Bharti Airtel

Table of Contents
Rpt. 17906783 23-Jul-2011
BHARTI AIRTEL LTD WRIGHT INVESTORS SERVICE - WRIGHT REPORTS
2 - 44
Rpt. 17862294 14-Jul-2011
BHARTI AIRTEL LTD/IDEA CELLULAR LTD CREDIT SUISSE - NORTH AMERICA - TIRUMALAI, SUNIL, ET AL
45 - 49
Rpt. 17845960 11-Jul-2011
BHARTI AIRTEL LTD/IDEA CELLULAR LTD JPMORGAN - SULLIVAN, JAMES, ET AL
50 - 81
Rpt. 17836023 08-Jul-2011
BHARTI AIRTEL LTD NOMURA INTERNATIONAL (HONG KONG) LTD. - AWASTHI, PRABHAT, ET AL
82 - 102
These reports were compiled using a product of Thomson Reuters
www.thomsonreuters.com
Company FundamentalsCompany Fundamentals\Company Profile
A Wright Investors' Service Research Report:
Bharti Airtel Limited

COMPANY PROFILE
440 Wheelers Farms Road Milford, CT 06461 U.S.A.
Figures in Indian Rupees

Wright Quality Rating:ACA20 Bharti Airtel Limited is a telecommunication service provider in India. The Company is engaged in mobile services, telemedia services, enterprise services and infrastructure services. The mobile business offers services in India, Sri Lanka and Bangladesh. The Telemedia business provides broadband, Internet protocol television (IPTV) and telephone services in 89 Indian cities. The digital television business provides direct-to-home television services across India. The enterprise business provides telecom solutions to corporate customers and national and international long distance services to telcos. The Company's subsidiaries include Bharti Cellular Limited, Bharti Infotel Limited, Bharti Airtel Services Limited, Bharti Aquanet Limited, Bharti Hexacom Limited, Satcom Broadband Equipment Limited, Bharti Broadband Limited, Bharti Infratel Limited, Bharti Infratel Ventures Limited and Bharti Airtel (USA) Limited. Stock Chart Officers Chairman & Managing Director Sunil Bharti Mittal Key Data Ticker: BHARTIARTL 2011 Sales: 594,672,000,000 Major Industry: Utilities Sub Industry: Telecommunications Country: India
Currency: Executive Managing Director Indian Rupees Manoj Kohli Fiscal Year Ends: Secretary & General Counsel March Vijaya Sampath Employees 18,354 Exchanges: BOM Share Type: Ordinary Stock Price (7/15/2011): 392.95 Recent stock performance 1 Week -1.3% 4 Weeks 3.3% 13 Weeks 5.5% 52 Weeks 31.7% Earnings / Dividends (as of 3/31/2011) Earnings 3.69 15.94 Ratio Analysis Dividends 1.00 1.00 Market Capitalization: 1,492,239,451,223 Total Shares Outstanding: 3,797,530,096 Closely Held Shares: 2,575,793,342
Most Recent Qtr Last 12 Months
Price / Earnings Ratio 24.65 Dividend Yield Price / Sales Ratio Price / Book Ratio 2.51 Payout Ratio
0.25% 6.27%
3.06 % Held by Insiders 67.83%
Address 1 Nelson Mandela Rd Vasant Kunj Phase II New Delhi DELHI 110 070 INDIA
Phone +91 11 4666-6100/4266-6500 Home Page http://airtel.in
Copyright 2000-2011 Distributed by Wright Investors' Service, Inc. All Rights Reserved. Except for quotations by established news media, no pages on this site may be reproduced, stored in a retrieval system, or transmitted for commercial purposes, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior written permission. Information is believed reliable, but accuracy, completeness and opinions are not guaranteed.
Company Fundamentals\Comparative Business Analysis
A Wright Investors' Service Research Report:

Provided By CorporateInformation.com
440 Wheelers Farms Road Milford, CT 06461 U.S.A.
Wright Comparative Business Analysis Report

Report Date: 7/15/2011 Company Description Bharti Airtel Limited is a telecommunication service provider in India. The Company is engaged in mobile services, telemedia services, enterprise services and infrastructure services. The mobile business offers services in India, Sri Lanka and Bangladesh. The Telemedia business provides broadband, Internet protocol television (IPTV) and telephone services in 89 Indian cities. The digital television business provides direct-to-home television services across India. The enterprise business provides telecom solutions to corporate customers and national and international long distance services to telcos. The Company's subsidiaries include Bharti Cellular Limited, Bharti Infotel Limited, Bharti Airtel Services Limited, Bharti Aquanet Limited, Bharti Hexacom Limited, Satcom Broadband Equipment Limited, Bharti Broadband Limited, Bharti Infratel Limited, Bharti Infratel Ventures Limited and Bharti Airtel (USA) Limited. Competitor Analysis Bharti Airtel Limited operates within the Radiotelephone communications sector. This analysis compares Bharti Airtel Limited with three other companies: SK Telecom Company Limited of South Korea (2010 sales of 15.44 trillion Korean Won [US$14.60 billion] of which 83% was Wireless Internet), Singapore Telecommunications Limited of Singapore (2011 sales: 18.07 billion Singapore Dollars [US$14.84 billion] ), and Chunghwa Telecom Company Limited which is based in Taiwan (2010 sales of 202.43 billion Taiwanese Dollars [US$7.02 billion] of which 44% was Mobile Phone Sales). Note: not all of these companies have the same fiscal year: the most recent data for each company are being used. Sales Analysis During the year ended March of 2011, sales at Bharti Airtel Limited were 594.67 billion Indian Rupees (US$13.36 billion). This is an increase of 42.2% versus 2010, when the company's sales were 418.29 billion Indian Rupees. This was the fifth consecutive year of sales increases at Bharti Airtel Limited (and since 2006, sales have increased a total of 410%).
Recent Sales at Bharti Airtel Limited 595 418
374 270 184 117
2006 2007 2008 2009 2010 2011 (Figures in Billions of Indian Rupees)
The company's sales increased faster in 2011 than at all three comparable companies. While Bharti Airtel Limited enjoyed a sales increase of 42.2%, the other companies saw smaller increases: SK Telecom Company Limited sales were up 6.0%, Singapore Telecommunications Limited increased 7.1%, and Chunghwa Telecom Company Limited experienced growth of 2.1%. The company currently employs 18,354. With sales of 594.67 billion Indian Rupees (US$13.36 billion) , this equates to sales of US$727,707 per employee. The sales per employee levels at the three comparable companies vary greatly, from US$249,530 to US$3,302,842, as shown in the following table. Some of the variation may be due to the way each of these companies counts employees (and if they count subcontractors, independent contractors, etc).
Sales Comparisons (Most Recent Fiscal Year) Company Bharti Airtel Limited SK Telecom Company Limited Chunghwa Telecom Company Limited Year Ended Mar 2011 Dec 2010 Dec 2010 Sales
(US$blns)
Sales Sales/ Growth Emp (US$) Largest Region 42.2% 6.0% 7.1% 2.1% 727,707 N/A 3,302,842 N/A 645,058 Australia (64.6%) 249,530 Taiwan (97.2%)
13.356 14.602 14.836 7.020
Singapore Telecommunications Limited Mar 2011
Recent Stock Performance For the 52 weeks ending 7/15/2011, the stock of this company was up 31.7% to 392.95 Indian Rupees. During the past 13 weeks, the stock has increased 5.5%. During the past 52 weeks, the stock of Bharti Airtel Limited has outperformed the three comparable companies, which saw changes between -10.0% and 28.1%. During the 12 months ending 3/31/2011, earnings per share totalled 15.94 Indian Rupees per share. Thus, the Price / Earnings ratio is 24.65. Earnings per share fell 34.0% in 2011 from 2010. The 24.7 P/E ratio of this company is higher than the P/E ratio of all three comparable companies, which are currently trading between 7.5 and 17.3 times earnings. This company is currently trading at 2.51 times sales. The three companies vary greatly in terms of price to sales ratio: trading from 0.66 times all the way up to 4.04 times their annual sales. Bharti Airtel Limited is trading at 3.06 times book value. However, at the end of fiscal year 2011, this company's intangible assets (637.32 billion Indian Rupees) were higher than its common equity (487.67 billion Indian Rupees), which means that the price to book ratio is not a very useful indicator. The company's price to book ratio is higher than that of all three comparable companies, which are trading between 0.90 and 2.11 times book value. Summary of company valuations (as of 7/15/2011). Company Bharti Airtel Limited SK Telecom Company Limited Singapore Telecommunications Limited Chunghwa Telecom Company Limited P/E 24.7 7.5 13.4 17.3 Price/ Price/ Book Sales 3.06 0.90 2.11 1.80 52 Wk Pr Chg
2.51 31.70% 0.66 -10.00% 2.84 2.88% 4.04 28.07%
The market capitalization of this company is 1.49 trillion Indian Rupees (US$33.52 billion) . Closely held shares (i.e., those held by officers, directors, pension and benefit plans and those shareholders who own more than 5% of the stock) amount to over 50% of the total shares outstanding: thus, it is impossible for an outsider to acquire a majority of the shares without the consent of management and other insiders. The capitalization of the floating stock (i.e., that which is not closely held) is 480.08 billion Indian Rupees (US$10.78 billion) . Dividend Analysis During the 12 months ending 3/31/2011, Bharti Airtel Limited paid dividends totalling 1.00 Indian Rupees per share. Since the stock is currently trading at 392.95 Indian Rupees, this implies a dividend yield of 0.3%. This company's dividend yield is lower than the three comparable companies (which are currently paying dividends between 4.9% and 6.5% of the stock price). The company has paid a dividend for 3 straight years. During the same 12 month period ended 3/31/2011, the Company reported earnings of 15.94 Indian Rupees per share. Thus, the company paid 6.3% of its profits as dividends. Since the company is paying less than 10% of its earnings out in dividends, it is likely that this company believes that it has significant growth prospects, and has decided to pay only a modest dividend. Profitability Analysis On the 594.67 billion Indian Rupees in sales reported by the company in 2011, the cost of services sold totalled 394.32 billion Indian Rupees, or 66.3% of sales (i.e., the gross profit was 33.7% of sales). This gross profit margin is lower than the company achieved in 2010, when cost of services sold totalled 58.8% of sales. The gross margin in 2011 was the lowest of the previous five years (in 2008, the gross margin had been as high as 53.3%). Bharti Airtel Limited's 2011 gross profit margin of 33.7% was lower than all three comparable companies (which had gross profits in 2011 between 58.9% and 96.8% of sales). In 2011, earnings before extraordinary items at Bharti Airtel Limited were 60.47 billion Indian Rupees, or 10.2% of sales. This profit margin is lower than the level the company achieved in 2010, when the profit margin was 21.9% of sales. The company's return on equity in 2011 was 15.2%. This was significantly worse than the already high 31.5% return the company achieved in 2010. (Extraordinary items have been excluded). Profitability Comparison
Company Bharti Airtel Limited Bharti Airtel Limited SK Telecom Company Limited Chunghwa Telecom Company Limited
Gross Earns Profit EBITDA bef. Year Margin Margin extra 2011 2010 2010 2010 33.7% 41.2% 96.8% 67.6% 58.9% N/A 10.2% 40.4% 21.9% 31.2% 8.9% 27.7% 21.2% 45.2% 23.5%
Singapore Telecommunications Limited 2011
Financial Position As of March 2011, the company's long term debt was 616.71 billion Indian Rupees and total liabilities (i.e., all monies owed) were 948.83 billion Indian Rupees. The long term debt to equity ratio of the company is 1.19. This is significantly higher than where the long term debt to equity ratio was in March 2010, when the long term debt to equity ratio was only 0.18. Financial Positions Company Bharti Airtel Limited SK Telecom Company Limited Chunghwa Telecom Company Limited Industry Overview Copyright 2001-2011 The Winthrop Corporation Distributed by Wright Investors' Service, Inc. All Rights Reserved Important Legal Notice LT Debt/ Year Equity 2011 2010 2010 1.19 0.34 0.19 0.01
Singapore Telecommunications Limited 2011
THIS REPORT IS PROVIDED FOR GENERAL INFORMATION ONLY, IS NOT TO BE CONSIDERED AS INVESTMENT ADVICE AND SHOULD NOT BE RELIED UPON FOR INVESTMENT DECISIONS. NO REPRESENTATION OR WARRANTY IS MADE REGARDING THE ACCURACY, RELIABILITY OR TIMELINESS OF THE CONTENT. THE REPORTS ARE COMPUTER GENERATED AND MAY BE SUBJECT TO PROGRAMMATIC AND/OR CONTENT ERRORS. VISITORS SHOULD VERIFY INFORMATION WITH OTHER RELIABLE SOURCES. THIS REPORT IS PROVIDED AS IS, WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. IN NO EVENT WILL THE WINTHROP CORPORATION, WRIGHT INVESTORS' SERVICE, INC. OR ANY OF THEIR DATA PROVIDERS BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, NO MATTER WHAT THE CAUSE. THE CONTENT OF THIS REPORT IS PROTECTED BY APPLICABLE COPYRIGHT LAWS. CONTENT MAY NOT BE REPRODUCED, DISTRIBUTED, MODIFIED OR FRAMED WITHOUT PRIOR WRITTEN PERMISSION.
Company Fundamentals\Summary Analysis
SUMMARY ANALYSIS:
Per Share- Indian Rupees

Price Market Price Last 14.10
E

Equity Capital % % Profit Book Earned Rate Value Growth (ROE) Begin Yr -4.6% 16.0% 28.5% 44.0% 55.1% 55.6% 34.4% 30.2% 14.2% n/a -4.6% 16.0% 28.5% 44.0% 55.1% 55.6% 36.2% 31.5% 15.2% n/a 12.05 9.86 11.44 12.23 19.44 30.30 57.23 76.72 105.01 128.42
G BG BDG G G BG
Year Fiscal Yr Ends: March 2003 2004 2005 2006 2007 2008 2009 2010 2011 7/15/2011
E E F
Value Ratios Price/ Price/ Earnings Book Dividend Ratio Ratio Yield n/c 49.5 31.8 38.3 35.6 24.5 15.1 13.0 22.4 24.7 1.2 7.9 9.1 16.9 19.7 13.6 5.5 4.1 3.4 3.1 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.3% 0.3% 0.3% 0.3%
Earnings 12 Month Earnings % Per Share Change

BG
Dividends % 12 Month Payout Dividends Ratio Per Share n/c 0.0% 0.0% 0.0% 0.0% 0.0% 4.8% 4.1% 6.3% 6.3%
A
-0.56 1.58
n/c n/c
0.00 0.00 0.00 0.00 0.00 0.00 1.00 1.00 1.00 1.00
77.90 103.70 206.38 381.95 413.13 312.88 312.55 357.40 392.95
3.26 107.2% 5.39 65.1% 98.9% 57.3% 22.8% 16.6%
10.72 16.86 20.70 24.13
15.94 -34.0% 15.94 n/c
(A): ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS - 2:1 ON 07/24/2009 (B): INCLUDES OR EXCLUDES EXTRAORDINARY CHARGE OR CREDIT - INCLS 0.02 PRETAX CHG MAR 2010, INCLS NOM PRETAX CHG MAR 2007, INCLS 0.01 PRETAX CHG IN FIS 2006, INCLS 0.21 PRETAX CR & 0.13 PRETAX CHG IN FIS 2003, INCLS 0.12 PRETAX CR IN FIS 2002, INCLS 1.33 PRETAX CR IN FIS 2001 (C): CHANGE FROM UNCONSOLIDATED TO CONSOLIDATED REPORTS (D): INCLUDES THE EFFECTS OF A CHANGE IN ACCOUNTING POLICIES OR TAX LAWS - - ADOPTED AS-15 FOR EMPLOYEE BENEFITS IN FIS 2007, EARNINGS IMPACT NOT SPECIFIED (E): ACQ'D - ACQD WARID TELECOM INTERNATIONAL LIMITED IN 2010, BALANCE 49% STAKE IN BHARTI AQUANET LIMITED IN FIS 2008, HEXACOM (INDIA) LTD IN FIS 2004, REMAINING INTEREST IN BRITISH TELECOM,, BHARTI MOBITEL IN FIS 2001 (F): NAME CHANGED FROM BHARTI TELE-VENTURES LTD IN 2006 (G): BASED ON AVERAGE SHARES OUTSTANDING, (U ): BASED ON AVERAGE SHARES OUTSTANDING, (U ): BASED ON AVERAGE SHARES OUTSTANDING, (U ): BASED ON AVERAGE SHARES OUTSTANDING, (U ): BASED ON AVERAGE SHARES OUTSTANDING (H): EARNINGS PER SHARE ESTIMATED USING NET INCOME AFTER PREFERRED DIVIDEND DIVIDED BY THE YEAR END SHARES OUTSTANDING OR THE LATEST SHARES AVAILABLE
Company Fundamentals\Sales Analysis
SALES ANALYSIS:
Figures in millions of Indian Rupees

Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) Amount in millions
Sales Amount Year-toin year millions Growth 15,005 n/c
Cost of Goods Sold Amount in % of millions Sales 9,148 61.0% 18,851 61.8% 27,554 55.1% 41,537 51.2% 62,613 53.7% 91,425 49.6% 126,050 46.7% 180,880 48.4% 246,041 58.8% 394,318 66.3%
After Tax Income before Extraordinary Charges and Credits Amount in millions -1,805
Employees Sales Per Employee 3,334,364 6,224,286 8,699,966 After Tax Income Per Employee -401,176 -418,571 1,015,112 1,547,942 n/a n/a 2,503,774 3,202,769 4,992,442 n/a
Year 2002 2003 2004 2005
% of Sales
% of Sales 12.0%
Number 4,500 4,900 5,750
4,608 30.7% 8,312 27.3% 17,600 35.2% 31,366 38.7% 42,062 36.1% 75,513 41.0% 114,679 42.5% 140,172 37.5% 180,913 43.3% 200,718 33.8%
30,499 103.3% 50,025 81,123 64.0% 62.2% 43.8% 57.9% 46.6% 38.3% 12.0% 42.2%
-2,051 -6.7% 5,837 11.7% 12,116 14.9% 20,279 17.4% 40,621 22.1% 63,954 23.7% 78,590 21.0% 91,631 21.9% 60,467 10.2%
7,827 10,364,512 n/a n/a n/a n/a
2006 116,641 2007 184,202 2008 270,122 2009 373,521 2010 418,295 2011 594,672
25,543 10,575,203 24,538 15,222,138 18,354 22,790,379 n/a n/a
Company Fundamentals\Price Analysis
PRICE ANALYSIS:
Per Share- Indian Rupees

12 months % Change n/a n/a n/a n/a 452.5% 249.7% 84.1% 105.9% 33.1% 78.0% 138.4% 59.7% 99.0% 52.2% 34.5% 82.3% 85.1% 125.9% 100.3% 58.2% 8.2% -13.7% -16.5% -28.2% -24.3% 11.2%
Quarter 2003 Jan - Mar Apr - Jun Jul - Sep Oct - Dec 2004 Jan - Mar Apr - Jun Jul - Sep
High Price 15.850 22.000 40.950 56.000 83.850 94.500 85.375
Low Price 10.325 14.000 18.000 35.000 52.650 57.000 65.425
Closing Price 14.100 19.525 39.725 52.550 77.900 68.275 73.150
Quarterly %Change n/a 38.5% 103.5% 32.3% 48.2% -12.4% 7.1% 47.9% -4.1% 17.2% 43.5% -1.0% 19.5% -10.4% 26.8% 34.2% 21.3% 9.4% 12.4% 6.0% -17.1% -12.7% 8.8% -8.8% -12.5% 28.2%
Oct - Dec 122.500 2005 Jan - Mar Apr - Jun Jul - Sep 125.000 123.450
70.900 108.175 97.000 103.700 96.250 121.550
183.625 114.900 174.425
Oct - Dec 188.500 152.575 172.750 2006 Jan - Mar Apr - Jun Jul - Sep 214.450 161.375 206.375 216.250 153.650 185.000 242.850 172.700 234.625
Oct - Dec 409.500 241.500 357.750 2009 Jan - Mar Apr - Jun 362.500 270.550 312.875 518.000 297.000 401.075
Jul - Sep
485.000 365.050 418.750
4.4% -21.3% -5.2% -15.9% 39.4% -2.0% -0.4% 10.5% 5.5%
6.7% -7.8% -0.1% -34.5% -12.5% 8.8% 14.3% 50.3% 31.7%
Oct - Dec 370.100 303.400 358.800 2011 Jan - Mar Apr - Jun 7/15/2011 365.000 304.450 357.400 428.400 345.700 394.900 392.950
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Company Fundamentals\Earnings & Dividends Analysis
EARNINGS AND DIVIDENDS ANALYSIS:

