Apr-11 21-Apr-11 21-Apr-11 29-Apr-11 29-Apr-11 6-May-11 6-May-11

Stocks HCL Tech ITC LTD Bank of Baroda Crompton Greaves JSW Steel Limited Tata Global Breverages Ltd. Sterlite Industries Tech Mahindra Limited ICICI Bank TCS JSW Steel Limited Yes Bank Reliance Industries TCS Cipla ITC

Category* L L L L L L L L L L L L L L L L

Reco Price 450.3 168.0 927.9 268.2 949.6 100.7 174.1 742.3 1101.7 1191.4 974.1 317.6 983.8 1165.7 305.6 183.6

High 528.0 194.8 1,006.7 296.7 1,014.9 110.4 190.0 746.5 1,128.5 1,245.8 1,008.0 330.0 986.8 1,177.5 307.9 191.3

Closing Price 504.8 189.0 883.6 243.0 935.8 99.2 168.8 672.9 1,073.1 1,127.1 935.8 295.9 948.0 1,127.1 308.2 189.0

* Category : L for Large cap (Target Price for L cap: ~4% to ~8% in 8 Weeks) M for Mid cap (Target Price for M cap: ~8% to ~12% in 8 Weeks)

Total Open Call 7 / Achieved 9

Aditya Birla Money

Copyright Aditya Birla Money Limited 2010

Aditya Birla Money

Research Team
Vivek Mahajan Head of Research 022-42333522 vivek.mahajan@adityabirla.com

Fundamental Team
Avinash Nahata Akhil Jain Sunny Agrawal Sumit Jatia Shreyans Mehta Dinesh Kumar Pradeep Parkar Head of Fundamental Desk Metals & Mining FMCG/Cement Banking & Finance Construction/Real Estate Information Technology/Auto Database/Production 022-42333459 022-42333540 022-42333458 022-42333460 022-42333544 022-42333531 022-42333597 avinash.nahata@adityabirla.com akhil.jain@adityabirla.com sunny.agrawal@adityabirla.com sumit.jatia@adityabirla.com shreyans.m@adityabirla.com dinesh.kumar.k@adityabirla.com pradeep.parkar@adityabirla.com

Quantitative Team
Rizwan Khan Jyoti Nangrani Raghuram Rahul Tendolkar Amit Somani Technical and Derivative Strategist Sr. Technical Analyst Technical Analyst Derivatives Analyst Derivative Analyst 022-42333454 022-42333454 022-42333537 022-42333532 022-42333532 rizwan.khan@adityabirla.com jyoti.nangrani@adityabirla.com raghuram.p@adityabirla.com rahul.tendolkar@adityabirla.com amit.somani@adityabirla.com

Advisory Support
Indranil Dutta Suresh Gardas Sandeep Pandey Advisory Desk HNI Advisory Desk Advisory Desk 022-42333494 022-42333535 022-30442104 indranil.dutta@adityabirla.com suresh.gardas@adityabirla.com sandeep.pandey@adityabirla.com

ABML research is also accessible in Bloomberg at ABMR

Aditya Birla Money

Copyright Aditya Birla Money Limited 2010

Aditya Birla Money

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