Per Share- Indian Rupees Fiscal Year Ends in March
Earnings Per Share 12 Months Fiscal Years 2001
E
Dividends Per Share 12 Months % Dividends Change 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 A 1.00 1.00 1.00 n/c n/c n/c n/c n/c n/c n/c n/c n/c 0.0% 0.0% Quarterly Reported Dividends Q1 Jun. n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Q2 Sep. n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Q3 Dec. n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Q4 Mar. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.00 1.00 1.00 % Payout 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 4.1% n/c
Quarterly Reported Earnings Q1 Jun. n/a n/a -0.21 0.06 0.65 1.25 2.19 3.76 5.71 6.97 4.44 Q2 Sep. n/a n/a -0.39 0.24 0.79 1.35 2.32 4.33 4.39 5.94 4.38 Q3 Dec. n/a n/a -0.08 0.42 0.86 1.44 2.73 3.77 5.21 5.89 3.43 Q4 Mar. n/a n/a 0.12 0.87 0.97 1.35 3.48 5.01 5.39 5.33 3.69
Earnings BH 0.03 BG -0.53 BG -0.56 1.58
% Change n/c n/c n/c n/c
2002
CE
2003 2004
E
2005 2006
F
G 3.26 107.2% BG 5.39 BDG 10.72 G 16.86 G 20.70 BG 24.13 65.1% 98.9% 57.3% 22.8% 16.6%
2007 2008
E
2009 2010
E
2011 (A): (B):
15.94 -34.0%
ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS - 2:1 ON 07/24/2009
INCLUDES OR EXCLUDES EXTRAORDINARY CHARGE OR CREDIT - INCLS 0.02 PRETAX CHG MAR 2010, INCLS NOM PRETAX CHG MAR 2007, INCLS 0.01 PRETAX CHG IN FIS 2006, INCLS 0.21 PRETAX CR & 0.13 PRETAX CHG IN FIS 2003, INCLS 0.12 PRETAX CR IN FIS 2002, INCLS 1.33 PRETAX CR IN FIS 2001
(C): (D):
CHANGE FROM UNCONSOLIDATED TO CONSOLIDATED REPORTS
INCLUDES THE EFFECTS OF A CHANGE IN ACCOUNTING POLICIES OR TAX LAWS - - ADOPTED AS-15 FOR EMPLOYEE BENEFITS IN FIS 2007, EARNINGS IMPACT NOT SPECIFIED
(E):
ACQ'D - ACQD WARID TELECOM INTERNATIONAL LIMITED IN 2010, BALANCE 49% STAKE IN BHARTI AQUANET LIMITED IN FIS 2008, HEXACOM (INDIA) LTD IN FIS 2004, REMAINING INTEREST IN BRITISH TELECOM,, BHARTI MOBITEL IN FIS 2001
(F): (G):
NAME CHANGED FROM BHARTI TELE-VENTURES LTD IN 2006
BASED ON AVERAGE SHARES OUTSTANDING, (U ): BASED ON AVERAGE SHARES OUTSTANDING, (U ): BASED ON AVERAGE SHARES OUTSTANDING, (U ): BASED ON AVERAGE SHARES OUTSTANDING, (U ): BASED ON AVERAGE SHARES OUTSTANDING
(H):
EARNINGS PER SHARE ESTIMATED USING NET INCOME AFTER PREFERRED DIVIDEND DIVIDED BY THE YEAR END SHARES OUTSTANDING OR THE LATEST SHARES AVAILABLE
Copyright 2000-2011 Distributed by Wright Investors' Service, Inc. All Rights Reserved. Except for quotations by established news media, no pages on this site may be reproduced, stored in a
11
retrieval system, or transmitted for commercial purposes, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior written permission. Information is believed reliable, but accuracy, completeness and opinions are not guaranteed.
12
Financial Statement AnalysesFinancial Statement Analyses\Balance Sheet - Common Size
Balance Sheet - (Common Size): Bharti
Airtel Limited
2009 2008 2007 2006
Figures are expressed as Percent of Total Assets. Total Assets are in millions of Indian Rupees.
Fiscal Year Fiscal Year End Date Assets Total Assets Cash & Short Term Investments Cash Short Term Investments Receivables (Net) Inventories -Total Raw Materials Work in Process Finished Goods Progress Payments & Other Prepaid Expenses Other Current Assets Current Assets - Total Long Term Receivables Investment in Associated Companies Other Investments Property Plant and Equipment Gross Accumulated Depreciation Property Plant and Equipment Net Other Assets Deferred Charges Tangible Other Assets
2010
3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006
750,612.2 624,120.5 492,729.8 285,507.8 198,474.8 3.4% 1.3% 2.1% 9.9% 0.1% 4.4% 0.6% 3.9% 14.0% 0.2% 1.4% 0.5% 0.9% 11.5% 0.2% 3.0% 0.9% 2.0% 10.8% 0.3% 1.8% 1.1% 0.7% 12.6% 0.2%
7.3% 1.4% 22.1%
0.4% 0.2% 19.2%
3.8% 0.0% 16.9%
3.2% 1.7% 19.0%
2.2% 0.1% 16.8%
0.0% 6.9% 93.5% 26.2% 67.4% 3.6% 0.0% 0.0%
0.0% 3.8% 95.1% 21.4% 73.7% 3.4% 0.0% 0.0%
0.0% 9.8% 85.3% 17.3% 67.9% 5.4% 0.0% 0.0%
0.0% 0.5% 96.2% 23.1% 73.1% 7.4% 0.0% 0.0%
0.0% 1.2% 94.2% 22.1% 72.1% 9.8% 0.0% 0.0%

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Intangible Other Assets Total Assets Liabilities & Shareholders' Equity Total Liabilities & Shareholders' Equity Accounts Payable Short Term Debt & Current Portion of Long Term Debt Accrued Payroll Income Taxes Payable Dividends Payable Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Capitalized Lease Obligations Provision for Risks and Charges Deferred Income Deferred Taxes Deferred Taxes - Credit Deferred Taxes - Debit Deferred Tax Liability in Untaxed Reserves Other Liabilities Total Liabilities Non-Equity Reserves Minority Interest Preferred Stock Preferred Stock Issued for ESOP
3.6% 100.0%
3.4% 100.0%
5.4% 100.0%
7.3% 100.0%
9.8% 100.0%
750,612.2 624,120.5 492,729.8 285,507.8 198,474.8 14.1% 3.6% 19.0% 8.5% 0.1% 0.1% 0.6% 14.6% 32.3% 10.1% 10.1% 0.0% 0.1% 0.0% 0.5% 2.1% 1.6% 0.0% 9.8% 38.1% 13.2% 13.2% 0.0% 0.1% 0.0% -0.0% 20.9% 3.9% 0.1% 3.6% 0.0% 9.0% 37.6% 15.6% 15.6% 0.0% 0.1% 0.0% 0.6% 0.6% 25.8% 3.9% 0.1% 3.1% 0.0% 10.6% 43.6% 14.6% 14.6% 0.0% 0.1% 0.0% 0.8% 0.8% 24.2% 11.0% 0.1% 1.6% 0.0% 11.3% 48.2% 13.0% 13.0% 0.0% 0.1% 0.0% 1.0% 1.0%
0.0% 43.1% 0.0% 3.8% 0.0%
0.0% 51.4% 0.0% 2.0% 0.0%
0.0% 53.9% 0.0% 2.1% 0.0%
0.0% 59.1% 0.0% 0.7% 0.0%
0.0% 62.4% 0.0% 0.5% 0.0%
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ESOP Guarantees - Preferred Issued Common Equity Total Liabilities & Shareholders' Equity 53.1% 100.0% 46.7% 100.0% 44.1% 100.0% 40.2% 100.0% 37.1% 100.0%
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Financial Statement Analyses\Balance Sheet - Year-Year % Change
Balance Sheet - (Year to Year Percent Change): Bharti

Figures are the Percent Changes from the Prior Year.
Airtel Limited
2008 2007 2006
2010
2009
3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006
20.3% -6.8% 182.6% -34.9% -14.7% -49.7%
26.7% 293.2% 45.0% 427.4% 54.3% -15.7%
72.6% -17.4% -7.9% -21.8% 83.5% 25.2%
43.9% 142.6% 24.6% 328.9% 23.6% 139.2%
38.2% -60.2% 19.8% -80.7% 44.3% -30.0%
2,281.5% 583.9% 38.8%
-87.7%
105.3%
113.4%
100.9% 2.4% 14.9%
-100.0% 1,760.1% 43.5% 53.8% 62.6%
283.8% 119.7% 18.3% 47.2% 9.9% 29.4% -100.0% -51.2% 3,168.8% 41.2% 56.3% 37.4% -20.2% -57.1% 53.0% 29.6% 60.4% 25.7% -92.4% -40.6% 5,561.7% 46.8% 50.1% 45.8% 7.9% -66.5% 51.7% 46.1% 53.5% -8.7% -86.4%
16
29.4% 20.3%
-20.2% 26.7%
25.9% 72.6%
8.2% 43.9%
-6.5% 38.2%
20.3% -11.2% -49.5%
26.7% 15.2% 178.0% 17.5% -96.4%
72.6% 40.1% 69.4% 36.9% 102.3%
43.9% 53.7% -48.4% 61.4% 173.0%
38.2% 56.4% 91.7% 76.9% 126.6%
80.1% 1.8% -7.4% -7.5% 593.3% 31.1%
37.1% 28.5% 6.8% 6.8% -28.6% 62.9%
47.4% 48.9% 85.0% 85.0% 25.7% 39.1%
34.7% 30.0% 60.7% 60.7% 18.2% 23.8%
59.2% 65.9% -33.0% -33.0%
203.4%
-110.7%
14.3% 14.3%
22.5% 22.5%
92.7% -23.4%
3,970.0%
0.8%
20.8%
57.3%
36.3%
27.1%
132.2%
21.3%
420.6%
78.6%
18.0%
17
ESOP Guarantees - Preferred Issued Common Equity Total Liabilities & Shareholders' Equity 36.9% 20.3% 34.1% 26.7% 89.1% 72.6% 56.0% 43.9% 62.4% 38.2%
18
Financial Statement Analyses\Balance Sheet - Five-Year Averages
Balance Sheet - (5 Year Averages): Bharti

Figures in millions of Indian Rupees.
Airtel Limited
2009 2008 2007 2006
2010
3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006
470,289.0 348,899.5 246,018.4 165,639.3 124,736.4 14,502.7 4,196.3 10,306.4 54,785.8 776.5 11,112.4 2,533.8 8,578.6 43,356.5 788.7 6,520.5 2,078.1 4,442.4 28,499.5 659.5 5,941.5 1,716.3 4,225.2 19,275.4 472.8 5,364.9 1,289.8 4,075.1 14,624.7 307.8
17,852.1 3,464.8 91,381.9
7,312.2 1,393.0 63,962.8
6,994.8 1,152.3 43,826.5
3,323.8 1,232.7 30,246.2
1,578.9 353.9 22,230.3
14.2 25,417.1
2.9 15,113.0
0.0 10,418.0
0.0 858.6
0.0 646.5 99,510.7 22,645.8 76,864.9 24,994.6 302.1 0.0
435,436.9 319,680.6 217,641.6 145,993.2 104,997.9 71,708.0 48,883.5 34,328.4
330,439.1 247,972.6 168,758.1 111,664.7 23,036.8 21.8 0.0 21,848.3 138.5 0.0 23,015.8 154.5 0.0 22,869.7 191.9 0.0
19
23,015.0
21,709.8
22,861.3
22,677.8
24,692.5
470,289.0 348,899.5 246,018.4 165,639.3 124,736.4
470,289.0 348,899.5 246,018.4 165,639.3 124,736.4 89,846.2 26,403.9 74,873.3 23,322.5 380.1 6,417.8 759.3 53,612.5 34,446.6 53,966.4 14,649.9 272.9 6,548.3 0.0 23,614.3 99,051.8 44,070.5 44,058.5 12.0 227.4 35,912.7 12,469.6 177.9 3,019.3 0.0 15,624.8 67,204.3 34,354.1 34,347.0 7.1 150.6 23,652.7 11,190.5 106.6 1,301.9 0.0 9,844.5 46,096.2 29,157.0 29,153.7 3.3 92.0
177,106.5 140,199.5 60,527.6 60,488.2 39.4 520.4 0.0 2,163.7 1,556.6 53,033.9 53,018.5 15.4 353.6
1,127.6
369.9
-319.4
0.0
0.0
0.0
0.0
334.1 75,359.9 0.0 856.2 0.0
240,318.2 195,143.6 144,477.4 102,078.9 0.0 10,806.9 0.0 0.0 5,280.7 0.0 0.0 2,842.0 0.0 0.0 997.8 0.0
20
ESOP Guarantees - Preferred Issued Common Equity Total Liabilities & Shareholders' Equity 219,164.0 148,475.3 98,699.1 62,562.6 48,520.3
470,289.0 348,899.5 246,018.4 165,639.3 124,736.4
21
Financial Statement Analyses\Income Statement - Common Size
Income Statement - (Common Size): Bharti
Airtel Limited
2009 2008 2007 2006
Figures are expressed as Percent of Net Sales or Revenues. Net Sales or Revenues are in millions of Indian Rupees.
Fiscal Year Net Sales or Revenues Cost of Goods Sold Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Other Operating Expenses Operating Expenses - Total Operating Income Extraordinary Credit - Pretax Extraordinary Charge - Pretax Non-Operating Interest Income Reserves - Increase/Decrease Pretax Equity in Earnings Other Income/Expense - Net Earnings before Interest, Taxes, Depreciation & Amortization (EBITDA) Earnings before Interest & Taxes (EBIT) Interest Expense on Debt Interest Capitalized Pretax Income Income Taxes Minority Interest Equity in Earnings After Tax Other Income/Expense
2010
418,294.6 373,520.8 270,122.4 184,202.0 116,640.9 58.8% 15.7% 25.5% 48.4% 13.3% 38.3% 46.7% 14.1% 39.2% 49.6% 14.2% 36.1% 53.7% 14.1% 32.2%
0.8% 75.3% 24.7% 0.0% 0.0% 0.2% 0.0%
0.5% 62.2% 37.8% 0.0% 0.0% 0.3% 0.0% 0.0%
1.3% 62.1% 37.9% 0.0% 0.0% 0.0% 0.0% 0.0% -9.6% 42.5%
0.9% 64.8% 35.2% 0.0% 0.0% 0.1%
1.2% 69.0% 31.0% 0.0% 0.0% 0.0%
0.0% -8.5% 41.0%
0.0% -9.0% 36.1%
2.6% 43.3%
-13.8% 37.5%
27.6% 1.5%
24.2% 1.3%
28.3% 1.4%
26.8% 1.5%
22.0% 2.0%
26.1% 3.7% 0.5% -0.0% 0.0%
22.9% 1.4% 0.5% 0.0% 0.0%
26.9% 2.9% 0.4% 0.0% 0.0%
25.3% 2.9% 0.3% 0.0% 0.0%
19.9% 2.3% 0.2% 0.0% 0.0%

22
Discontinued Operations Net Income before Extraordinary Items/Preferred Dividends Extraordinary Items & Gain/Loss Sale of Assets Preferred Dividend Requirements Net Income after Preferred Dividends - available to Common
0.0% 21.9% 0.0% 0.0% 21.9%
0.0% 21.0% 0.0% 0.0% 21.0%
0.0% 23.7% 0.0% 0.0% 23.7%
0.0% 22.1% 0.0% 0.0% 22.1%
0.0% 17.4% 0.0% 0.0% 17.4%
23
Financial Statement Analyses\Income Statement - Year-Year % Change
Income Statement - (Year to Year Percent Change): Bharti

Figures are the Percent Changes from the Prior Year.
Airtel Limited
2008 46.6% 37.9% 45.5% 59.1% 2007 57.9% 46.0% 59.5% 77.0% 2006 43.8% 50.7% 32.9% 38.1%
Fiscal Year Net Sales or Revenues Cost of Goods Sold Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Other Operating Expenses Operating Expenses - Total Operating Income Extraordinary Credit - Pretax Extraordinary Charge - Pretax Non-Operating Interest Income Reserves - Increase/Decrease Pretax Equity in Earnings Other Income/Expense - Net Earnings before Interest, Taxes, Depreciation & Amortization (EBITDA) Earnings before Interest & Taxes(EBIT) Interest Expense on Debt Interest Capitalized Pretax Income Income Taxes Minority Interest Equity in Earnings After Tax Other Income/Expense Discontinued Operations
2010 12.0% 36.0% 32.0% -25.4%
2009 38.3% 43.5% 30.3% 34.9%
76.8% 35.5% -26.8%
-45.7% 106.8% 38.6% 37.7% 40.5% 57.9%
16.2% 48.2% 79.5%
-7.1% 45.1% 40.9%
-71.1% 100.0% 7.7% 4,166.1% -82.2% 441.6% 125.6%
29.1% 27.4% 26.5%
22.2% 18.2% 30.2%
51.9% 55.3% 37.5%
79.5% 92.3%
34.1% 34.9%
17.8% -24.9%
27.5% 203.1% 7.1%
17.6% -34.8%
56.3% 100.0% 43.4%
46.9%
99.5% -24.6% 80.9% 120.5%
85.2% 107.4%
24
Net Income before Extraordinary Items/Preferred Dividends Extraordinary Items & Gain/Loss Sale of Assets Preferred Dividend Requirements Net Income after Preferred Dividends available to Common
16.6%
22.9%
57.4% 100.3%
67.4%
16.6%
22.9%
57.4% 100.3%
67.4%
25
Financial Statement Analyses\Income Statement - Five-Year Averages
Income Statement - (5 Year Averages): Bharti

Figures in millions of Indian Rupees.
Airtel Limited
2009 2008 2007 2006
Fiscal Year Net Sales or Revenues Cost of Goods Sold Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Other Operating Expenses Operating Expenses - Total Operating Income Extraordinary Credit - Pretax Extraordinary Charge - Pretax Non-Operating Interest Income Reserves - Increase/Decrease Pretax Equity in Earnings Other Income/Expense - Net Earnings before Interest, Taxes, Depreciation & Amortization (EBITDA) Earnings before Interest & Taxes (EBIT) Interest Expense on Debt Interest Capitalized Pretax Income Income Taxes Minority Interest Equity in Earnings After Tax Other Income/Expense Discontinued Operations
2010
272,556.1 205,121.8 140,422.6 92,497.9 58,658.5 141,402.0 100,501.3 39,178.9 91,975.2 28,541.2 76,079.3 69,836.0 48,396.1 31,940.7 20,377.4 14,146.4 9,841.1
50,209.2 29,955.4 16,876.6
2,375.9
2,018.6
1,773.4
1,208.7
884.7
182,956.8 131,061.1 89,599.3 0.0 25.2 438.1 231.1 74,060.7
91,986.8 63,751.2 42,666.5 48,435.8 28,746.8 15,992.0
38.4
36.0
17.1
-18,523.3 -22,067.1 -12,600.0 -8,009.6 -5,113.4 110,667.8 71,488.9 4,091.6 80,758.3 52,217.1 3,453.9 56,243.9 34,970.5 20,789.4 35,866.5 20,824.2 10,948.3 3,098.3 2,950.9 2,768.5
67,397.3 7,255.6 1,117.0 -9.7 0.0 0.0
48,763.2 4,906.8 744.4 0.0 0.0 0.0
32,768.2 17,873.3 3,830.4 376.4 0.0 0.0 0.0 2,279.1 233.8 0.0 0.0 0.0
8,179.8 1,149.9 148.4 -6.3 0.0 0.0
26
Net Income before Extraordinary Items/Preferred Dividends Extraordinary Items & Gain/Loss Sale of Assets Preferred Dividend Requirements Net Income after Preferred Dividends available to Common
59,015.1 0.0 0.0 59,015.1
43,112.0 0.0 0.0 43,112.0
28,561.4 15,360.5 0.0 0.0 0.0 0.0
6,875.2 0.0 0.0 6,875.2
28,561.4 15,360.5
27
Financial Statement Analyses\Sources of Capital - Net Change
Sources of Capital: Bharti
Airtel Limited
2010 2009 2008 2007 2006
Currency figures are in millions of Indian Rupees. Year to year % changes pertain to reported Balance Sheet values.
Fiscal Year Fiscal Year End Date Total Capital Percent of Total Capital Short Term Debt Long Term Debt Other Liabilities Total Liabilities Minority Interest Preferred Stock Retained Earnings Common Equity Total Capital Year to Year Net Changes Short Term Debt Long Term Debt Other Liabilities Total Liabilities Minority Interest Preferred Stock Retained Earnings Common Equity Total Capital Year to Year Percent Changes Short Term Debt Long Term Debt Other Liabilities
3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006 503,425.8 385,711.9 304,326.4 158,428.9 100,599.1
5.3% 15.1% 0.0% 64.2% 5.7% 0.0%
13.8% 21.3% 0.0% 83.1% 3.2% 0.0%
6.3% 25.3% 0.0% 87.2% 3.3% 0.0%
7.1% 26.3% 0.0% 106.5% 1.2% 0.0%
21.7% 25.7% 0.0% 123.0% 1.1% 0.0%
79.2% 100.0%
75.5% 100.0%
71.4% 100.0%
72.5% 100.0%
73.2% 100.0%
-2,623.6 -605.4 0.0 272.4 1,625.8 0.0
3,395.9 519.5 0.0 5,520.0 215.5 0.0
781.5 3,534.4 0.0 9,666.8 819.4 0.0
-1,058.2 1,571.3 0.0 4,491.6 85.7 0.0
1,045.1 -1,272.9 0.0 2,636.5 16.6 0.0
10,751.0 11,771.4
7,403.5 8,138.5
10,236.0 14,589.8
4,126.0 5,783.0
2,827.8 1,571.6
-49.5% -7.4%
178.0% 6.8%
69.4% 85.0%
-48.4% 60.7%
91.7% -33.0%
28
Total Liabilities Minority Interest Preferred Stock Retained Earnings Common Equity Total Capital Total Liabilities & Common Equity Total Liabilities Net Change in Liabilities as % of Total Liabilities Common Equity Net Change in Common Equity as % of Common Equity Cash Flow Operating Activities Financing Activities Investing Activities
0.8% 132.2%
20.8% 21.3%
57.3% 420.6%
36.3% 78.6%
27.1% 18.0%
36.9% 30.5%
34.1% 26.7%
89.1% 92.1%
56.0% 57.5%
62.4% 18.5%
323,267.8 320,543.7 265,343.7 168,675.8 123,759.9 0.8% 17.2% 36.4% 26.6% 21.3% 73,623.9 38.4%
398,789.1 291,279.2 217,243.8 114,883.8 27.0% 25.4% 47.1% 35.9%
149,511.1 133,808.3 119,623.5 -6,579.5 25,318.5 63,867.1
82,371.1 6,332.5 83,693.3
46,721.2 5,878.1 53,230.2
149,147.4 153,116.3 185,086.3
29
Financial Ratio AnalysesFinancial Ratio Analyses\Accounting Ratios
Accounting Ratios: Bharti Fiscal Year Fiscal Year End Date Receivables Turnover
Airtel Limited
2010 2009 2008 2007 2006 3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006 5.6 70.5 340.2 1.1 0.6 0.8 4.3 70.2 171.9 2.1 0.6 0.8 4.8 59.0 122.7 3.0 0.6 0.8 6.0 55.2 141.4 2.6 0.7 0.9 4.7 66.1 135.2 2.7 0.6 0.8
Receivables - Number of Days Inventory Turnover Inventory - Number of Days Gross Property, Plant & Equipment Turnover Net Property, Plant & Equipment Turnover Depreciation, Depletion & Amortization % of Gross Property, Plant & Equipment Depreciation, Depletion & Amortization Year to Year Change Depreciation, Depletion & Amortization Year to Year % Change
9.3%
8.4%
9.1%
9.5%
8.8%
1,590.5
1,153.7
1,191.2
977.2
406.3
32.0%
30.3%
45.5%
59.5%
32.9%
30
Financial Ratio Analyses\Asset Utilization
Asset Utilization: Bharti
Airtel Limited
2010 2009 2008 2007 2006
Figures are expressed as the ratio of Net Sales. Net Sales are in millions of Indian Rupees.
Fiscal Year Fiscal Year End Date Net Sales Cash & Cash Equivalents Short-Term Investments Accounts Receivable Inventories Other Current Assets Total Current Assets Total Long Term Receivables & Investments Long Term Receivables Investments in Associated Companies Other Investments Property, Plant & Equipment Gross Accumulated Depreciation Property Plant & Equipment - Net Other Assets Total Assets
3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006 418,294.6 373,520.8 270,122.4 184,202.0 116,640.9 6.2% 3.7% 17.8% 0.1% 2.5% 39.7% 12.3% 7.4% 6.4% 23.4% 0.3% 0.4% 32.0% 6.3% 2.6% 1.7% 20.9% 0.4% 0.0% 30.9% 17.8% 4.6% 3.2% 16.7% 0.5% 2.7% 29.5% 0.8% 3.0% 1.2% 21.4% 0.3% 0.2% 28.6% 2.1%
0.0% 12.3% 167.8% 47.0% 120.9% 6.5% 179.4%
0.0% 6.3% 158.8% 35.7% 123.1% 5.6% 167.1%
0.0% 17.8% 155.5% 31.6% 123.9% 9.8% 182.4%
0.0% 0.8% 149.1% 35.7% 113.3% 11.4% 155.0%
0.0% 2.1% 160.3% 37.6% 122.7% 16.7% 170.2%
31
Financial Ratio Analyses\Employee Efficiency
Employee Efficiency: Bharti Fiscal Year Fiscal Year End Date Employees Values per Employee Sales Net Income Cash Earnings Working Capital Total Debt Total Capital Total Assets Year to Year % Change per Employee Employees Sales Net Income Cash Earnings Working Capital Total Debt Total Capital Total Assets
Airtel Limited
2010 3/31/2010 18,354 2009 3/31/2009 24,538 2008 3/31/2008 25,543 2005 3/31/2005 7,827 2004 3/31/2004 5,750
Values per Employee are in Indian Rupees.
22,790,379 15,222,138 10,575,203 10,364,512 4,992,442 8,006,607 3,202,769 5,753,859 2,503,774 4,119,827 1,547,942 3,492,064
8,699,966 1,015,112 2,407,922
-4,145,239 -4,820,912 -3,985,773 -3,659,436 -2,302,335 5,605,395 5,508,659 3,759,052 6,388,910 8,172,435
27,428,668 15,718,963 11,914,280 10,844,927 13,881,756 40,896,384 25,434,854 19,290,209 18,355,028 19,080,829
-25.2% 49.7% 55.9% 39.2%
-3.9% 43.9% 27.9% 39.7%
226.3% 2.0% 61.7% 18.0%
36.1% 19.1% 52.5% 45.0%
1.8% 74.5% 60.8%
46.5% 31.9% 31.9%
-41.2% 9.9% 5.1%
-21.8% -21.9% -3.8%
32
Financial Ratio Analyses\Fixed Charges Coverage
Fixed Charges Coverage: Bharti Fiscal Year Fiscal Year End Date EBIT/Total Interest Expense EBIT/Net Interest EBIT/(Total Interest Exp + Pfd Div) EBIT/Dividends on Common Shares EBIT/(Dividends on Common + Pfd) EBITDA/Total Interest Expense EBITDA/Net Interest EBITDA/(Total Interest Exp + Pfd Div) EBITDA/Dividends on Com Shares EBITDA/(Dividends on Com + Pfd)
Airtel Limited
2010 2009 2008 2007 2006 3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006 18.1 21.7 18.1 30.4 30.4 28.4 34.0 28.4 47.7 47.7 27.9 34.5 27.9 29.7 29.9 29.7 26.9 28.1 26.9 17.6 17.8 17.6 18.0 22.3 18.0 19.8 19.9 19.8 17.5 18.4 17.5 10.7 10.9 10.7
33
Financial Ratio Analyses\Leverage Analysis
Leverage Analysis: Bharti Fiscal Year Fiscal Year End Date Long Term Debt % of EBIT Long Term Debt % of EBITDA
Airtel Limited
2010 2009 2008 2007 2006 3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006 65.9% 42.1% 10.1% 15.1% 19.1% 89.2% 56.9% 13.7% 20.4% 19.4% 25.8% 24.8% 15.8% 3.8% 5.7% 7.2% 0.0% 0.0% 0.0% 0.0% 0.0% 53.1% 79.2% 67.1% 29.9% 90.7% 58.6% 13.2% 21.3% 28.2% 149.3% 96.4% 21.7% 35.0% 30.8% 46.4% 13.6% 8.8% 2.0% 3.2% 4.2% 0.0% 0.0% 0.0% 0.0% 0.0% 46.7% 75.5% 61.8% 45.1% 100.5% 67.1% 15.6% 25.3% 35.4% 125.4% 83.7% 19.5% 31.6% 29.7% 44.2% 13.2% 8.8% 2.1% 3.3% 4.7% 0.0% 0.0% 0.0% 0.0% 0.0% 44.1% 71.4% 61.8% 50.5% 84.3% 55.1% 14.6% 26.3% 36.2% 107.2% 70.0% 18.5% 33.4% 31.2% 46.0% 3.9% 2.6% 0.7% 1.2% 1.7% 0.0% 0.0% 0.0% 0.0% 0.0% 40.2% 72.5% 55.5% 46.8% 100.9% 61.5% 13.0% 25.7% 35.2% 186.1% 113.5% 24.0% 47.4% 39.0% 64.8% 4.3% 2.6% 0.5% 1.1% 1.5% 0.0% 0.0% 0.0% 0.0% 0.0% 37.1% 73.2% 50.7% 47.4%
Long Term Debt % of Total Assets Long Term Debt % of Total Capital Long Term Debt % of Com Equity Total Debt % of EBIT Total Debt % of EBITDA Total Debt % of Total Assets Total Debt % of Total Capital Total Debt % of Total Capital & Short Term Debt Total Debt % of Common Equity Minority Interest % of EBIT Minority Interest % of EBITDA Minority Interest % of Total Assets Minority Interest % of Total Capital Minority Interest % of Com Equity Preferred Stock % of EBIT Preferred Stock % of EDITDA Preferred Stock % of Total Assets Preferred Stock % of Total Capital Preferred Stock % of Total Equity Common Equity % of Total Assets Common Equity % of Total Capital Total Capital % of Total Assets Capital Expenditure % of Sales
34
Fixed Assets % of Common Equity Working Capital % of Total Capital Dividend Payout Funds From Operations % of Total Debt
126.8% -15.1% 4.1% 142.8%
157.9% -30.7% 0.0% 104.5%
154.1% -33.5% 0.0% 109.6%
181.7% -44.3% 0.0% 136.2%
194.5% -61.9% 0.0% 87.9%
35
Financial Ratio Analyses\Liquidity Analysis
Liquidity Analysis: Bharti Fiscal Year Fiscal Year End Date
Airtel Limited
2010 2009 2008 2007 2006 3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006 39.7% 6.1% 15.5% 0.4 44.8% 70.5 0.3% 1.1 19,185.2 9.9% 0.7 19.4% 60.7% 193.2% 142.8% 29.2% 32.0% 3.0% 23.1% 0.5 72.9% 70.2 0.8% 2.1 10,343.6 14.0% 0.5 30.8% 59.3% 171.9% 104.5% 36.6% 30.9% 3.0% 8.4% 0.3 67.8% 59.0 1.4% 3.0 2,216.8 11.5% 0.5 29.7% 56.8% 136.8% 109.6% 34.6% 29.5% 4.9% 15.7% 0.3 56.8% 55.2 1.7% 2.6 3,363.0 10.8% 0.4 31.2% 57.9% 173.1% 136.2% 45.4% 28.6% 6.4% 10.5% 0.3 74.7% 66.1 1.1% 2.7 3,316.0 12.6% 0.3 39.0% 43.9% 162.1% 87.9% 41.7%
Total Current Assets % Net Sales Cash % of Current Assets Cash & Equivalents % of Current Assets Quick Ratio Receivables % of Current Assets Receivable Turnover - number of days Inventories % of Current Assets Inventory Turnover - number of days Inventory to Cash & Equivalents number of days Receivables % of Total Assets Current Ratio Total Debt % of Total Capital Funds from Operations % of Current Liabilities Funds from Operations % of Long Term Debt Funds from Operations % of Total Debt Funds from Operations % of Total Capital Cash Flow (in milllions of Indian Rupees) Operating Activities Financing Activities Investing Activities
149,511.1 133,808.3 119,623.5 -6,579.5 25,318.5 63,867.1
82,371.1 6,332.5 83,693.3
46,721.2 5,878.1 53,230.2
149,147.4 153,116.3 185,086.3
36
37
Financial Ratio Analyses\Per-Share Ratios
Per Share Data: Bharti
Airtel Limited
2010 2009 2008 2007 2006
Figures are expressed as per unit of respective shares. Figures are in Indian Rupees.
Fiscal Year Fiscal Year End Date Sales Operating Income Pre-tax Income Net Income (Continuing Operations) Net Income Before Extra Items Extraordinary Items Net Income After Extraordinary Items Net Income Available to Common Shares Fully Diluted Earnings Common Dividends Cash Earnings Book Value Retained Earnings Assets
3/31/2010 3/31/2009 3/31/2008 3/31/2007 3/31/2006 110.15 27.22 28.70 28.69 24.13 0.00 24.13 24.13 24.13 1.00 38.70 105.01 98.39 37.17 22.52 22.52 20.70 0.00 20.70 20.70 20.70 1.00 37.19 76.72 71.16 27.00 19.16 19.16 16.85 0.00 16.85 16.86 16.84 0.00 27.73 57.23 48.58 17.11 12.27 12.27 10.71 0.00 10.71 10.72 10.71 0.00 18.99 30.30 30.79 9.55 6.14 6.14 5.35 0.00 5.35 5.39 5.34 0.00 11.15 19.44
197.66
164.39
129.81
75.29
52.40
38
Financial Ratio Analyses\Profitability Growth
Profitability Analysis: Bharti Fiscal Year Fiscal Year End Date Gross Income Margin Operating Income Margin Pretax Income Margin EBIT Margin Net Income Margin Return on Equity - Total Return on Invested Capital Return on Assets Asset Turnover Financial Leverage Interest Expense on Debt Effective Tax Rate Cash Flow % Sales Selling, General & Administrative 2010 3/31/2010 25.5%
Airtel Limited
2009 3/31/2009 38.3% 2008 3/31/2008 39.2% 2007 3/31/2007 36.1% 2006 3/31/2006 32.2%
Currency figures are in Indian Rupees.
24.7%
37.8%
37.9%
35.2%
31.0%
26.1% 27.6% 21.9% 26.6%
22.9% 24.2% 21.0% 30.9%
26.9% 28.3% 23.7% 38.5%
25.3% 26.8% 22.1% 43.1%
19.9% 22.0% 17.4% 34.1%
20.0%
21.9%
27.3%
29.5%
20.5%
14.1% 0.6 25.8%
14.9% 0.6 46.4%
17.3% 0.5 44.2%
17.8% 0.6 46.0%
13.1% 0.6 64.8%
6,366,365,000 5,031,092,000 3,864,075,000 2,810,619,000 2,385,639,000
14.1% 35.1%
5.9% 37.8%
10.7% 39.0%
11.6% 39.1%
11.7% 36.0%
39
Expenses % of Sales Research & Development Expense Operating Income Return On Total Capital
30.5%
26.7%
92.1%
57.5%
18.5%
40
Wright Quality Rating AnalysesWright Quality Rating Analyses\Investment Acceptance
Wright Quality Rating - Investment Acceptance: Bharti

Currency figures are in millions of U.S. Dollars.
Wright Quality Rating
Airtel Limited
ACA20 ACA20
31,558 33,516 10,153 10,783 0 0 0.0% 0.0% BOM 0 472,498 67.8%
Investment Acceptance Rating Total Market Value of Shares Outstanding - Three Year Average - Current Year Public Market Value (Excludes Closely Held) - Three Year Average - Current Year Trading Volume - Three Year Average - Current Year Turnover Rate - Three Year Average - Current Year Stock Exchange Listings Number of Institutional Investors Number of Shareholders Closely Held Shares as % of Total Shares Outstanding
41
Wright Quality Rating Analyses\Financial Strength
Wright Quality Rating - Financial Strength: Bharti Wright Quality Rating Financial Strength Rating Total Shareholders' Equity (Millions of U.S. Dollars) Total Shareholders' Equity as % Total Capital Preferred Stock as % of Total Capital Long Term Debt as % of Total Capital Long Term Debt (Millions of Indian Rupees) Lease Obligations (Millions of Indian Rupees)
Airtel Limited
A A
CA20 CA20
10,948 43.0% 0.0% 54.4%
616,828 120 616,948 57.2% 4.5 4.8 9.5 0.7
Long Term Debt including Leases (Millions of Indian Rupees) Total Debt as % of Total Capital Fixed Charge Coverage Ratio: Pretax Income to Interest Expense & Preferred Dividends Fixed Charge Coverage Ratio: Pretax Income to Net Interest Income & Preferred Dividends Quick Ratio (Cash & Receivables / Current Liabilities) Current Ratio (Current Assets / Current Liabilities)
42
Wright Quality Rating Analyses\Profitability & Stability
Wright Quality Rating - Profitability & Stability: Bharti Wright Quality Rating Profitability & Stability Rating
Airtel Limited
AC AC
A20 A20
38.4% -4.0% 45.2% -2.7% 82.0% 16.8% 12.2% 16.4% 41.0% 12.2% 16.4% 41.0%
Profit Rate of Earnings on Equity Capital - Time-Weighted Normal - Basic Trend Cash Earnings Return on Equity - Time-Weighted Average - Basic Trend Cash Earnings Return on Equity - Stability Index Return On Assets (Time-Weighted Average) Pre-Tax Income as % of Total Assets (Time-Weighted Average) Operating Income as % of Total Assets (Time-Weighted Average) Operating Income as % of Total Capital (Adjusted Rate) Pre-Tax Income as % of Total Assets (Time-Weighted Average) Operating Income as % of Total Assets (Time-Weighted Average) Operating Income as % of Total Capital (Adjusted Rate)
43
Wright Quality Rating Analyses\Corporate Growth
Wright Quality Rating - Corporate Growth: Bharti

Figures are expressed on a Per Share Basis.
Airtel Limited
ACA ACA
Wright Quality Rating Growth Rating Normal Earnings Growth Cash Earnings Growth Cash Earnings Stability Index Earned Equity Growth Dividend Growth Operating Income Growth Assets Growth Sales/Revenues Growth
20 20
13.7% 22.0% 94.3% 25.0% 25.0% 14.5% 25.0% 25.0%
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India Telecoms Sector ---------------------------------------------------------------------------------------3G/data opportunity: Encouraging takeaways from meetings with VAS industry players
Sunil Tirumalai / Research Analyst / 91 22 6777 3714 / sunil.tirumalai@credit-suisse.com
We have highlighted lack of locally relevant content as the key hurdle for rapid data revenue uptake in India (in our 23 May 2011 report). In this context, we recently met with a number of app developers, content providers and tech consultants, at a conference in Delhi. Plain mobile internet access is seen as the immediate driver for 3G revenues in India, especially from English speaking Indians who are already web-literate. Simultaneously, developers are working on video-based extensions of current voice-based entertainment applications, as subscribers move from a 2G to a 3G environment. Over the longer term, content developers are focusing on moving beyond entertainment themes to other areas such as education, health and governance. Falling handset prices (including the expectation of a US$100 smartphone in the next 12 months) is a key catalyst that the developer community is encouraged by. We believe that the data/3G theme is yet to be fully appreciated in the Indian telecoms sector, and expect 3G to surprise positively on both revenues and capex. We maintain our OUTPERFORM ratings on Bharti and Idea.
Valuation metrics
Company Price Year P/E (x) P/B (x) Local Target T T+1 T+2 T+1 Bharti Airtel BRTI.BO O 394.1 450.0 03/11 15.3 11.1 2.7 Idea Cellular IDEA.BO O 80.90 95.00 03/11 20.9 12.3 2.0 Reliance Comm RLCM.BO N 98.25 120.0 03/10 11.9 7.4 0.5 Note: O = OUTPERFORM, N = NEUTRAL, U = UNDERPERFORM Source: Company data, Credit Suisse estimates Ticker Rating
The participants at the conference agreed that plain internet access will be the key driver (short of a killer app) for the next 6-12 months. They expect sufficient demand from English speaking Indians who are already online through large screen access. The developer community is also encouraged by the falling ASPs of smartphones (including the visibility of a US$100 smartphone in the next 12 months by India-based handset vendors).
Figure 1: India is likely to take the mobile route for internet access, like China
100% 80% 60% 40% 20% 0% US PC penetration China Wireline penetration India 79.7% 65.0% 49.6% 26.3% 25.5% 5.6% 3.2% 3.2%
% of internet users who use mobile access 2009 Source: World Economic Forum, Nielsen, Credit Suisse estimates
Working on video-based apps for the near term
The next leg of content/app drivers in India are expected to be video extensions of current voice-based ABCD applications. Some of the apps the developers are working on include: Video ringback tones, as extensions of currently popular caller ring-back tones Video versions of shortfilms: Over the past year audio shortfilms are gaining popularity these are abridged audio tracks of popular Indian movies that run for around 15 minutes which more or less give the entire story line. One developer we spoke to claimed ARPUs of Rs35+ from this service from subscribers of Bharti, Aircel and Idea including from rural areas. IVVRs Video versions of interactive voice response systems. Other applications that developers are banking on include speechrecognition-based services and navigation guides.
Long-term focus on localised applications for non-metros
In our 23 May 2011 report (Indian Telecom Sector: Data is here and now!), we had highlighted that of the five parts of the data access supply chain, the content segment is probably the weakest link. This segment is yet to see the developments seen in the rest of the supply chain. In this context, we recently attended a conference on Mobile VAS in Delhi, to get an idea of current thinking of players in this industry. The players we met included some of the operators (VAS teams of Bharti, Idea, Aircel, Tata Docomo), application developers, technology platform providers, technology consultants etc.
Current state of m-VAS in India
Currently, non-voice revenues account for 10-15% of mobile operator revenues in India, with 50-60% of this coming from SMS. Thus, only 5-7% of industry revenues come from non-SMS VAS. Entertainment-based VAS accounts for ~55% of this m-VAS segment, while information-based VAS accounts for around 40%. The key themes in the entertainment segment revolve around astrology, Bollywood, cricket and devotional content (collectively called ABCD).
Immediate 3G demand will be driven by internet access
Over the longer term, m-VAS is expected to go beyond the ABCD themes, to utility areas like education, health, agriculture, law, mgovernance etc, mostly in local languages. We have shown in our report (please refer to page 25) that lack of local language content is a key hindrance for mass uptake of internet in India. We are yet to see any strong local language websites/applications in India (this issue suffers from a chicken-andegg situation which we have detailed in the report). However, our discussions with the content developers give us comfort that the industry is moving towards this goal over the longer term.
With 6% internet usage penetration, ~1% broadband penetration and 3% wireline telephony penetration, it is reasonable to expect that most Indians will access the internet for the first time on their mobile phones.
DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
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Companies Mentioned (Price as of 13 Jul 11) Bharti Airtel Ltd (BRTI.BO, Rs394.05, OUTPERFORM, TP Rs450.00) Idea Cellular Ltd (IDEA.BO, Rs80.90, OUTPERFORM, TP Rs95.00) Reliance Communication Ltd (RLCM.BO, Rs98.25, NEUTRAL [V], TP Rs120.00)
Disclosure Appendix
Important Global Disclosures I, Sunil Tirumalai, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. See the Companies Mentioned section for full company names.
3-Year Price, Target Price and Rating Change History Chart for BRTI.BO
BRTI.BO Date 25-Jul-08 13-Mar-09 24-Jul-09 02-Oct-09 22-Oct-09 25-Jan-10 09-Jul-10 17-Sep-10 06-May-11 24-May-11 Closing Price (Rs) 398.225 279.35 416.95 435 337.5 331 307.5 359.5 369.5 Target Price Initiation/ (Rs) Rating Assumption 475 425 N 375 U 290 320 N 360 O 415 X 450
475 455 425 405 355 320 305 290 Rs 255
14 - Ju
4 50 U N 375 360 N O 6-May-11 415
3-Year Price, Target Price and Rating Change History Chart for IDEA.BO
IDEA.BO Date 29-Oct-08 03-Jun-09 27-Jul-09 22-Oct-09 25-Jan-10 09-Jul-10 26-Jan-11 24-Feb-11 24-May-11 Closing Price (Rs) 38.75 80.9 79.6 59.75 61.9 66.9 71.6 65 Target Price Initiation/ (Rs) Rating Assumption 60 O 70 N 72.5 45 U 50 75 O 85 X 95 X
96 86 N 76 70 66 60 56 50 46 Rs 36
l- 0 8
The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities. Analysts stock ratings are defined as follows: Outperform (O): The stocks total return is expected to outperform the relevant benchmark* by at least 10-15% (or more, depending on perceived risk) over the next 12 months. Neutral (N): The stocks total return is expected to be in line with the relevant benchmark* (range of 10-15%) over the next 12 months. Underperform (U): The stocks total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months. *Relevant benchmark by region: As of 29th May 2009, Australia, New Zealand, U.S. and Canadian ratings are based on (1) a stocks absolute total return potential to its current share price and (2) the relative attractiveness of a stocks total return potential within an analysts coverage universe**, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. Some U.S. and Canadian ratings may fall outside the absolute total return ranges defined above, depending on market conditions and industry factors. For Latin American, Japanese, and non-Japan Asia stocks, ratings are based on a stocks total return relative to the average total return of the relevant country or regional benchmark; for European stocks, ratings are based on a stocks total return relative to the analyst's coverage universe**. For Australian and New Zealand stocks a 22% and a 12% threshold replace the 10-15% level in the Outperform
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14 -S ep -0 8 14 -N ov -08 14 -Ja n14 09 -M ar 1 4 09 -M ay -0 9 14 -J u l -0 9 14 -S ep -0 9 14 -N ov -0 9 14 - Ja n-1 0 14 -M ar10 14 -M ay -1 14 0 -J ul10 14 -S ep -10 14 -N ov -10 14 -Ja n14 11 -M ar 1 4 11 -M ay -1 1
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l1 4 08 -S ep -0 8 14 -N ov -08 14 -Ja n14 09 -M ar 1 4 09 -M ay -0 9 14 -J u l -0 9 14 -S ep -0 9 14 -N ov -0 9 14 - Ja n-1 0 14 -M ar10 14 -M ay -1 14 0 -J ul10 14 -S ep -10 14 -N ov -10 14 -Ja n14 11 -M ar 1 4 11 -M ay -1 1
Closing Price
Target Price
Initiation/Assumption
Rating
O=Outperform; N=Neutral; U=Underperfo rm; R=Restricted; NR=Not Rated; NC=Not Cove red
95 85 75 O U
73
45 O 24-Feb-11 24-May-11
Closing Price
Target Price
Initiation/Assumption
Rating
O=Outperform; N=Neutral; U=Underperfo rm; R=Restricted; NR=Not Rated; NC=Not Cove red
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and Underperform stock rating definitions, respectively, subject to analysts perceived risk. The 22% and 12% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively, subject to analysts perceived risk. **An analyst's coverage universe consists of all companies covered by the analyst within the relevant sector. Restricted (R): In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V]: A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts coverage universe weightings are distinct from analysts stock ratings and are based on the expected performance of an analysts coverage universe* versus the relevant broad market benchmark**: Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months. Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months. *An analysts coverage universe consists of all companies covered by the analyst within the relevant sector. **The broad market benchmark is based on the expected return of the local market index (e.g., the S&P 500 in the U.S.) over the next 12 months. Credit Suisses distribution of stock ratings (and banking clients) is: Global Ratings Distribution Outperform/Buy* 48% (61% banking clients) Neutral/Hold* 39% (56% banking clients) Underperform/Sell* 10% (52% banking clients) Restricted 2%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.
Credit Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. See the Companies Mentioned section for full company names. Price Target: (12 months) for (BRTI.BO) Method: We arrive at our TP of Rs450 for Bharti by Discounted cash flow (DCF). We assume a weighted average cost of capital (WACC) of 12. Our DCF model builds in strong cashflow growth till FY3/15, a 8% medium term growth (FY3/15 - FY3/30) and 3% terminal growth. This includes a Rs-24/share value destruction from Zain Africa acquisition Risks: Risks to our 12-month target price of Rs450 for Bharti include 1) TRAI recommendations get implemented 2) increased capex/slower improvement in EBITDA for African operations and 3) increased competitive intensity in the Indian market 4) Slower than expected 3G ramp Price Target: (12 months) for (IDEA.BO) Method: Our 12-month target price of Rs95 for Idea Cellular Limited is based on discounted cash flow (DCF) analysis. We assume a weighted average cost of capital (WACC) of 12. Our DCF model builds a period of strong cashflow growth till FY3/16, and a 3% terminal growth rate and terminal ROIC of 27%. Risks: Risks to our 12-month target price of Rs95 for Idea are: 1) If TRAI's recommendations get implemented, it could negatively impact our fair value estimate by 70% 2) execution risk - Idea is entering new circles, where it is the sixth or seventh operator. If marketshare or margins are below our estimates or capex higher than our numbers, it could lead to a downside risk to our target price, 3) Intensification of competition in the Indian telecom market. Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names. The subject company (BRTI.BO, IDEA.BO) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (BRTI.BO, IDEA.BO) within the past 12 months. Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (BRTI.BO, IDEA.BO) within the next 3 months. Important Regional Disclosures Singapore recipients should contact a Singapore financial adviser for any matters arising from this research report.
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The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (BRTI.BO, IDEA.BO) within the past 12 months. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml. As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.
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49
Asia Pacific Equity Research

11 July 2011
India Telecoms
1QFY12 Preview: Bharti, Idea, RCOM, TTSL and TCOM
Expect modest volume growth in Q1: After strong volume growth in Q4 were expecting slower Q/Q wireless minutes growth across Bharti/Idea/RCOM. This is driven by the 15%-25% decline in quarterly net add rates for these telcos with flat to slight declines in MOUs. While slightly negative for Q1, we believe telcos are increasingly focusing on revenue generating subs/minutes positive for H2 FY12. Some ARPM pressure to continue: We expect ARPMs to decline again in Q1 after Q4 broke away from the improving trend. However we expect the rate of decline to be more modest in Q1. We forecast about 1% declines in blended ARPM for the three telcos vs. 0-3% seen in Q4. Wireless margin a mixed picture: We expect slight margin improvement (~70bp each) at Bharti and RCOM which saw 130-160bps decline in wireless margin in Q4 while for Idea, which saw a flattish development in Q4 we expect margins to decline 30bp in Q1. Key issues to watch in Q1 [1] Pricing development as we expect H1 to be a transition with most telcos indicating a better environment [2] Weaker subscriber trajectory as telcos increasingly focus on revenue generating subs and minutes [3] increased network opex [4] for Bharti Africa, evidence of continued margin improvement. Forecast changes: For Bharti, we reduce our FY12E EPS by 4% driven by the wireless business, while for Idea our FY12E EPS declines to INR2.5 (from INR2.7) due to below-the-line costs. We slightly tweak our Tulip Telecom estimates too. Our new Mar-12 PTs for Bharti and Idea are INR444/62 vs. INR440/60 earlier. While Q1, besides being a seasonally weak quarter, will also see higher 3G related costs for the telcos, we continue to see two positives for the sector in FY12 improved pricing and regulatory clarity. We prefer Bharti as it is best positioned to absorb any negative regulatory impact in addition to benefiting from the expected pricing stability in H2 FY12 and strong earnings growth. We also like Tulip Telecom and expect continued strength in core business as increased fibre contribution drives both top-line growth and margin expansion. We remain cautious on Idea Cellular primarily due to higher exposure to regulatory risks.
Equity Ratings and Price Targets Company Bharti Airtel Limited Idea Cellular Limited Reliance Communications Limited Tata Communications Ltd Tulip Telecom Limited Symbol BRTI.BO IDEA.BO RLCM.BO TATA.BO TULP.BO Mkt Cap (Rs mn) 1,485,784. 00 264,300.60 203,203.50 59,436.75 23,171.00 Rating Price (Rs) 391.25 80.00 98.45 208.55 159.80 Cur OW UW N UW OW Prev n/c n/c n/c n/c n/c Price Target Cur Prev 444.00 440.00 62.00 95.00 180.00 230.00 60.00 n/c n/c n/c
India Telecommunications Malvika Gupta

AC
(91-22) 6157 3595 malvika.x.gupta@jpmorgan.com J.P. Morgan India Private Limited
Amit Sharma
(91-22) 6157 3598 amit.d.sharma@jpmorgan.com J.P. Morgan India Private Limited
James R. Sullivan, CFA

(65) 6882-2374 james.r.sullivan@jpmorgan.com J.P. Morgan Securities Singapore Private Limited
Source: Company data, Bloomberg, J.P.Morgan estimates. n/c = no change. All prices as of 11 Jul 11.
See page 28 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.morganmarkets.com
50
Malvika Gupta (91-22) 6157 3595 malvika.x.gupta@jpmorgan.com
Asia Pacific Equity Research 11 July 2011
Company Description Bharti Airtel Limited, a group company of Bharti Enterprises, is an integrated telecom services provider with operations in India, Sri Lanka, Bangladesh and now Africa. Established in 1995 by Sunil Mittal, Bharti Airtel has 21% subscriber share in India and 30% revenue share. It has recently completed the acquisition of Zains African assets in 16 countries. Bharti Airtel has a strong execution track record over the past years and has a quality management team.
P&L sensitivity metrics

Wireless India & SEA revenue (Rs mn) Impact of each 5% Fixed revenue (Rs mn) Impact of each 5% EBITDA margin (%) Impact of each 1% Capex (Rs mn) Impact of each 5%
Source: Company Reports and J.P. Morgan Estimates.
FY12E EBITDA impact (%) 415,164 2.9% 38,302 0.3% 35.8% 2.8% 149,480 NA
FY12E EPS impact (%) 7.4% 0.9% 7.1% 0.4%
Shareholding (Mar-11)
Indian Institution s 9% Others 6%
Price target and valuation analysis
FIIs 17%
Indian Promoter 45%
Our Mar-12 PT of Rs444 is based on our SOTP valuation and a quantified adjustment for regulatory. Our SOTP value is Rs472: Bharti's core business at Rs401, passive infrastructure at Rs31, while Africa is value additive to the extent of Rs8 and Bharti's 36% effective stake in Indus adds Rs33. To this we make a Rs28/share adjustment for regulatory risks to get to our PT.
Risk-free rate: Market risk premium: Beta: 7.6% 6.0% 0.9
Foreign Promoter 23%
Debt/capital Cost of debt: Terminal g: WACC
10.0% 5.0% 3.0% 12.0%
Source: BSE.
J.P. Morgan vs. consensus (Including Africa) Sales

Rs MM FY12E FY13E J. P. Morgan 698,556 809,927 J. P. Morgan 250,164 315,141 J. P. Morgan 19.6 30.3 Consensus 708,695 803,923 Consensus 250,595 296,713 Consensus 20.6 27.6
EBITDA
Rs MM FY12E FY13E
Key risks to our rating and price target are rational competition post MNP and a better performance in Africa on the upside, while downside risks include higher-post paid churn at Bharti on account of competition and a less benign regulatory environment.
EPS
In Rs FY12E FY13E
Source: Bloomberg, J.P. Morgan estimates.
51
Company Description Reliance Communications Limited (RCOM), a group company of Reliance Anil Dhirubhai Ambani Group, is an integrated telecommunications service provider which has established a pan-India integrated (wireless and wireline), convergent (voice, data and video) digital network covering over 24,000 towns and 600,000 villages. RCOMs subscriber share is 18% while its revenue share is 15%. Non-wireless businesses (Global, Broadband) account for 38% of gross revenue and 37% of EBITDA. Shareholding (Mar-11)

Mobile revenue (INR mn) Impact of each 5% Global revenue (INR mn) Impact of each 5% EBITDA margin (%) Impact of each 1% Capex (INR mn) Impact of each 5%
Source: Company Reports and J.P. Morgan estimates.
FY11E EPS impact (%) 16.6% 5.7% 15.1% 0.2%
Indian Institutions 9% FIIs 8%
Others 15%
Our Mar-12 price target is INR 95. This is based on a sum-of-the parts fair value of RCOMs core business of INR 134. To this we make a INR 38 adjustment for the risks in the regulatory environment. We run a full DCF model and value the Wireless business at Rs86 /share, the Globalcom business at Rs56/share, Broadband at Rs25/share.
Risk free rate: Market risk premium: Beta: 7.6% 7.5% 1.0
Indian Promoter 68%

Source: Company Reports.
Debt/capital Cost of debt: Terminal g: WACC
25% 4.7% 3.0% 12.1%
J.P. Morgan vs. consensus Sales

INR mn FY12E FY13E J. P. Morgan 220,795 244,985 J. P. Morgan 73,137 85,171 J. P. Morgan 6.6 12.1 Consensus 229,458 252,206 Consensus 73,463 83,184 Consensus 6.5 9.5
EBITDA
INR mn FY12E FY13E
EPS
INR FY12E FY13E
Source: J.P. Morgan estimates and Bloomberg.
Upside risks: [1] Sustained ARPMs coupled with MOU growth; [2] Better performance in Globalcom from data revenue; [3] Wireless margin strength; [4] consolidation in the market [5] Deleveraging of balance sheet. Downside risks: [1] Less success for RCOM in MNP than we expect resulting in continued declines in ARPMs vs. the stabilization we forecast; [2] Delays in or unsuccessful stake sale (cash inflow from which would be used for debt reduction) [3] regulatory uncertainty continuing.
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Company Description Idea Cellular is a pure play wireless GSM operator in India. The company has a strong management team and is backed by the Aditya Birla group, which has a 49% stake in the operator. After the recently completed acquisition of 100% of Spice, Idea Cellular has operations in all 22 service areas of India. Idea (including Spice) has 11% subscriber market share and 13.5% revenue share. In addition to a pan-India presence, Idea has a 16% stake in Indus Towers.

Mobile revenue (INR mn) Impact of each 5% Indus revenue (INR mn) Impact of each 5% EBITDA margin (%) Impact of each 1% Capex (INR mn) Impact of each 5%
Source: Company Reports and J.P. Morgan Estimates
FY12 EBITDA impact (%) 193,803 4.4% 12,504 0.6% 25.0% 4.0% 39,869 NA
FY12 EPS impact (%) 18.1% 2.3% 16.5% 1.0%
Shareholding (Mar-11)
Others 39%
Indian Promoters 47%
Our March 2012 SOTP-based price target is Rs62. This includes a DCF-based value of Rs62 for Ideas core business and Rs13 for Ideas 16% stake in Indus. To this we make a Rs13/share quantified adjustment for the regulatory risks.
Indian Institutions 8%
FIIs 6%
Risk free rate: Market risk premium: Beta: Debt/capital Cost of debt: Terminal g:
Source: J.P. Morgan Estimates
7.5% 7.5% 1.1 30% 5.0% 3.0%
Source: Company Reports

Rs MM FY12E FY13E J. P. Morgan 190,145 220,050 J. P. Morgan 47,542 57,924 J. P. Morgan 2.5 3.9 Consensus 187,059 216,043 Consensus 46,749 56,768 Consensus 2.3 3.8
EBITDA
Rs MM FY12E FY13E
Risks to our ratings and price target are: 1) faster-than-expected growth in profitability in new circles; 2) monetization of tower assets; 3) potential M&A activity; and 4) operators refraining from price aggression.
EPS
Rs FY12E FY13E
53
Company description Tulip Telecom (TTSL) is an enterprise communication service provider with operations in India, the US, the Middle East and Asia Pacific. Started in 1992 as a software reseller, it is now an enterprise solutions provider to over 2200 clients across banking, government, telecommunications and other sectors. TTSL is the #1 service provider in the MPLS VPN segment of enterprise data services with ~31% market share, and overall it has 12.7% share. The company has rolled out a last-mile fiber network to about 300 cities, opening up new addressable markets, and also has wireless last-mile connectivity in 2000 cities. The total value for R-APDRP projects can be valued at INR 2,300 mn for Tulip. Enterprise data service market share (FY10)
Others 24%

EDS revenue (RsMM) Impact of each 5% Total Revenue (RsMM) Impact of each 5% EBITDA margin (%) Impact of each 1% Capex (RsMM) Impact of each 5%
Source: J.P. Morgan estimates.
FY11E EPS impact (%) 8.6% 9.8% 6.7% 0.4%
TCOM 20%
Our Mar-12 DCF-based price target is Rs230. Our full DCF valuation of Tulips core business is Rs221/share. To this, we add Rs10/share for its stake in the Qualcomm broadband wireless access (BWA) joint venture.
B SNL 14% TTSL 1% 1 RCOM 1 4%
B harti 1 7%
Source: Company reports.

RsMM FY12E FY13E J. P. Morgan 28,599 34,591 J. P. Morgan 8,343 10,552 J. P. Morgan 19.5 27.3 Consensus 28,385 33,719 Consensus 7,991 9,612 Consensus 22.8 25.8
Risk free rate: Market risk premium: Beta: Debt/capital Cost of debt: Terminal g: WACC
7.6% 6.0% 1.20 20.0% 8.8% 3.0% 13.0%
EBITDA
RsMM FY12E FY13E
Key risks to our rating and price target are: (1) earlier or deeper competition from BWA winners such as Reliance Industries in last-mile enterprise connectivity and/or increasing competition from traditional players; (2) TTSL having to pay a license fee for using the 3.3GHz band (currently unlicensed); (3) continued caution on spending by enterprises (4) delays in the DC business.
Adjusted EPS
Rs FY12E FY13E
54
Company Description Tata Communications (formerly VSNL) is a global network managed solution provider for multi-national enterprises, service providers and Indian consumers . The company is the #1 player in the Enterprise Data segment with ~20% share. Globally, Tata Communications has more than 210,000km of fiber cable across 200 countries and 400 PoPs and nearly one million square feet of data center and co-location space. The company has three business segments with Global Voice and Global Enterprise & Carrier Data comprising ~93% of revenue and Other services accounting for the rest. Shareholding (FY11)
Insuranc e Cos, 10% FIIs, 1% Mutual Funds / Banks, 2% Public, 7% Others, 3% Central gov't, 26%

Enterprise Data Revenue (Mn) Impact of each 5% Total Revenue (Mn) Impact of each 5% EBITDA margin Impact of each 1% Capex Impact of each 5%
Source: J.P. Morgan estimates
FY12E EPS impact (%) -2.4% -6.1% -12.0% -0.4%
Our December 2011 PT of INR180 is based on SOTP. Our DCF fair value estimate for Tata Communications core business is INR12 per share. We value the Tata Teleservices stake at INR54 per share and land at INR114 per share.
Risk free rate:
8.0% 1.00 30%
Indian corporate s, 50%
Beta: Debt/capital
Cost of debt
Source: Company Reports
8% 3.0% 13.0%
Terminal g: WACC

INR MM FY12E FY13E J. P. Morgan 128,995 137,480 J. P. Morgan 16,631 19,768 J. P. Morgan (16.5) (9.5) Consensus 128,905 138,498 Consensus 15,906 18,936 Consensus (21.2) (13.6)
EBITDA
INR MM FY12E FY13E
Key risks to our Underweight rating and price target include 1) faster-than-expected growth in data, 2) a quick turnaround in Neotel, 3) visibility with regards to monetization of surplus land, and 4) sale of stake in Tata Teleservices
EPS
INR FY12E FY13E
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Table 1: India Telco: Q1FY12 Estimate Summary

INR in millions, year end March Q1FY12E JPMe Bharti Airtel * Revenue EBITDA margin Net Income EPS-reported(INR) Reliance Communications Revenue EBITDA margin Net Income EPS-reported(INR) Idea Cellular Revenue EBITDA margin Net Income EPS-reported(INR) Tulip Telecom Revenue EBITDA margin Net Income EPS-reported(INR) Tata Communications Revenue EBITDA margin Net Income 167,306 33.9% 13,906 3.7 54,258 30.7% 1,258 0.6 43,954 23.6% 987 0.3 6,458 28.4% 670 4.1 31,036 11.3% -1,596 Q4FY11A 163,010 33.4% 14,009 3.7 53,311 29.9% 1,564 0.8 42,022 23.9% 2,745 0.8 6,380 29.3% 827 5.1 30,688 11.6% -1,619 Q/Q 3% 0.5pp -1% -1% 2% 0.9pp -20% -20% 5% (0.3)pp -64% -64% 1% (0.9) pp -19% -19% 1% (0.3)pp -1% Q1FY11A 122,308 36.9% 19,112 5.0 51,092 31.9% 2,509 1.2 36,537 24.3% 2,014 0.6 5,252 27.0% 642 4.0 28,845 9.0% -2,814 Y/Y 37% (3.0)pp -27% -27% 6% (1.2)pp -50% -50% 20% (0.7)pp -51% -51% 23% 1.4 pp 4% 4% 8% 2.3pp -43% Q1FY12E Consensus 167,775 33.8% 14,625 3.9 55,115 30.4% Q1FY12E JPM vs. cons 0% 0.7pp 4% 4% -2% 0.4pp
44,605 24.1%
-1% (0.5)pp
NA
NA
NA
NA
Source: Company reports, J.P. Morgan estimates, Bloomberg * Please note Y/Y comparison skewed as Q1FY11 is only for India and South Asia
Table 2: Valuation Comparison

Company name Bharti Airtel Reliance Communications Idea Cellular Tulip Telecom Tata Communications Ticker BHARTI IN RCOM IN IDEA IN TTSL IN TCOM IN Rating OW N UW OW UW Current Price (Rs) 391 98 80 160 209 Price Target (Rs) 444 95 62 230 180 Upside/ Downside 13% -4% -23% 44% -14% P/E (x) FY12E FY13E 19.9 12.9 14.9 8.2 31.8 20.7 8.2 5.8 3.8 2.9 EV/EBITDA (x) FY12E FY13E 8.2 6.2 6.6 5.1 7.9 6.5 5.1 3.6 8.3 6.9 Valuation method SOTP SOTP SOTP SOTP SOTP
Source: Bloomberg, J.P. Morgan estimates. Priced as of 11 July 2011
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Table of Contents
Bharti Airtel Q4 trends spill-over expected; watching for margin improvement in Africa.................................................9 Reliance Communications concerned about volumes and margins ...................................................................................11 Idea Cellular sharp net income decline expected.............12 Tulip Telecom expect a seasonally modest Q1, looking for Y/Y growth...............................................................................13 Tata Communications Watch Neotel .................................14 Forecast Changes ..................................................................15 Valuation Analysis and Risks................................................18
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Bharti Airtel Q4 trends spill-over expected; watching for margin improvement in Africa
Bharti India's Q1 net adds like the market have declined Q/Q. The run rate for Bharti is 25% until May while for the GSM market it is 27%. While we expect this to have impacted minutes growth somewhat, our conversations reveal that with a greater focus on revenue generating and active subs, the decline in net adds was driven by lower-end subs implying only a limited negative volume impact. For Bhartis India wireless business, were looking for 4.6% minutes growth Q/Q after the 6.4% seen in Q4. On ARPMs, we looking for continued pressure on the voice segment and forecast 3% decline in voice-ARPMs, somewhat off-set by continued growth in non-wireless revenue resulting in our estimate of a 1.5% Q/Q decline in blended ARPM to 42.6 paisa after the 2.3% decline seen in Q4. This drives our estimate for wireless revenue growth of 3.0%, slightly below the 3.8-3.9% seen over the past two quarters. We expect some momentum in the Telemedia business driven by data and forecast 3.5% Q/Q growth while we expect the Enterprise business to remain largely flat with 1% growth. After a weaker Q4 than expected in the passive infrastructure business (only 0.2% growth seen in Q4), we expect a small rebound with 4.5% growth. On the costs front, we expect network opex and SG&A expenses to remain high and forecast only a 40bp Q/Q improvement in margin to 37.0% for India and South Asia. For Bharti Africa, we expect elasticity to have remained robust and forecast a slight recovery in net add trend. Were looking for 1.8% revenue growth and a 30bp margin improvement to 26.6%. On a consolidated basis, we forecast 2.6% revenue growth to INR 167.3bn, a 45bp margin improvement to 33.9% and an EPS of INR 3.7.
58
Table 3: Bharti Airtel Limited

Rs in millions, year-end March Q1FY12E JPMe Financial estimates Wireless Telemedia (Fixed line and Broadband) Enterprise Passive Infrastructure Other Eliminations Total revenue excluding Africa Africa Total consolidated revenue Interconnection / access costs License fee and spectrum Network operating costs Employee Costs SG&A Total operating expense EBITDA EBITDA margin Net Profit EPS Capex Capex/sales Operational estimates(India) Wireless subscribers(000s) MoU (minutes) ARPM ARPU (INR) 97,799 9,504 10,333 23,066 3,348 (19,331) 124,718 42,588 167,306 (22,453) (14,236) (35,802) (8,951) (28,329) (109,772) 56,693 33.9% 13,906 3.7 40,873 24.4% 169,553 445 0.43 189 Q4FY11A 94,948 9,178 10,179 22,010 3,315 (18,435) 121,195 41,815 163,010 (21,602) (13,885) (34,661) (9,202) (28,319) (107,669) 54,500 33.4% 14,009 3.7 48,004 29.4% 162,203 449 0.43 194 Q/Q 3% 4% 2% 5% 1% 5% 2.9% 2% 2.6% 4% 3% 3% -3% 0% 2% 4% 45bps -1% -1% -15% (502 bps) 5% -1% -1% -2% Q1FY11A 88,237 8,960 10,186 20,412 1,949 (17,019) 112,725 9,583 122,308 (14,227) (11,742) (27,268) (5,601) (18,411) (77,249) 45,122 36.9% 19,112 5.0 18,361 15.0% 136,620 480 0.45 215 Y/Y 11% 6% 1% 13% 72% 14% 11% 37% 58% 21% 31% 60% 54% 42% 26% (301 bps) -27% -27% 123% 942bps 24% -7% -5% -12% 56,727 33.8% 14,625 3.9 0% 7bps 4% 4% 167,775 0% Q1FY12E Consensus JPMe vs. consensus
Source: Company reports, J.P. Morgan estimates, Bloomberg.
Table 4: Bharti Africa Estimates

Rs in millions, year end March Q1FY12E JPMe 42,588 (8,631) (1,569) (6,415) (4,026) (10,605) (31,246) 11,341 26.6% (1,347) (0.22) 14,510 34.1% 46,392 118 2.66 313 Q4FY11A 41,815 (8,475) (1,541) (6,163) (4,286) (10,352) (30,817) 10,998 26.3% (1,877) (0.23) 17,312 41.4% 44,206 115 2.82 324 Q/Q 1.8% 1.8% 1.8% 4.1% -6.1% 2.4% 1.4% 3.1% 33bps -28.3% -3.6% -16.2%
Revenue Access charges License fee, revenue share & spectrum charges Network operating costs Employee costs SG&A Total operating expense EBITDA EBITDA margin Net Profit EPS Capex Capex/sales Operational estimates Wireless subscribers(000s) MoU (minutes) ARPM ARPU (INR)
Source: Company reports, J.P. Morgan estimates.
4.9% 2.4% -5.5% -3.3%
10
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Reliance Communications concerned about volumes and margins

We expect volumes to remain sluggish at RCOM given that [1] its net adds in Q1 are tracking 23% lower Q/Q and [2] it continues to protect ARPM over volume. We forecast 3% volume growth in Q1 (vs. 5% for Bharti,7% for Idea) and 2% wireless revenue growth. On a consolidated basis, were looking for 2% Q/Q revenue growth to INR 54.3bn. We expect a slight margin recovery after the 1.6pp drop in wireless margin, 3.5pp in consolidated margin Q4 and forecast a 70bp/90bp increase respectively. Well be watching the capex development and leverage levels.
Table 5: Reliance Communications
Rs in millions, year-end March Q1FY12E JPMe Financial estimates Wireless Global Broadband Others Eliminations Total revenue Interconnection cost Employee cost SG&A Network operating costs License fee and spectrum Total operating expense EBITDA EBITDA margin Net Profit EPS (INR) Capex Capex/sales Operational estimates Wireless subscribers(000s) MoU (minutes) ARPM ARPU (INR)
Q4FY11A 41,978 19,308 6,906 3,643 (18,524) 53,311 (6,655) (4,067) (8,881) (15,331) (2,607) (37,540) 15,921 29.9% 1,564 0.76 6,590 12.4% 135,719 241 0.44 107
Q/Q 2% 2% -8% 3% 0% 2% 9% -7% -5% -2% 17% 0% 5% 87bps -20% -20% -21% (278 bps) 6% -4% -1% -4%
Q1FY11A 41,528 18,137 6,763 3,348 (18,684) 51,092 (6,610) (3,535) (8,446) (13,079) (3,102) (34,772) 16,320 31.9% 2,509 1.22 7,940 15.5% 110,806 295 0.44 130
Y/Y 3% 9% -6% 12% -1% 6% 9% 7% 0% 15% -1% 8% 2% (121 bps) -50% -50% -35% (596 bps) 30% -21% 0% -21%
Q1FY12E consensus
JPMe vs. consensus
42,839 19,748 6,370 3,750 (18,448) 54,258 (7,233) (3,782) (8,440) (15,071) (3,057) (37,582) 16,677 30.7% 1,258 0.61 5,198 9.6% 143,519 232 0.44 102
55,115
-2%
16,730 30.4%
0% 38 bps
11
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Idea Cellular sharp net income decline expected

Like the rest of the industry, Ideas net add rate has declined Q/Q too - we estimate a 15% decline, but better than the GSM markets 27% (as of data to May-11). With slight MOU pressure expected to continue (JPMe -1%), we expect 7.3% Q/Q growth in minutes, slower than the 9-10% seen in the last 2 quarters. We expect ARPM to decline by 0.5 paisa/1.2% to 40.1 paisa which drives wireless revenue growth of 5.5% to INR 44.7bn. Our consolidated revenue estimate is INR42,954m, +4.6% Q/Q and we expect slight margin pressure of 30bp to 23.6%. Our concerns are around Q1 expenses and costs [1] We expect an increase in network opex as result of towers being added late in FY11 and 3G related network opex [2] We expect SG&A to remain high [3] Q1 will see the incremental INR 1.2bn of 3G related interest expense impact the P&L [4] We estimate INR 700-750m of incremental amortization too. As a result, we estimate a sharp 64% Q/Q decline in net income to INR 987m and EPS of INR 0.30/share.
Table 6: Idea Cellular Limited
Rs in millions, year-end March Q1FY12E JPMe 43,954 (7,274) (5,004) (10,964) (2,213) (6,378) (1,758) (33,591) 10,363 23.6% 987 0.30 11,407 26.0% 96,177 393 109,412 0.40 161 Q4FY11A 42,022 (6,812) (4,780) (10,325) (2,114) (6,293) (1,652) (31,975) 10,047 23.9% 2,745 0.83 14,600 34.7% 89,503 397 101,960 0.41 161 Q/Q 5% 7% 5% 6% 5% 1% 6% 5% 3% (33 bps) -64% -64% -22% (879 bps) 7% -1% 7% -1% 0% Q1FY11A 36,537 (5,761) (4,242) (10,159) (1,715) (4,310) (1,466) (27,653) 8,884 24.3% 2,014 0.61 3,204 8.8% 68,887 415 82,274 0.44 182 Y/Y 20% 26% 18% 8% 29% 48% 20% 21% 17% (74 bps) -51% -51% 256% 1,718bps 40% -5% 33% -9% -12% 10,721 24.1% NM NM -3% (51 bps) NM NM Q1FY12E consensus 44,506 JPMe vs. consensus -1%
Revenue Interconnection cost License fee and spectrum Network operating costs Employee Costs SG&A Other Total operating expense EBITDA EBITDA margin Net Profit EPS (INR) Capex Capex/sales Operational estimates Wireless subscribers (000s) MoU (minutes) Wireless minutes (mn) ARPM (INR) ARPU (INR)
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Tulip Telecom expect a seasonally modest Q1, looking for Y/Y growth
With Q3 and Q4 being stronger quarters for Tulip Telecom, were looking for a modest 1% Q/Q revenue growth in Q1 (-1% in Q1FY10, -4% in Q1FY09). On a Y/Y basis this implies 23% growth. We forecast 28.4% EBITDA margin, a ~90bp decline Q/Q, but +1.4pp Y/Y. We will also be watching for a continued increase in contribution from fibre, which was 50%+ of new orders in Q4 and an update on the data centre business.
Table 7: Tulip Telecom
Rs in millions, year-end March Q1FY12E JPMe 6,458 (4,176) (284) (165) (4,625) 1,833 28.4% 670 4.1 1,913 29.6% Q4FY11A 6,380 (3,992) (275) (247) (4,513) 1,866 29.3% 827 5.1 3,921 61.5% Q/Q 1% 5% 3% -33% 2% -2% (87 bps) -19% -19% -51% (3,185 bps) Q1FY11A 5,252 (3,475) (215) (145) (3,834) 1,417 27.0% 642 3.95 1,125 21.4% Y/Y 23% 20% 32% 14% 21% 29% 140bps 4% 4% -100% 819bps NA NA NA NA Q1FY12E consensus NA JPMe vs. consensus NA
Revenue Cost of Goods and Service Employees cost Other expenditure Total operating expense EBITDA EBITDA margin Net Profit EPS(INR) Capex Capex/sales
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Tata Communications Watch Neotel

We forecast a modest 1% Q/Q revenue growth for Tata Communications to INR31,036m, as a result of continued pricing pressure in the global voice and domestic data segments. We forecast a 30bp sequential margin decline to 11.3% and expect improvements to show from H2 FY12. We expect Neotel to continue weighing on consolidated profitability. Our net loss estimate is INR1,596m and an EPS of INR5.6. Our Q1 capex estimate is INR4.7bn (~US$110m) and we expect the company to spend US$450m of capex this fiscal year.
Table 8: Tata Communications
Rs in millions, year-end March Q1FY12E JPMe 31,036 (4,145) (18,252) (5,123) (27,520) 3,516 11.3% (1,596) -5.60 4,669 15.0% Q4FY11A 30,688 (4,203) (17,926) (5,003) (27,132) 3,557 11.6% (1,619) -5.68 2,093 6.8% Q/Q 1% -1% 2% 2% 1% -1% (26 bps) -1% -1% 123% 822bps Q1FY11A 28,845 (3,989) (17,556) (4,703) (26,247) 2,598 9.0% (2,814) -9.87 Y/Y 8% 4% 4% 9% 5% 35% 232bps -43% -43% NA NA NA NA Q1FY12E consensus NA JPMe vs. consensus NA
Revenue Staff cost Interconnect, license fee, network cost SG&A costs Total Operating Expense EBITDA EBITDA margin Net Profit EPS(INR) Capex Capex/sales
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Forecast Changes
Bharti Airtel
Table 9: Bharti: New vs. Old Estimates
Rs in millions, year-end March FY12E Revenue New Old % Change Y/Y growth (%) EBITDA New Old % Change Y/Y growth (%) EBITDA Margin (%) New Old % Change Reported Profit New Old % Change Y/Y growth (%) EPS (INR) New Old % Change Y/Y growth (%) Capex New Old % Change Y/Y growth (%) Capex/sales New Old % point change
FY13E 809,927 818,860 -1.1% 15.9% 315,141 316,749 -0.5% 26.0% 38.9% 38.7% 0.2% 115,221 115,983 -0.7% 54.6% 30.3 30.5 -0.7% 54.6% 143,631 142,535 0.8% -3.9% 17.7% 17.4% 0.3%
698,556 706,504 -1.1% 17.3% 250,164 252,953 -1.1% 24.7% 35.8% 35.8% 0.0% 74,512 77,689 -4.1% 21.2% 19.6 20.5 -4.1% 21.2% 149,480 157,596 -5.1% 4.8% 21.4% 22.3% -0.9%
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Idea Cellular
Table 10: Idea Cellular: New vs. Old Estimates
FY13E 220,050 219,290 0.3% 15.7%
190,145 189,250 0.5% 22.9%
47,542 47,020 1.1% 27.8%
57,924 56,669 2.2% 21.8%
25.0% 24.8% 0.2%
26.3% 25.8% 0.5%
8,313 8,962 -7.2% -7.5%
12,779 13,273 -3.7% 53.7%
2.5 2.7 -7.2% -7.5%
3.9 4.0 -3.7% 53.7%
39,869 40,151 -0.7% 24.2%
37,278 37,541 -0.7% -6.5%
21% 21% -0.2%
17% 17% -0.2%
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Tulip Telecom
Table 11: Tulip Telecom: New vs. Old Estimates
Source: J.P Morgan estimates.
FY13E 34,591 34,980 -1.1% 21.0% 10,552 10,663 -1.0% 26.5% 30.5% 30.5% 0.0% 1.02 4,348 4,419 -1.6% 37.4% 27.3 27.8 -1.6% 40.4% 6,363 6,418 -0.8% -14.0% 19.3% 19.2% 0.1%
28,599 28,966 -1.3% 21.6% 8,343 8,449 -1.3% 25.8% 29.2% 29.2% 0.0% 0.72 3,164 3,238 -2.3% 3.2% 19.5 19.9 -2.3% 3.2% 7,399 7,460 -0.8% -3.5% 26.1% 26.0% 0.1%
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Valuation Analysis and Risks

Bharti Airtel
Our March 2012 price target is now INR444 (vs. INR440 earlier). We note that we take an INR 28/share adjustment (quantified based on detailed analysis) for the regulatory risk Bharti faces. Without this, our fair value estimate for Bharti is close to INR 472.
Table 12: Bharti: Sum-of-the-Parts Valuation
Rs Sum-of-the-parts valuation Core business Passive Infrastructure Africa Indus Total Adjustment for Reg. risk Price Target
EV 1,658,309 145,830 494,269 444,265 2,742,673
Net debt 136,925 10,246 456,265 100,207 703,643
Equity value 1,521,384 135,584 38,004 344,058 2,039,030
Stake 100% 86% 81% 36%
Value per share 401 31 8 33 472 (28) 444
Risks to our view include: We highlight the following risks to our rating and price target: Downside risks: [1] Delay in clarity in the regulatory environment and the impact exceeding the INR28/share we factor in [2] High-end competition impact on Bharti more than expected; [3] 3G data pricing competition; [4] Slower subscriber growth than we forecast; [5] Higher capex requirements in Africa
Reliance Communications
Our Mar-12 price target is INR 95. This is based on our SOTP-based fair market value of INR 134/share for RCOM's core businesses and an INR 38 reduction for estimated risk of the current regulatory environment.
Table 13: RCOM: Sum-of-the-Parts Valuation
Enterprise value (INR million) 428,696 159,300 58,952 (50,227) 596,720 Equity value (INR million) 176,841 115,244 50,965 (66,816) 276,235 Value per share (INR) 86 56 25 (32) 134 (38) 95
Wireless Globalcom Broadband Other / Eliminations Total Quantified regulatory risk Price Target
We quantify the risk relating to the 2G spectrum issues. These include [1] excess spectrum payment [2] renewal of licenses [3] the loss attributed to dual-technology telcos by the CAG report [4] others like the shareholding in Swan Telecom and the CBI investigation. We estimate the impact at INR 38. We note that these are known risks to the market now and we acknowledge that the risk here may be different.
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Table 14: Tear-down of the impairment adjustment

Issues [1] Excess payment [2] Renewal of licenses [3] Dual technology [4] Other known risks (CBI probe / Swan Telecom stake) Total Estimated risk (INR mn) 1,564 30,926 119,917 Probability 75% 75% 25% Impact (INR mn) 1,173 23,194 29,979 Impact per share (INR) 1 11 15 12 38
Risks to our ratings and price target include Upside risks: [1] Better minute volume performance in wireless; [2] Better performance in Globalcom from data revenue; [3] Wireless margin strength; [4] consolidation in the market; [5] Stake sale confirmation the RCOM board has approved a 26% stake sale in the company. An equity infusion would be positive and help de-lever the company. Downside risks: [1] Less success for ROCM in Mobile Number Portability resulting in continued declines in ARPMs vs. the stabilization we forecast; [2] Delays in or unsuccessful stake sale (cash inflow which would be used for debt reduction) [3] Continued regulatory-related issues.
Idea Cellular
Our Mar-12 price target is now Rs62 and is based on our SOTP valuation. This is driven by INR62 from the core business and INR13 for its 16% stake in Indus, and we knocked off Rs.13 for regulatory uncertainty. We use a WACC of 12% and a terminal growth rate of 3%.
Table 15: Sum-of-the Parts Valuation
Rs Core business DCF Indus stake Value per share (INR) Regulatory adjustment Price Target
62 13 62 (13) 62
Risks to our ratings and price target are: (1) operators staying away from price competition post 3G/MNP; (2) faster-than-expected growth in profitability in new circles; and (3) monetization of tower assets, and consolidation, M&A in the sector.
Tulip Telecom
Our Mar-12 price target is INR 230. We value Tulips core business at INR 221 based on a full DCF analysis. We add INR 10/share for TTSLs 13% stake in the BWA JV with Qualcomm valued at INR 1,400.
Table 16: Tulip Telecom: SOTP
INR million, year-end March SOTP Core valueA Investment in BWA JV Equity Value Per Share (INR) INR 221 10 230
Source: Company reports and J.P. Morgan estimates.
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We highlight the following downside risks to our ratings and price target: [1] Earlier or deeper competition from BWA winners like Reliance Industries in last mile enterprise connectivity and/or increasing competition from traditional players like Tata Communications, BSNL, Bharti, Reliance Communications; [2] Tulip having to pay license fee for using the 3.3GHz band (currently unlicensed); [3] Continued caution on spend by enterprises [4] Delays in execution in Tulips data centre business.
Tata Communications
Our Mar-12 price target of INR 180 is based on our sum-of-the-parts valuation. We use a WACC of 13% and a terminal growth rate of 3%. The core business (ILD, NLD voice, data and others) contributes INR12 value, its 9.5% stake in Tata Teleservices adds INR54, while the surplus land is valued at INR114.
Table 17: Sum-of-the-parts valuation
INR Core business Tata Teleservices Land Total
12 54 114 180
Key risks to our Underweight rating and price target include 1) faster-than-expected growth in data, 2) a quick turnaround in Neotel, 3) visibility with regards to monetization of surplus land, and 4) sale of stake in Tata Teleservices.
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Company Data 52-wk range (Rs) Mkt cap (Rs mn) Mkt cap ($ mn) Shares O/S (mn) Free float (%) 3-mth avg trading volume 3m Average daily value ($ mn) NIFTY Exchange Rate Price (Rs) Date Of Price 428.40 - 292.00 1,485,784 33,518 3,798 31.7% 5 40.84 5,661 44.33 391.25 11 Jul 11 Bharti Airtel Limited (Reuters: BRTI.BO, Bloomberg: BHARTI IN) Rs in mn, year-end Mar FY10A FY11A FY12E Revenue (Rs mn) 418,472 595,279 698,556 EBITDA (Rs mn) 168,098 200,646 250,164 EBITDA margin 40.2% 33.7% 35.8% Net Profit (Rs mn) 99,587 61,466 74,512 Adjusted EPS (Rs) 26.3 16.2 19.6 Adjusted EPS growth (%) 17.5% (38.4%) 21.2% EV/EBITDA (x) 8.9 10.6 8.3 Adjusted P/E 14.90 24.17 19.94 FCF to mkt cap (%) 3.7% 3.0% 5.7% ROE 27.8% 13.2% 13.6% Net debt/EBITDA (0.1) 2.8 2.2
Source: Company data, Bloomberg, J.P. Morgan estimates.
FY13E 809,927 315,141 38.9% 115,221 30.3 54.6% 6.3 12.90 9.8% 18.1% 1.5
FY14E 929,938 387,604 41.7% 163,977 43.2 42.3% 4.7 9.06 13.9% 21.6% -
Idea Cellular Limited

Company Data 52-wk range (Rs) Mkt cap (Rs mn) Mkt cap ($ mn) Shares O/S (mn) Free float (%) 3-mth avg trading volume 3m Average daily value ($ mn) NIFTY Exchange Rate 84.50 - 52.05 264,301 5,962 3,304 39.3% 3,611,475 5.94 5,616 44.33 Idea Cellular Limited (Reuters: IDEA.BO, Bloomberg: IDEA IN) Rs in mn, year-end Mar FY09A FY10A FY11A Revenue (Rs mn) 101,493 124,471 154,708 EBITDA (Rs mn) 28,353 33,651 37,202 EBITDA margin 27.9% 27.0% 24.1% Net Profit (Rs mn) 9,009 9,539 8,987 Adjusted EPS (Rs) 3.1 3.1 2.7 Adjusted EPS growth (%) (22.7%) 0.1% (11.1%) EV/EBITDA (x) 10.6 9.8 9.6 Adjusted P/E 26.18 26.15 29.40 FCF to mkt cap (%) 8.6% (2.9%) 13.7% ROE 10.7% 7.7% 7.6% Net debt/EBITDA 1.3 1.9 2.5
FY12E 190,145 47,542 25.0% 8,313 2.5 (7.5%) 7.4 31.79 (8.7%) 6.6% 1.9
FY13E 220,050 57,924 26.3% 12,779 3.9 53.7% 6.3 20.68 6.1% 9.3% 1.8
Reliance Communications Limited

Company Data 52-wk range (Rs) Mkt cap (Rs mn) Mkt cap ($ mn) Shares O/S (mn) Free float (%) 3-mth avg trading volume 3m Average daily value ($ mn) NIFTY Exchange Rate Price (Rs) Date Of Price 195.40 - 74.65 203,204 4,584 2,064 32.1% 7 15.19 5,661 44.33 98.45 11 Jul 11 Reliance Communications Limited (Reuters: RLCM.BO, Bloomberg: RCOM IN) Rs in mn, year-end Mar FY10A FY11A FY12E FY13E Revenue (Rs mn) 221,323 205,627 220,795 244,985 EBITDA (Rs mn) 77,689 65,365 73,137 85,171 EBITDA margin 35.1% 31.8% 33.1% 34.8% Net Profit (Rs mn) 45,861 13,307 13,616 24,923 Adjusted EPS (Rs) 22.2 6.4 6.6 12.1 Adjusted EPS growth (%) (22.4%) (71.3%) 3.3% 83.0% EV/EBITDA (x) 4.9 7.7 6.3 4.9 Adjusted P/E 4.43 15.41 14.92 8.15 FCF to mkt cap (%) 21.9% (11.7%) 26.0% 30.3% ROE 12.1% 3.6% 3.7% 6.5% Net debt/EBITDA 2.6 4.9 3.8 2.8
FY14E 268,320 96,583 36.0% 36,945 17.9 48.2% 3.3 5.50 55.3% 9.0% -
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Tata Communications Ltd

Company Data 52-wk range (Rs) Mkt cap (Rs mn) Mkt cap ($ mn) Shares O/S (mn) Free float (%) 3-mth avg trading volume 3m Average daily value ($ mn) NIFTY Exchange Rate Price (Rs) Date Of Price 354.40 - 170.10 59,437 1,341 285 0 1.27 5,661 44.33 208.55 11 Jul 11 Tata Communications Ltd (Reuters: TATA.BO, Bloomberg: TCOM IN) Rs in mn, year-end Mar FY10A FY11A FY12E FY13E Revenue (Rs mn) 110,256 119,320 128,995 137,480 EBITDA (Rs mn) 10,124 12,256 16,631 19,768 EBITDA margin 9.2% 10.3% 12.9% 14.4% Net Profit (Rs mn) -5,977 -8,542 -4,712 -2,718 Adjusted EPS (Rs) -21.0 -30.0 -16.5 -9.5 Adjusted EPS growth (%) (289.3%) 42.9% (44.8%) (42.3%) EV/EBITDA (x) 13.5 11.1 8.7 7.2 Adjusted P/E -9.94 -6.96 -12.61 -21.87 FCF to mkt cap (%) -20.5% 4.3% -6.5% 9.2% ROE -12.4% -20.7% -13.5% -8.6% Net debt/EBITDA 6.9 5.7 4.7 3.9
FY14E 143,224 21,200 14.8% -1,292 -4.5 (52.4%) 6.7 -46.00 9.4% -4.4% 3.6
Tulip Telecom Limited

Company Data 52-wk range (Rs) Mkt cap (Rs mn) Mkt cap ($ mn) Shares O/S (mn) Free float (%) 3-mth avg trading volume 3m Average daily value ($ mn) NIFTY Exchange Rate Price (Rs) Date Of Price 201.40 - 132.00 23,171 523 145 31.0% 0 0.84 5,616 44.33 159.80 11 Jul 11 Tulip Telecom Limited (Reuters: TULP.BO, Bloomberg: TTSL IN) Rs in mn, year-end Mar FY10A FY11A FY12E Revenue (Rs mn) 19,655 23,510 28,599 EBITDA (Rs mn) 5,249 6,631 8,343 EBITDA margin 26.7% 28.2% 29.2% Net Profit (Rs mn) 2,438 3,064 3,164 Adjusted EPS (Rs) 15.3 18.8 19.5 Adjusted EPS growth (%) (9.7%) 23.4% 3.2% EV/EBITDA (x) 6.5 6.1 5.0 Adjusted P/E 10.5 8.5 8.2 FCF to mkt cap (%) -2.8% -19.7% -5.4% ROE 30.3% 28.6% 21.9% Net debt/EBITDA 1.7 2.2 2.0
FY13E 34,591 10,552 30.5% 4,348 27.3 40.5% 3.6 5.8 3.7% 20.8% 1.2
FY14E 40,066 12,910 32.2% 5,107 32.1 17.5% 2.9 5.0 10.9% 18.7% 0.9
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Bharti Airtel Limited: Summary of Financials

Profit and Loss Statement Rs in millions, year end Mar Revenue EBITDA D&A EBIT Interest income Interest expense Net Interest expense Profit before tax Tax Net profit - reported Net profit - adjusted Shares Outstanding EPS (Rs) (Reported) EPS (Adjusted) Revenue growth EBITDA growth Net profit growth EPS growth EBITDA margin EBIT Margin Net margin Ratio Analysis %, year end Mar P/E (Adjusted) EV/EBITDA P/B ROE ROCE ROA FCF Yield FY11 595,279 200,646 (102,066) 98,580 0 (21,862) (21,862) 77,795 (17,802) 61,466 61,466 3,797 16.2 16.2 42.3% 19.4% (38.3%) (38.4%) 33.7% 16.6% 10.3% FY11 24.2 10.6 2.9 13.2% 12.2% 5.8% 3.0% FY12E 698,556 250,164 (125,026) 125,139 0 (27,093) (27,093) 99,350 (22,747) 74,512 74,512 3,797 19.6 19.6 17.3% 24.7% 21.2% 21.2% 35.8% 17.9% 10.7% FY12E 19.9 8.3 2.5 13.6% 10.9% 5.0% 5.7% FY13E 809,927 315,141 (126,952) 188,189 0 (24,276) (24,276) 165,217 (43,837) 115,221 115,221 3,797 30.3 30.3 15.9% 26.0% 54.6% 54.6% 38.9% 23.2% 14.2% FY13E 12.9 6.3 2.2 18.1% 16.0% 7.5% 9.8% (17.7%) 42.3% 1.5 Balance Sheet statement FY14E Rs in millions, year end Mar 929,938 Cash and equivalents 387,604 Accounts receivable (129,187) Others Total Current assets 258,418 0 Total current liabilities (19,244) (19,244) Net working capital 240,478 Net fixed assets (66,713) Other long term assets 163,977 Total non-current assets 163,977 Total Assets 3,797 43.2 Long-term debt 43.2 Other liabilities Total Liabilities 14.8% 23.0% Shareholders' equity 42.3% 42.3% Total liabilities and equity 41.7% Net debt/(cash) 27.8% Book value per share 17.6% Cash flow statement FY14E Rs in millions, year end Mar 9.1 Cash flow from operations 4.7 Capex 1.8 Cash flow from other investing 21.6% Cash flow from financing 21.2% 10.3% Change in cash for year 13.9% Beginning cash Closing cash (14.3%) 33.1% FCF FY11 9,575 54,929 47,573 112,077 369,845 (257,768) 1,288,743 64,244 1,352,987 1,465,064 532,338 46,650 948,833 516,231 1,465,064 607,133 135.95 FY12E 13,729 61,728 47,681 123,137 382,408 (259,271) 1,325,579 64,244 1,389,823 1,512,960 499,960 46,650 929,018 583,942 1,512,960 570,601 153.78 FY13E 35,358 68,379 47,875 151,611 405,070 (253,459) 1,342,259 64,244 1,406,503 1,558,114 418,854 46,650 870,574 687,540 1,558,114 467,866 181.06 FY14E 105,982 78,511 48,111 232,603 432,641 (200,038) 1,346,077 64,244 1,410,321 1,642,924 329,003 46,650 808,294 834,630 1,642,924 307,391 219.80
FY11 187,140 (142,623) (491,241) 396,983 (18,842) 26,501 7,659 44,517
FY12E 234,379 (149,480) 0 (68,363) 16,536 6,119 22,656 84,899
FY13E 288,424 (143,631) 0 (123,164) 21,628 22,656 44,284 144,793
FY14E 339,398 (133,004) 0 (135,770) 70,624 44,284 114,908 206,394
Capex to sales (24.0%) (21.4%) Debt/Capital 54.4% 50.0% Net debt/EBITDA 2.8 2.2 Source: Company reports and J.P. Morgan estimates.
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Idea Cellular Limited: Summary of Financials

Profit and Loss Statement Rs in millions, year end Mar Revenue EBITDA D&A EBIT Interest income Interest expense Net Interest expense Profit before tax Tax Net profit - reported Net profit - adjusted Shares Outstanding EPS (Rs) (Reported) EPS (Adjusted) Revenue growth EBITDA growth Net profit growth EPS growth EBITDA margin EBIT Margin Net margin Ratio Analysis %, year end Mar P/E (Adjusted) EV/EBITDA P/B ROE ROCE ROA FCF Yield FY11 154,708 37,202 (23,973) 13,229 0 (3,965) (3,965) 9,264 (855) 8,987 8,987 3,303 2.7 2.7 24.3% 10.5% (5.8%) (11.1%) 24.1% 8.6% 5.8% FY11 29.4 9.6 2.2 7.6% 6.3% 3.5% 13.7% FY12E 190,145 47,542 (27,879) 19,663 1,607 (5,630) (4,023) 10,840 (2,527) 8,313 8,313 3,303 2.5 2.5 22.9% 27.8% (7.5%) (7.5%) 25.0% 10.3% 4.4% FY12E 31.8 7.4 2.0 6.6% 8.3% 2.8% (8.7%) (21.0%) 46.8% 1.9 FY13E 220,050 57,924 (32,482) 25,442 1,233 (4,606) (3,373) 17,269 (4,490) 12,779 12,779 3,303 3.9 3.9 15.7% 21.8% 53.7% 53.7% 26.3% 11.6% 5.8% FY13E 20.7 6.3 1.8 9.3% 10.2% 4.0% 6.1% (16.9%) 42.7% 1.8 Balance Sheet statement FY14E Rs in millions, year end Mar 255,001 Cash and equivalents 74,479 Accounts receivable (33,202) Others Total Current assets 41,277 992 Total current liabilities (4,291) (3,299) Net working capital 33,178 Net fixed assets (9,954) Other long term assets 23,225 Total non-current assets 23,225 Total Assets 3,303 7.0 Long-term debt 7.0 Other liabilities Total Liabilities 15.9% 28.6% Shareholders' equity 81.8% 81.8% Total liabilities and equity 29.2% Net debt/(cash) 16.2% Book value per share 9.1% Cash flow statement FY14E Rs in millions, year end Mar 11.4 Cash flow from operations 4.6 Capex 1.6 Cash flow from other investing 14.9% Cash flow from financing 16.0% 6.8% Change in cash for year 12.7% Beginning cash Closing cash (12.9%) 36.8% FCF FY11 13,902 5,587 9,012 28,500 53,412 (24,911) 207,079 48,637 255,716 284,217 105,098 2,940 161,450 122,767 284,217 91,196 37.17 FY12E 26,095 6,866 47,330 80,291 64,820 15,471 255,031 -21,384 233,647 313,938 115,098 2,940 182,858 131,080 313,938 89,003 39.68 FY13E 4,726 7,946 54,759 67,431 73,350 (5,919) 259,827 61 259,888 327,318 107,169 2,940 183,459 143,859 327,318 102,444 43.55 FY14E 20,075 9,208 63,420 92,703 85,000 7,703 259,430 61 259,491 352,193 97,169 2,940 185,110 167,084 352,193 77,094 50.58
FY11 68,211 (32,099) 12,163 23,174 71,450 2,900 74,349 36,112
FY12E 16,825 (39,869) (35,961) 1,177 (57,828) 74,349 16,521 (23,044)
FY13E 53,455 (37,278) 0 (13,173) 3,004 16,521 19,525 16,177
FY14E 66,253 (32,805) 0 (18,099) 15,349 19,525 34,875 33,448
Capex to sales (20.8%) Debt/Capital 46.1% Net debt/EBITDA 2.5 Source: Company reports and J.P. Morgan estimates.
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Reliance Communications Limited: Summary of Financials

Profit and Loss Statement Rs in millions, year end Mar Revenue EBITDA D&A EBIT Interest income Interest expense Net Interest expense Profit before tax Tax Net profit - reported Net profit - adjusted Shares Outstanding EPS (Rs) (Reported) EPS (Adjusted) Revenue growth EBITDA growth Net profit growth EPS growth EBITDA margin EBIT Margin Net margin Ratio Analysis %, year end Mar P/E (Adjusted) EV/EBITDA P/B ROE ROCE ROA FCF Yield FY11 205,627 65,365 (39,739) 25,627 0 0 14,903 (117) 13,307 13,184 2,064 6.4 6.4 (7.1%) (15.9%) (71.0%) (71.0%) 31.8% 12.5% 6.5% FY11 15.4 7.7 0.6 3.6% 3.8% 1.5% (11.7%) FY12E 220,795 73,137 (44,278) 28,859 3,572 (16,068) (12,496) 16,363 (1,145) 13,616 13,616 2,064 6.6 6.6 7.4% 11.9% 2.3% 2.3% 33.1% 13.1% 6.2% FY12E 14.9 6.3 0.5 3.7% 4.1% 1.6% 26.0% (7.7%) 46.1% 3.8 FY13E 244,985 85,171 (43,128) 42,043 2,137 (14,709) (12,572) 29,472 (2,947) 24,923 24,923 2,064 12.1 12.1 11.0% 16.5% 83.0% 83.0% 34.8% 17.2% 10.2% FY13E 8.2 4.9 0.5 6.5% 6.1% 2.9% 30.3% (7.3%) 43.8% 2.8 Balance Sheet statement FY14E Rs in millions, year end Mar 268,320 Cash and equivalents 96,583 Accounts receivable (41,305) Others Total Current assets 55,277 4,377 Total current liabilities (14,305) (9,928) Net working capital 45,349 Net fixed assets (6,802) Other long term assets 36,945 Total non-current assets 36,945 Total Assets 2,064 17.9 Long-term debt 17.9 Other liabilities Total Liabilities 9.5% 13.4% Shareholders' equity 48.2% Minority interests 48.2% Total liabilities and equity 36.0% Net debt/(cash) 20.6% Book value per share 13.8% Cash flow statement FY14E Rs in millions, year end Mar 5.5 Cash flow from operations 3.3 Capex 0.5 Cash flow from other investing 9.0% Cash flow from financing 7.9% 4.1% Change in cash for year 55.3% Beginning cash Closing cash (7.1%) 40.1% FCF FY11 53,272 40,017 67,495 160,784 151,761 9,023 547,496 183,001 730,497 891,281 373,757 151,761 525,518 357,518 8,245 891,281 320,485 173.24 FY12E 35,487 43,654 68,358 147,499 154,118 (6,619) 520,200 183,001 703,201 850,701 316,809 154,118 470,927 369,927 9,847 850,701 281,322 179.25 FY13E 71,387 48,437 70,275 190,099 158,080 32,019 494,890 183,001 677,891 867,991 306,028 158,080 464,107 392,435 11,448 867,991 234,640 190.15 FY14E 147,447 53,050 72,124 272,622 206,179 66,442 472,623 183,001 655,624 928,245 284,465 206,179 490,645 424,551 13,050 928,245 137,018 205.72
FY11 19,273 (42,957) (10,123) 90,550 4,687 48,586 53,273 (23,684)
FY12E 69,848 (16,982) (12,496) -58,155 (17,785) 53,273 35,488 52,866
FY13E 79,485 (17,818) (12,572) -13,196 35,900 35,488 71,388 61,668
FY14E 131,418 (19,038) (9,928) -26,392 76,060 71,388 147,448 112,380
Capex to sales (20.9%) Debt/Capital 51.1% Net debt/EBITDA 4.9 Source: Company reports and J.P. Morgan estimates.
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Tata Communications Ltd: Summary of Financials

Profit and Loss Statement Rs in millions, year end Mar Revenue EBITDA D&A EBIT Interest income Interest expense Net Interest expense Profit before tax Tax Net profit - reported Net profit - adjusted Shares Outstanding EPS (Rs) (Reported) EPS (Adjusted) Revenue growth EBITDA growth Net profit growth EPS growth EBITDA margin EBIT Margin Net margin Ratio Analysis %, year end Mar P/E (Adjusted) EV/EBITDA P/B ROE ROCE ROA FCF Yield FY11 119,320 12,256 -15,483 -1,195 435 -5,611 -5,176 -6,371 -689 -8,542 -8,542 285 (29.97) -29.97 8.2% 26.2% 42.9% 42.9% 10.3% -1.0% -7.2% FY11 NM 11.1 1.6 (20.7%) -1.0% (4.3%) 4.3% FY12E 128,995 16,631 -17,144 688 904 -5,318 -4,414 -3,726 -485 -4,712 -4,712 285 (16.53) -16.53 8.1% 24.8% -44.8% (44.8%) 12.9% 0.5% -3.7% FY12E NM 8.7 1.8 (13.5%) 0.6% (2.3%) -6.5% -15.0% 73.8% 4.7 FY13E 137,480 19,768 -18,427 2,141 1,206 -5,548 -4,341 -2,201 -308 -2,718 -2,718 285 (9.54) -9.54 6.6% 15.3% -42.3% (42.3%) 14.4% 1.6% -2.0% FY13E NM 7.2 2.0 (8.6%) 1.7% (1.3%) 9.2% -11.0% 75.3% 3.9 Balance Sheet statement FY14E Rs in millions, year end Mar 143,224 Cash and equivalents 21,200 Accounts receivable -18,809 Others Total Current assets 3,192 1,203 Total current liabilities -5,471 -4,268 Net working capital -1,076 Net fixed assets -216 Other long term assets -1,292 Total non-current assets -1,292 Total Assets 285 (4.53) Long-term debt -4.53 Other liabilities Total Liabilities 4.2% 7.0% Shareholders' equity -52.4% (52.4%) Total liabilities and equity 14.8% Net debt/(cash) 2.2% Book value per share -0.9% Cash flow statement FY14E Rs in millions, year end Mar NM Cash flow from operations 6.7 Capex 2.0 Cash flow from other investing (4.4%) Cash flow from financing 2.6% (0.6%) Change in cash for year 9.4% Beginning cash Closing cash -10.5% 75.6% FCF 3.6 FY11 15,077 21,544 36,426 73,047 77,324 -4,277 118,871 9,104 127,976 201,023 84,740 79,256 163,996 37,027 201,023 69,663 129.92 FY12E 14,575 23,291 37,206 75,072 78,030 -2,958 121,134 9,104 130,238 205,311 92,532 79,963 172,495 32,816 205,311 77,957 115.14 FY13E 15,587 22,913 39,344 77,845 80,110 -2,265 117,801 9,104 126,905 204,750 92,400 82,042 174,443 30,308 204,750 76,813 106.34 FY14E 14,486 23,871 40,791 79,148 81,349 -2,201 114,000 9,104 123,105 202,252 89,955 83,281 173,236 29,016 202,252 75,469 101.81
FY11 16,135 -13,609 4,496 5,907 12,929 2,574 15,502 2,525
FY12E 15,526 -19,406 0 3,378 -502 15,502 15,000 -3,880
FY13E 20,579 -15,094 0 -4,473 1,012 15,000 16,012 5,485
FY14E 20,620 -15,008 0 -6,713 -1,101 16,012 14,911 5,612
Capex to sales -11.4% Debt/Capital 69.6% Net debt/EBITDA 5.7 Source: Company reports and J.P. Morgan estimates.
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Tulip Telecom Limited: Summary of Financials

Profit and Loss Statement Rs in millions, year end Mar Revenue EBITDA D&A EBIT Interest income Interest expense Net Interest expense Profit before tax Tax Net profit - reported Net profit - adjusted Shares Outstanding EPS (Rs) (Reported) EPS (Adjusted) Revenue growth EBITDA growth Net profit growth EPS growth EBITDA margin EBIT Margin Net margin Ratio Analysis %, year end Mar P/E (Adjusted) EV/EBITDA P/B ROE ROCE ROA FCF Yield FY11 23,510 6,631 -1,714 4,917 -853 -853 4,065 -1,001 3,064 3,064 163 18.85 18.85 19.6% 26.3% 25.7% 23.4% 28.2% 20.9% 13.0% FY11 8.5 6.1 2.1 28.6% 19.2% 10.7% -19.7% FY12E 28,599 8,343 -2,560 5,783 -1,564 -1,564 4,218 -1,055 3,164 3,164 163 19.46 19.46 21.7% 25.8% 3.2% 3.2% 29.2% 20.2% 11.1% FY12E 8.2 5.0 1.6 21.9% 17.4% 8.7% -5.4% -25.9% 54.1% 2.0 FY13E 34,591 10,552 -3,275 7,277 -1,480 -1,480 5,797 -1,449 4,348 4,348 159 27.33 27.33 21.0% 26.5% 37.4% 40.5% 30.5% 21.0% 12.6% FY13E 5.8 3.6 1.0 20.8% 19.0% 10.3% 3.7% -18.4% 37.5% 1.2 Balance Sheet statement FY14E Rs in millions, year end Mar 40,066 Cash and equivalents 12,910 Accounts receivable -3,901 Others Total Current assets 9,009 - Total current liabilities -1,272 -1,272 Net working capital 7,738 Net fixed assets -2,631 Other long term assets 5,107 Total non-current assets 5,107 Total Assets 159 32.10 Long-term debt 32.10 Other liabilities Total Liabilities 15.8% 22.3% Shareholders' equity 17.5% 17.5% Total liabilities and equity 32.2% Net debt/(cash) 22.5% Book value per share 12.8% Cash flow statement FY14E Rs in millions, year end Mar 5.0 Cash flow from operations 2.9 Capex 0.9 Cash flow from other investing 18.7% Cash flow from financing 21.8% 11.1% Change in cash for year 10.9% Beginning cash Closing cash -15.4% 30.4% FCF 0.9 FY11 2,504 6,344 3,542 12,390 2,990 9,400 20,526 20,526 32,916 15,769 5,022 20,790 12,125 32,916 15,265 75 FY12E 3,124 7,444 3,738 14,306 3,471 10,835 25,672 25,672 39,977 17,725 5,503 23,227 16,750 39,977 16,601 103 FY13E 2,023 9,003 4,521 15,547 4,198 11,349 28,760 28,760 44,307 13,024 6,230 19,254 25,054 44,307 13,001 157 FY14E 828 10,428 5,235 16,491 4,863 11,629 31,016 31,016 47,507 10,973 6,894 17,868 29,639 47,507 12,146 186
FY11 3,103 -7,665 -1,184 3,440 -2,306 3,470 1,164 -4,562
FY12E 6,143 -7,399 330 52 -874 1,164 290 -1,256
FY13E 7,231 -6,363 257 -2,225 -1,101 290 -811 868
FY14E 8,675 -6,156 128 -3,843 -1,195 -811 -2,006 2,519
Capex to sales -32.6% Debt/Capital 59.4% Net debt/EBITDA 2.2 Source: Company reports and J.P. Morgan estimates.
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Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report.
Important Disclosures
Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of Tulip Telecom Limited. Client:J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Bharti Airtel Limited, Idea Cellular Limited, Reliance Communications Limited, Tata Communications Ltd. Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Reliance Communications Limited. Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Bharti Airtel Limited, Reliance Communications Limited, Tata Communications Ltd. Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Reliance Communications Limited. Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Reliance Communications Limited. Investment Banking (next 3 months): J.P. Morgan expect to receive, or intend to seek, compensation for investment banking services in the next three months from Bharti Airtel Limited, Reliance Communications Limited. Non-Investment Banking Compensation:J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Bharti Airtel Limited, Reliance Communications Limited, Tata Communications Ltd.
Date
Bharti Airtel Limited (BRTI.BO) Price Chart
Rating Share Price (Rs) OW OW OW OW OW OW OW OW OW N N N N N N N N N OW OW 234.20 332.35 343.45 406.02 462.62 503.30 402.10 462.65 365.18 312.12 279.35 425.50 332.70 307.55 318.75 359.85 334.55 338.50 339.80 339.70 357.90 381.60
Price Target (Rs) 275.00 365.00 390.00 475.00 537.50 575.00 530.00 550.00 500.00 362.50 300.00 400.00 330.00 305.00 357.00 360.00 356.00 380.00 370.00 410.00 405.00 440.00
10-Oct-06 14-Jan-07 24-Jan-07
889 762
OW Rs390
OW Rs575
OW Rs500
N Rs400 N Rs300 N Rs362.5 N Rs305 N Rs330
N Rs356 Rs410 OW
30-Apr-07 27-Jul-07
OW Rs365OW Rs537.5
OW Rs550 OW Rs530
N Rs360 Rs370 Rs440 01-Nov-07 N OW
635 OW Rs275 OW Rs475 Price(Rs) 508 381 254 127 0 Oct 06 Jul 07
11-Apr-08
N Rs357N Rs380 Rs405 OW
28-Apr-08 17-Jul-08 14-Jan-09 13-Mar-09 22-Oct-09 10-Nov-09 16-Aug-10 04-Oct-10
22-May-09 N
Apr 08
Jan 09
Oct 09
Jul 10
Apr 11
11-Nov-10 07-Jan-11 03-Feb-11 28-Mar-11 01-Jun-11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Oct 10, 2006.
06-May-11 OW
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Date 12-Mar-07 25-Apr-07

Idea Cellular Limited (IDEA.BO) Price Chart
Rating Share Price (Rs) N N UW N OW N UW N OW OW OW UW UW UW UW UW UW UW UW UW UW UW 85.55 114.60 116.25 114.75 133.40 117.10 152.00 133.70 136.05 102.45 99.80 105.50 76.35 43.95 47.00 53.30 68.80 79.90 59.80 60.30 72.65 72.65 71.60 64.20 74.20
Price Target (Rs) 90.00 105.00 105.00 110.00 140.00 140.00 140.00 135.00 145.00 145.00 134.00 135.00 120.00 40.00 37.00 40.00 55.00 60.00 45.00 51.00 57.00 58.00 60.00 54.00 60.00 Price Target (Rs) 400.00 475.00 525.00 600.00 700.00 644.00 650.00 600.00 210.00 180.00 265.00 250.00 220.00 235.00 200.00 188.00 182.00 190.00 160.00 82.00 95.00
26-Apr-07 26-Jul-07 26-Aug-07

UW Rs60 UW Rs54
10-May-07 UW
258 UW Rs105 Rs140N Rs145 Rs135 OW OW 215 N Rs105 UW Rs135OW Rs134 N Rs140 UW Rs40 UW Rs45 UW Rs60
UW Rs37 UW Rs60 UW Rs51
UW Rs58 UW Rs57
25-Oct-07 28-Oct-07 22-Jan-08 13-Feb-08 10-Apr-08 17-Jul-08 14-Jan-09 01-Feb-09 07-Apr-09 28-Jul-09 22-Oct-09 27-Jan-10 16-Aug-10 07-Oct-10 27-Oct-10 28-Mar-11 15-Jun-11 Date
172 N Rs90 UW Rs110 N Rs140 Rs145 OW OW Rs120 UW Rs40 W Rs55 U Price(Rs)
129
02-May-08 OW
86
43
0 Mar 07 Dec 07 Sep 08 Jun 09 Mar 10 Dec 10
22-May-09 UW
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Mar 12, 2007.
Rating Share Price (Rs) OW OW N N N N N N N N N N N N N N N 344.25 433.75 477.10 544.15 779.30 496.35 561.20 399.30 185.40 218.10 322.30 289.90 299.80 231.45 174.35 163.65 177.55 169.90 139.35 101.55 87.55
Reliance Communications Limited (RLCM.BO) Price Chart

1,404 N Rs700 1,170 OW Rs475 N Rs600 N Rs650 N Rs180 N Rs220 N Rs182 Rs82 N N Rs600 N Rs265N Rs235 N Rs190
10-Oct-06 13-Jan-07 08-Aug-07 06-Nov-07 10-Apr-08 17-Jul-08 14-Jan-09 07-Apr-09
02-May-07 N
936 OW Rs400N Rs525 Price(Rs) 702
N Rs644
N Rs210
N Rs250 N Rs200
N Rs188N Rs160 N Rs95
04-May-08 N
468
22-May-09 N 02-Aug-09 06-Oct-09 22-Oct-09 10-Nov-09

Oct 06 Jul 07 Apr 08 Jan 09 Oct 09 Jul 10 Apr 11
234
16-Aug-10 07-Oct-10 16-Nov-10 07-Jan-11 16-Feb-11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Oct 10, 2006.
31-May-11 N
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Tata Communications Ltd (TATA.BO) Price Chart
1,182 985
N Rs450
Date
N Rs500 N Rs460 N Rs475 N Rs400 UW Rs350 Rs325 UW UW Rs207
Rating Share Price (Rs) N N N N UW UW UW 445.05 454.05 448.75 448.85 384.85 531.05 487.40 276.35 234.80 212.30
Price Target (Rs) 460.00 475.00 500.00 450.00 400.00 350.00 325.00 245.00 207.00 180.00
06-Nov-06
788 Price(Rs) 591 394 197 0 Sep 06 Jun 07 Mar 08 Dec 08 Sep 09 Jun 10 Mar 11 UW Rs245UW Rs180 10-May-07
29-May-07 N 03-Aug-07 17-Jul-08 26-Mar-09 29-Jul-09 01-Feb-11
01-Dec-10 UW 31-May-11 UW
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Nov 06, 2006.
Tulip Telecom Limited (TULP.BO) Price Chart
378
OW Rs244 OW Rs230 OW Rs215 OW Rs230
315
252 Price(Rs) 189
Date 23-Sep-10 16-Nov-10 16-Feb-11
Rating Share Price (Rs) OW OW OW 172.30 179.20 168.45 163.45
Price Target (Rs) 215.00 230.00 244.00 230.00
126
16-May-11 OW
63
0 Sep 07 Jun 08 Mar 09 Dec 09 Sep 10 Jun 11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Sep 23, 2010.
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = Underweight Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] The analyst or analyst's team's coverage universe is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying analyst(s) coverage universe. Coverage Universe: Gupta, Malvika: Bharti Airtel Limited (BRTI.BO), Idea Cellular Limited (IDEA.BO), Reliance Communications Limited (RLCM.BO), Tata Communications Ltd (TATA.BO), Tulip Telecom Limited (TULP.BO)
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J.P. Morgan Equity Research Ratings Distribution, as of June 30, 2011

J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients* Overweight (buy) 47% 50% 45% 70% Neutral (hold) 42% 46% 47% 64% Underweight (sell) 11% 32% 8% 52%
*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.
Equity Valuation and Risks: Please see the most recent company-specific research report for an analysis of valuation methodology and risks on any securities recommended herein. Research is available at http://www.morganmarkets.com , or you can contact the analyst named on the front of this note or your J.P. Morgan representative. Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities and Investment Banking. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.
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32
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Equity Strategy | I N D I A
Prabhat Awasthi Nipun Prem +91 22 4037 4180 +91 22 4037 5030 prabhat.awasthi@nomura.com nipun.prem@nomura.com
NOMURA FINANCIAL ADVISORY AND SECURITIES (INDIA) PRIVATE LIMITED
This editions highlight This note contains a preview of 1Q FY12 earnings (for the quarter ending June 2011), based on analyst forecasts for 100 of the 114 stocks under our coverage. Q U A R T E R L Y
1Q FY12 earnings preview

Risks to earnings remain
Bottom-up expectations (ex oil and gas & banks): Based on our analysts expectations, 1QFY12 earnings are likely to increase by 4.0% y-y; net sales are expected to increase by 21.7% y-y. The June-quarter is seasonally the weakest, and sequential declines in sales and profits are likely to reflect this. On a quarterly basis, net profit should fall by 22.3% q-q; net sales should fall by 8.8% q-q. In terms of margins, EBITDA margin is expected at 20.1%, a contraction of 130bps y-y and 39bps q-q. Risks to earnings from the slowdown: Apart from seasonal weakness, we note that earnings in this quarter could come under pressure given the ongoing slowdown in economic growth momentum. The slowdown started with the investment cycle but early signs suggest that it is spreading to the consumer. Further, even though global commodity prices have come off their recent highs, they remain elevated on a y-y basis; so raw material cost pressure could persist given the quarter or so lag in transmission to input costs of companies. We would closely watch this earnings season and accompanying management commentary for signs of demand weakness for consumer-facing companies. Order inflows for construction and infrastructure companies should provide us with the direction of the investment cycle. Further, asset quality issues in the banking space would also be something to look out for. We have a constructive view on the market on a 12-month horizon, but we recommend caution in the near-term going into the earnings season, especially after the sharp 8% up-move of the market to date since the bottom on 20 June. This earnings season might not be a tailwind for the market and news flow on the inflation front will likely get worse in the coming couple of months before it gets better, we expect. In our view, bouts of significant weakness would be an opportunity for selective buying. In this note, we highlight the major factors at play across sectors, key result plays and stock-wise expected sales and profit numbers, along with analyst commentaries for the stocks in our coverage universe.
Analysts
Prabhat Awasthi +91 22 4037 4180 prabhat.awasthi@nomura.com Nipun Prem +91 22 4037 5030 nipun.prem@nomura.com Sanjay Kadam +91 22 4037 4187 sanjay.kadam@nomura.com
Any authors named on this report are research analysts unless otherwise indicated. See the important disclosures and analyst certifications on pages 18 to 21.
Nomura 1 8 July 2011
82
Equity Strategy | India
Prabhat Awasthi
Exhibit 1. Sector-wise sales, EBITDA and net profit q-q and y-y growth
Net Sales Q-Q (%) Auto & Auto Parts Electrical Equipment Infrastructure IT Consulting & Computer Services Consumer Steel & Metals Oil and Gas Property Transport Infrastructure Pharmaceuticals Telecommunications Agri Inputs Midcaps Power/Utilities NOMURA Universe (Ex Banks) NOMURA Universe Ex Banks and Oil & Gas NM Not Meaningful Source: Company data, Nomura estimates. -9.2 -43.6 -30.2 3.0 4.5 -7.1 6.7 -14.5 1.3 2.6 3.0 1.3 -16.0 -3.5 -1.5 -8.8 Y-Y (%) 17.5 20.1 22.0 21.9 20.8 27.0 43.1 16.7 16.8 11.9 26.7 39.2 15.3 14.2 31.7 21.7 EBITDA Q-Q (%) -12.1 -58.9 -38.3 -1.0 8.6 -18.6 -17.5 23.4 0.3 9.0 4.8 -5.3 -6.7 0.4 -12.4 -10.5 5.5 30.0 24.6 15.7 17.6 12.1 222.3 2.6 13.0 -5.1 23.0 24.1 10.3 16.6 37.0 14.3 EBITDA margins Q-Q bps -38.2 -545.2 -162.4 -98.0 72.3 -275.7 -198.6 1310.5 -36.0 128.6 54.9 -62.4 80.0 125.9 -165.7 -38.6 Y-Y bps -132.3 111.4 25.4 -127.3 -52.5 -259.5 376.4 -583.7 -127.1 -389.7 -97.0 -110.0 -36.7 67.1 52.3 -130.3 11.6 14.6 12.3 23.8 19.0 19.6 6.8 42.7 38.6 21.8 31.9 9.0 8.1 32.1 13.3 20.1 Net Profit Q-Q (%) -17.0 -57.7 -45.4 -6.2 5.6 -38.6 -25.6 17.9 -4.0 -3.2 -1.5 -8.1 2.4 -17.0 -23.2 -22.3 Y-Y (%) 1.4 30.1 12.2 12.6 16.3 7.7 NM -3.8 27.1 -8.2 -30.4 17.6 -4.4 -0.9 44.6 4.0 Y-Y (%) 1QFY12F
Nomura
8 July 2011
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Prabhat Awasthi
Drilling down
Sector-wise highlights: The table below shows key factors at play across sectors in 1QFY12.
Exhibit 2. Key 1Q FY12 sector highlights

Sector Agri inputs Autos Banks Key 1Q FY12 sector highlights Margins may fall this quarter on a y-y basis as raw material costs have moved up, growth rates to be robust. We expect 1QFY12 in general be a quarter of negative surprises. We expect EBITDA margins to come off q-q due to increased raw material costs and lower volumes. We expect to continue to see diverging performance of private banks vs. PSU banks, with PSU banks facing higher margins pressure, operating expense and provisions. We are estimating 10-20bp contraction in NIMs due to the lag effect of low-yielding priority sector lending done in the previous quarter. However, lending rate hikes by banks done in May will likely arrest any major fall in margins. Other income will be muted, given subdued fee income growth and possible mark-to-market losses in the trading portfolio. We expect a pickup in order inflows sequentially for the mid-cap construction companies. Order inflow is expected to be strong for L&T (LT IN) as well. We expect 10-15% revenue growth and stable EBITDA margins y-y for the mid-caps while L&T is expected to report revenue growth of 20%. In our view, the increase in interest costs is expected to significantly dent mid-cap earnings and we expect a net profit decline y-y in many cases. We expect companies to report robust sales growth, but primarily led by pricing with volume growth showing some slowdown both y-y and q-q. RM prices are still high, so we expect margin pressures to continue, but lower A&P spends could again help mitigate some of the impact as in 4QFY11. We expect muted revenue growth for the sector on grim outlook for overall power sector. Execution activity is expected to have been hampered amidst concerns on environmental clearances and fuel availability apart from macro headwinds such as interest rates leading to capex slowdown. 1QFY12 results will provide a window to the outlook for FY12 and be a test of expectations for the key stocks. Impact of macro-economic deterioration on demand, continuation of pricing momentum, shift in client spending towards discretionary segments and possible impacts of visa-related issues on revenue and margins will be keenly watched. See only marginal upgrades in revenue guidance at Infosys (INFO IN) and Cognizant (CTSH US) likely. Continuation of pricing momentum would be a positive trigger. Results unlikely to lead to estimate upgrades, in our view. We expect expectations to lower in Wipro (WPRO IN) and HCL Tech (HCLT IN) post results. Low street expectations at Infosys and high street expectations at TCS (TCS IN) might lead to opposing impacts on stock prices, even in case of in-line results at both. Despite recent moderation, oil prices were up 12% q-q in 1QFY12; Refining strength continues but some moderation was seen in petchems in the quarter; Gas volumes likely to be flat as declined production was offset by high LNG imports; 4Q under-recoveries expected at very high INR435bn (up 116% y-y; 39% q-q). We expect 1QFY12 results for the pharmaceutical sector to reflect margin pressures and healthy revenue growth. The margin pressures are expected to come from adverse macro-economic environment and lack of one-off opportunities. We expect an 11.9% y-y growth in revenues for the sector, and a net profit decline of 8.2%. Sequentially, we pencil in a growth of 2.6% in revenues and a decline of 3.2% in net profit. The major contributors to a profit decline would be Ranbaxy with Valtrex exclusivity profits last year and Aricept exclusivity profits last quarter and Sun with significant Protonix and Eloxatin profits last year. Lower generation (planned maintenance shutdown and backdown issues) and relatively muted merchant realisations (despite a peak-summer quarter) will weigh on profitability of private IPPs; growth broadly to be driven by capacity expansion. We expect consensus earnings for a majority of IPPs to be trimmed post results. Largely company-specific. Revenues may be higher y-y but will be lower q-q due to seasonal factors plus execution issues. Continued sequential growth in top-line, as minutes usage continues to rise, offset by moderating price declines. Margins could be broadly flattish or see modest improvement as benefits from stable competition are slightly offset by 3G-related costs and MNP initiatives.
Construction & Infra
Consumer
Electrical equipment
IT services
Oil & gas
Pharma
Power
Property Telcos
Source: Nomura research
Potential surprises, risks and result plays: The table below consolidates our analysts views on key result plays that could surprise either way along with risks to bear in mind going into the earnings season.
Nomura
8 July 2011
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Prabhat Awasthi
Exhibit 3. 1Q FY12 potential surprises, risks and result plays

Sector Autos (Kapil Singh) Agri inputs (Aatash Shah) Banks (Prabhat Awasthi / Amit Nanavati) Potential surprises, risks and result plays We expect 1Q FY12 to be a quarter of q-q margin decline and negative surprises. MSIL, BJAUT and TTMT could report negative surprises, while EXID could report a positive surprise, in our view. United Phosphorus (UNTP IN) could outperform post results if it beats estimates given lower growth expectations Despite margin pressure and higher credit cost expectation for the sector, we continue to believe that the private banks will be in a better position to overcome the headwinds, given better ALM and stable asset quality. Amongst the private banks, some may surprise on margins and asset quality and amongst PSU banks, some could see further asset quality deterioration and higher-than-expected margin pressure. We expect high interest costs to adversely impact net profit growth in the sector in 1Q FY12. But given the low expectations and attractive valuations, we see potential for the stocks to go up even on in-line results. We expect L&T (LT IN) to report strong inflows and earnings in line with consensus expectations. We believe IVRCL (IVRC IN) and IRB (IRB IN) results could surprise the market positively and our earnings expectations for these companies are above consensus. On NJCC (NJCC IN) and PUNJ (PUNJ IN), we expect some disappointment as our earnings estimates are below consensus. With sector valuations above long-term average, we see potential for stocks to drift lower on even in-line results. Hindustan Lever (HUVR IN) and Marico (MRCO IN) remain most 'at risk' from margin pressures, while Nestle (NEST IN) could surprise on the upside No high conviction ideas to play for result surprises as we maintain a bearish undertone for the sector In-line results at Infosys (INFO IN) with FY12 EPS guidance raised to INR130 and 2QFY12 revenue growth guidance at 6% q-q should be taken positively. In-line results at TCS (TCS IN) might not provide enough ammunition to take the stock higher. Risks to consensus estimates at Wipro (WPRO IN) post 1Q FY12 results, if the company guides for less than 5% q-q growth in 2Q FY12 (our estimates are lower than street's by 5%). HCL Tech (HCLT IN) is a post-results play with expectation reset on margin stability vs. street expectations of margin increase over FY11-12, could provide better entry points to the stock. Downward bias to our Cognizant (CTSH US) 2Q FY12 revenue growth expectations on company-specific European weakness, could be used to add positions to the stock. Stocks calls: Expect Infosys to react positively, Wipro to react negatively to results. Corrections in HCL Tech should be used to add positions. Do not see material stock reaction in TCS post results. Infosys and HCL Tech remain top picks. 1Q FY12 results would likely disappoint. Despite strengthened regional refining margins, we expect RIL (RIL IN) to report only muted growth. With upstream sharing back at 1/3rd (from effective 47% in 4Q FY11 and 38.7% in FY11), even after assuming 50% cash compensation, we see OMCs reporting 70-90% q-q profit decline; If government compensation is not announced in time (as happened in 1Q FY11) OMCs may report losses similar to 1Q FY11. Gas volumes are likely to remain flat q-q, and we do not see any big surprises in gas companies earnings. We expect sharp q-q declines in GAIL's (GAIL IN) petchem volumes and marginal declines in gas volumes, though we expect earnings to increase 15% q-q due to lower subsidy share. We do not expect any sharp increase in volumes for PLNG (PLNG IN), and expect earnings to decline 9% q-q (unless company surprises again on marketing margins) as 4Q had one-off gains. Similarly, expect flat q-q volume for GSPL (GUJS IN), but earnings decline of 16% as 4Q had oneoff accounting gains. We expect robust growth at IGL (IGL IN), and see 26% y-y and 4% q-q earnings growth. Gujarat Gas (GGAS IN) may also disappoint (down 8% q-q), as spot LNG prices continue to increase. Cairn India (CAIR IN) is likely to surprise positively as it benefitted from both volume (5% q-q) and oil prices (up 12% q-q) increases, and we expect earnings to grow by 16% q-q. We believe Glenmark (GNP IN) could surprise on the upside on higher-than-expected API sales. Glaxo (GLXO IN) could also outperform expectations on account of higher-than-expected growth in the domestic formulations. We are cautious on Ranbaxy (RBXY IN) as the results could negatively surprise on lower margins due to expiry of Aricept exclusivity and higher interest burden resulting from an increase in debt. In general, we expect muted 1Q FY12 results with reported net profit to rise y-y but drop q-q. Within our coverage universe, we expect negative reaction following results from Lanco Infra (LANCI IN) and JSW Energy (JSW IN). For JSW Energy, we expect ~25% q-q decline in EBITDA, 50% q-q decline in net profit due to lower PLF and muted merchant realisations. For Lanco, we expect delays in Udupi, Anpara capacity commissioning to negatively impact cashflows and profitability. We expect EBITDA to be up 10% q-q, but on consolidation, elimination plus higher interest outgo could dent profits to just about a breakeven level. We expect a neutral-to-positive reaction on PWGR, NTPC, RPWR & ADANI. Stock performance post results is expected to be largely neutral. Focus will likely remain on balance sheets and companies that show positive cash flow generation like HDIL (HDIL IN) and Unitech (UT IN) can outperform. For Bharti (BHARTI IN), operational trends in Africa will likely be in focus, especially given the strong price performance. IDEA (IDEA IN) has been executing strongly, and we expect this to continue.
Construction & Infra (Saion Mukherjee / Harish Venkateswaran)
Consumer (Manish Jain / Anup Sudhendranath) Electrical equipment / Transport infrastructure (Amar Kedia) IT services (Ashwin Mehta / Pinku Pappan)
Oil & Gas (Anil Sharma / Ravikumar Adukia)
Pharma (Saion Mukherjee / Aditya Khemka)
Power (Anirudh Gangahar / Nishit Jalan)
Property (Aatash Shah)
Telcos (Sachin Gupta / Neeraja Natarajan)

Source: Nomura research
FY12 consensus earnings changes YTD: When assessing the FY12 earnings outlook at the end of last year, our expectation was for downside risk to FY12 consensus earnings for Sensex, which then was about 20% y-y growth. The table below shows how individual index constituents have fared YTD.
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8 July 2011
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Prabhat Awasthi
Exhibit 4. FY12 consensus earnings estimate changes YTD

Company RELIANCE COMMUNI DLF LTD CIPLA LTD HERO HONDA MOTOR JINDAL STEEL & P BHARTI AIRTEL HINDALCO INDS MARUTI SUZUKI IN HINDUSTAN UNILEV TATA STEEL LTD RELIANCE INFRAST INFOSYS LTD RELIANCE INDS NTPC LTD OIL & NATURAL GA LARSEN & TOUBRO STATE BANK IND WIPRO LTD STERLITE INDUSTR HDFC BANK LTD ICICI BANK LTD BHARAT HEAVY ELE TATA POWER CO HOUSING DEV FIN BAJAJ AUTO LTD TATA MOTORS LTD TATA CONSULTANCY MAHINDRA & MAHIN ITC LTD JAIPRAKASH ASSOC SENSEX
Source: Nomura research, Bloomberg
Bloomberg ticker RCOM IN DLFU IN CIPLA IN HH IN JSP IN BHARTI IN HNDL IN MSIL IN HUVR IN TATA IN RELI IN INFO IN RIL IN NATP IN ONGC IN LT IN SBIN IN WPRO IN STLT IN HDFCB IN ICICIBC IN BHEL IN TPWR IN HDFC IN BJAUT IN TTMT IN TCS IN MM IN ITC IN JPA IN SENSEX INDEX
Sector Telcos Property Pharmaceuticals Autos Power Telcos Metals Autos Consumer Metals Infrastructure IT services Oil & gas Power Oil & gas Infrastructure Banks IT services Metals Banks Banks Electrical equipment Power Banks Autos Autos IT services Autos Consumer Infrastructure
YTD % change in FY12 consensus earnings (36.6) (35.3) (12.3) (10.2) (10.1) (8.8) (8.0) (7.3) (7.0) (6.5) (6.3) (5.8) (5.7) (5.7) (5.1) (4.4) (3.9) (2.9) (1.9) (0.7) 0.0 0.2 1.2 2.0 2.3 5.5 6.3 6.7 6.7 18.2 (3.8)
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Sector-wise net profit y-y and q-q growth charts

Exhibit 5. Nomura coverage aggregate earnings growth Y-Y and Q-Q charts
Nomura Universe earnings growth 60 40 20 0 -20 -40
Jun-09 Mar-10 Jun-10 Dec-09 Dec-10 Sep-09 Sep-10 Mar-11 Jun 11E
YoY % QoQ %
Nomura Ex Banks earnings growth 75 50 25 0 -25 -50

Dec-09 Sep-09 Dec-10 Sep-10 Jun-09 Jun-10 Jun 11E Mar-10 Mar-11
YoY % QoQ %
Source: Company data, Nomura estimates
Nomura Ex Oil & Gas earnings growth 80 60 40 20 0 -20 -40

Jun-09
YoY % QoQ %
Nomura Ex Oil/Gas & Banks earnings growth 120 90 60 30 0 -30 -60

Jun-09
YoY % QoQ %
Mar-10
Jun-10
Dec-09
Dec-10
Sep-09
Sep-10
Mar-11
Jun 11E
Mar-10
Jun-10
Sep-09
Sep-10
Dec-09
Dec-10
Mar-11
Jun 11E
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Prabhat Awasthi
Exhibit 6. Nomura coverage sectors earnings growth y-y and q-q charts
Automobiles earnings growth 300 250 200 150 100 50 0 -50
Jun-09
YoY % QoQ %
YoY %
Banks Earnings growth
40 30 20 10 0 -10 -20 -30 -40
QoQ %
Jun-09
Mar-10
Jun-10
Sep-09
Sep-10
Dec-09
Dec-10
Mar-11
YoY % QoQ %
Jun-10
Mar-10
Dec-09
Sep-09
Dec-10
Sep-10
Mar-11
Jun 11E
Electrical Equipments earnings growth 100 80 60 40 20 0 -20 -40 -60 -80

Jun-09
YoY % QoQ %
Infrastructure earnings growth 100 80 60 40 20 0 -20 -40 -60

Jun 11E
Mar-10
Jun-10
Sep-09
Sep-10
Dec-09
Dec-10
Mar-11
Jun-09
Mar-10
Jun-10
Sep-09
Sep-10
Dec-09
Dec-10
Mar-11
Mar-11
Mar-11
Jun 11E
IT earnings growth 25 20 15 10 5 0 -5 -10

Sep-09 Jun-09
YoY % QoQ %
YoY %
Consumers earnings growth
Sep-10
Dec-09
Dec-10
Jun-10
Jun 11E
35 30 25 20 15 10 5 0 -5 -10 -15
Jun-09
QoQ %
Mar-10
Mar-11
Dec-09
Mar-10
Jun-10
Dec-10
Sep-09
Sep-10
YoY %
Metals earnings growth

500 0 -500 -1000 -1500 -2000 -2500 -3000
Jun-09
Mar-10
Jun-10
600 400 200 0 -200 -400 -600 -800 -1000
Oil & Gas earnings growth
QoQ %
YoY % QoQ %
Dec-09
Sep-09
Dec-10
Sep-10
Jun-09
Mar-10
Jun-10
Sep-09
Sep-10
Dec-09
Dec-10
Mar-11
Jun 11E
Jun 11E
Jun 11E
Jun 11E
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Prabhat Awasthi
Exhibit 6. Nomura coverage sectors earnings growth y-y and q-q charts (continued)
YoY %
Property earnings growth

50 40 30 20 10 0 -10
80 60 40 20 0 -20 -40 -60 -80 -100
YoY % QoQ %
Transport Infra. earnings growth
QoQ %
Dec-09
Dec-10
Sep-09
Sep-10
Jun-09
Jun-10
Dec-09
Sep-09
Sep-10
Dec-10
Jun-09
Jun-10

YoY %
Jun 11E
Mar-10
Mar-11
Pharmaceuticals earnings growth
400 300 200 100 0 -100 -200 -300 -400 -500

Jun-09
20 10 0 -10 -20 -30 -40 -50
YoY % QoQ %
Telecommunication earnings growth
QoQ %
Sep-09
Sep-10
Dec-09
Dec-10
Jun-09
Jun-10
Sep-09
Dec-09
Sep-10
Dec-10
Jun 11E
YoY %
Agri Inputs earnings growth

500 400 300 200 100 0 -100
YoY % QoQ %
Midcaps earnings growth
80 60 40 20 0 -20 -40
QoQ %
Jun-09
Mar-10
Jun-10
Mar-11
Sep-10
Sep-09
Dec-09
Dec-10
Jun-09
Jun-10
Jun 11E
Power/Utilities earnings growth 60 50 40 30 20 10 0 -10 -20 -30

YoY % QoQ %
Dec-09
Sep-09
Sep-10
Dec-10
Jun-09
Jun-10
Jun 11E
Mar-10
Mar-11
Jun 11E
Sep-09
Sep-10
Dec-09
Dec-10
Mar-10
Mar-11
Jun 11E
Jun-10
Mar-10
Mar-10
Mar-11
Mar-11
Jun 11E
Mar-10
Mar-11
Nomura
8 July 2011
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Prabhat Awasthi
Sector earnings
Exhibit 7. Agri-inputs Aatash Shah/Tanuj Shori & Tushar Mohata

Company (INRmn) Jain Irrigation JI IB 179.2 BUY KS Oil KSO IB 21.9 BUY Ruchi Soya 55277.6 RSI IB 97.7 BUY United Phosphorus UNTP IB 155.2 BUY 15951.0 2979.0 1576.0 3.4 (14.1) (18.9) (27.2) 8.6 3.0 10.7 63806.0 12312.5 7080.8 15.3 16.4 (6.5) We expect a 9% YoY growth in revenues in 1QFY12 driven by Asia and Rest of World, though the drought in EU would have impacted business there. We expect a 100bps hit on margins YoY and QoQ on account of higher raw material costs which may get passed on with a 3 month lag. We do not estimate any forex loss or gain in 1FY12A. 1897.8 670.8 2.0 14.8 53.0 208.1 59.9 73.5 28.0 221110.6 7591.3 2683.4 8.1 8.1 We expect a sequential upswing in net income due to seasonality, (0.4) and y-y net income should be up 28% on higher volumes. Revenues should be up 60% y-y. Our net income estimate for the quarter is INR671mn 12868.6 1642.4 474.7 1.1 1.3 25.4 43.6 24.9 40.0 (6.0) 53619.0 6843.2 1977.7 4.6 Net sales 8862.0 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 1871.0 779.0 2.0 (28.3) (29.0) (28.7) 23.0 16.8 48.9 Net sales 53000.4 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 9865.5 3965.0 10.4 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments The financials cannot be compared on a QoQ basis given seasonality. 9.3 11.6 On a YoY basis, we expect a 23% revenue growth driven by a 30% growth in micro-irrigation systems (MIS) business. We expect a fall in operating margins YoY due to higher raw material and manufacturing costs. Interest costs are likely to be higher on account of higher debt. We have not assumed any forex loss or gain on account of foreign currency debt vs. an INR197 mn forex loss in 1QFY11. 4.7 (0.0) We expect net income growth of 44% q-q but 6% decline y-y. However we would watch out for the effect of interest expense which had been a drag on earnings in the last quarter.
Source: Nomura estimates and Bloomberg, pricing as of 8th July 2011
Exhibit 8. Autos & auto parts Kapil Singh

Company (INRmn) Ashok Leyland AL IB 52.8 BUY Bajaj Auto BJAUT IB 1457.8 BUY Bharat Forge 8197.3 BHFC IB 328.7 BUY Exide Industries EXID IB 168.7 BUY Hero Honda 57343.1 HH IB 1890.0 NEUTRAL Mahindra & Mahindra MM IB 711.6 BUY Maruti Suzuki India 82973.6 MSIL IB 1176.1 BUY TVS Motor TVSL IB 52.6 BUY Tata Motors 120504.2 TTMT IB 1047.5 NEUTRAL 10044.3 3142.4 5.8 (17.5) (19.4) (45.2) 15.7 (13.1) (31.9) 538861.1 42866.4 27769.5 45.4 35.6 Estimate revenue to grow by 16% YoY backed by strong commercial 27.5 vehicle growth. Operating margin decline QoQ due to lower operating leverage. Adj. PAT to fall 32% YoY 17237.6 993.0 521.9 1.1 7.4 8.8 25.2 25.9 10.5 29.2 67338.1 5062.6 2690.6 5.7 5.3 6.0 Revenue to grow by 7.4% QoQ backed by 3.5% volume growth. Operating margin to remain flat QoQ. RM/Sales is expected to rise as mix of bikes weakens amortization expenses would reduce as product development expenses will not get amortized from FY12. PAT to increase by 25% QoQ backed by lower tax rate. 6798.8 4285.2 14.8 (17.7) (31.7) (34.1) 0.8 (13.1) (6.6) 414214.7 33150.2 25907.0 89.7 89.7 Revenue to grow by 0.8% YoY. Operating margin to drop due to lower (0.0) operating leverage and higher material costs. Adj. PAT to fall by 6.6% YoY 67017.9 8444.6 5517.8 9.0 (1.1) (2.0) (9.0) 29.9 8.9 (1.9) 268991.3 34802.4 25097.5 44.6 54.0 (17.4) Net Sales to improve by 30% YoY backed by 23% volume growth. We expect margins to remain flattish QoQ. Also watch out for increased interest cost. Adj. PAT to remain flat YoY 8870.7 5741.7 28.8 6.4 6.9 14.5 33.5 47.2 16.8 220734.6 28302.5 24040.5 120.4 112.1 Revenue growth of 33.5% YoY backed by 23% YoY volume growth. 7.4 OPM to remain flattish. PAT to grow by 17% YoY 13486.7 2297.2 1739.4 2.0 10.0 10.9 9.4 17.1 (10.9) 8.4 55658.5 12379.6 7837.0 9.2 8.7 5.4 Revenue to grow by 17% YoY. OPM estimated to remain flattish QoQ. Adj, PAT to grow by 8% YoY. 1981.3 924.3 4.0 (0.2) (0.4) (7.9) 30.1 24.8 45.2 53343.7 9948.9 4060.2 18.2 18.7 Revenue to grow by 30% YoY backed by increase in truck production (2.4) and Non auto segments. OPM estimated to remain Flat QoQ. Adj, PAT to increase by 45% YoY. 48686.6 9454.8 7340.3 25.4 15.9 9.8 8.7 25.2 21.7 24.4 193237.8 32902.9 30721.0 106.2 102.0 4.0 Revenue to increase by 25% YoY backed by 17% volume growth. Operating margin to come down to 19.4%. Margins can report some negative surprise as mix is adverse and price increases have been taken with a lag. Adj. PAT to grow by 24% YoY. Net sales 25150.6 Nomura estimates for quarter ended 30 June, 2011 Q-Q growth (%) Y-Y growth (%) Nomura estimates June, 11 Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 2107.5 721.4 0.5 (34.3) (58.7) (75.8) 7.1 (10.5) (41.2) Net sales 119595.9 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 13593.7 7318.9 5.5 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments Expect revenue to grow by 7% YoY despite 9.9% drop in volumes. Op 5.1 8.8 margin to drop to 8.4% due to lower op leverage. Adj. PAT to fall by 41% YoY.
Nomura
8 July 2011
90
Prabhat Awasthi
Exhibit 9. Banks Prabhat Awasthi / Amit Nanavati

Nomura estimates for quarter ended 30 June. 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Net Net Net Interest Operating Net EPS Interest Operating Net Interest Operating Income Profit profit (INR) Income Profit profit Income Profit 17458.3 15776.2 8563.2 2.6 (13.4) (16.1) 15.3 8.8 Net profit Comments 15.4 We expect loan growth to remain strong at 30% Y/Y, however, declining marginally over the previous quarter owing to a strong 15% Q/Q loan growth in 4QFY11. Margins may decline 15-20bps due to the lag effect of lower yielding priority sector lending done in the previous quarter. Other Income growth to remain subdued. Lower NII growth, margin decline and subdued other income will drag the PAT growth to 15% Y/Y for the quarter. We expect NII to decline 12% sequentially resulting into ~30bps (4.5) compression in margins, largely due to 4QFY11 NII numbers reflecting INR3bn on account of interest on IT refund. Other income is expected to grow 13% y-y due to subdued trading gains. Loan growth is expected to be above industry average. Provisions will remain higher on the back of revised RBI guidelines on provisioning. PAT is expected to grow 40% sequentially due to fall in operating expenses related to pension provision. 30.8 Loan growth is expected to fall below industry levels owing to higher base effect on account of 3G lending last year. Margins for the bank will stay largely stable, due to 210bps Q/Q expansion in CASA ratio in the previous quarter. Asset quality for the bank will remain robust. PAT will continue to grow above 30% Y/Y levels led by stable margins and lower credit cost. 41.1 We expect loans to grow in-line with industry at 20% Y/Y. NII will grow 22% y-y with margins compressing by ~5-10bps sequentially. We expect asset quality to improve further with growing base and credit cost to decline marginally, however, higher provisioning requirements by RBI will act as a floor to the falling credit costs for the bank. Lower credit cost and lower tax rate due to tax benefits on BOR merger will boost the banks bottom-line. (0.9) We expect margins to compress by ~20bps due to deposit repricing and impact of 50bps hike in savings rate. Loan growth will be above industry levels at around 25%. Slippages will remain elevated due to transition to system-wide recognition of NPLs, leading to higher provisions. PAT growth will remain flat Y/Y on account of higher provisions and margin pressure.
Company (INRmn) Axis Bank AXSB IB 1306.5 Rating suspended Bank of India
20332.1 BOI IB 411.6 Rating suspended HDFC Bank HDFCB IB 2561.8 Rating suspended 29353.2
15492.3
6924.0
(11.9)
28.5
40.3
16.8
9.8
20583.7
10613.8
3.4
(1.8)
(4.8)
22.2
17.7
ICICI Bank ICICIBC IB 1060.6 Rating suspended
24384.2
22851.7
14479.3
(2.8)
(0.9)
(0.3)
22.5
4.4
Punjab National Bank PNB IB 1149.0 Rating suspended State Bank of India SBIN IB 2480.0 Rating suspended Union Bank of India UNBK IB 299.5 Rating suspended
30249.4
22494.0
10582.0
(0.1)
(10.3)
(11.9)
15.5
7.2
85941.3
67188.2
21572.3
6.7
10.5
10231.6
17.7
9.5
We expect loan growth to be lower than industry loan growth at (26.0) 18% Y/Y. Margins are expected to expand by 5-10bps on the back of 75 bps hike in base rates and PLR in May 2011 in order to offset higher cost of funds. Provisions are expected to remain high as the bank catches up with its provisioning coverage requirements. 12.5 We expect NII to grow 24% Y/Y and margins to decline ~20bps sequentially due to higher deposit costs. Loans to grow above industry level at around 24%. Slippages will remain high for the bank as it transits to system based NPL recognition. Other income will remain subdued, growing 15% Y/Y. Lower margins and higher provisions will restrict the PAT growth at 12% Y/Y.
16777.5
12294.4
6763.2
(2.3)
41.4
13.2
24.5
17.8
Nomura
10
8 July 2011
91
Prabhat Awasthi
Exhibit 10. Consumers Manish Jain, Anup Sudhendranath

Company (INRmn) Asian Paints APNT IB 3155.0 BUY Colgate Palmoliv CLGT IB 1007.0 REDUCE Dabur India DABUR IB 111.4 BUY Godrej Consumer Products GCPL IB 438.1 NEUTRAL GSK Consumer SKB IB 2489.0 BUY Hindustan Unilever HUVR IB 332.5 REDUCE ITC ITC IB 200.2 BUY Jubilant Foodworks JUBI IB 849.0 BUY Marico Industries MRCO IB 165.7 REDUCE Nestle India NEST IB 4266.1 NEUTRAL Pantaloon Retail India PF IB 324.5 BUY Titan Industries TTAN IB 225.9 REDUCE United Spirits UNSP IB 1080.0 BUY 17058.8 2955.3 1220.8 9.3 6.8 25.3 52.6 16.6 2.3 0.2 83721.0 16606.5 7674.4 61.1 43.4 We expect volume growth to be relatively subdued on account of 40.8 impact of raised taxes during the quarter. EBITDA per case will also be under pressure on account of rise in glass prices. 16417.2 1608.9 1100.2 1.2 (7.6) 23.6 31.3 31.0 34.8 35.3 68846.1 6480.3 4220.5 4.8 6.5 (27.0) Titan is likely to deliver another strong quarter, although slowdown in volume growth could be the downside risk to our estimate. Expects margins to move up marginally during the quarter. 30368.7 2608.7 509.3 2.5 8.0 5.2 0.8 22.5 27.4 (33.5) 118906.3 12899.7 4853.0 23.0 13.2 Expect another strong quarter in terms of sales, with margins slightly 74.6 down. 17954.3 3583.7 2326.6 24.1 (0.8) (7.0) (11.4) 22.4 21.9 15.5 76610.6 15907.7 10256.0 106.4 104.1 2.2 Volume growth is likely to be the key driver of revenue growth with some impact from price/mix expected during the quarter. Margins will likely to flat to marginally down during the quarter. 9876.8 1214.9 847.5 1.4 32.2 54.3 18.3 25.0 15.2 14.9 36453.3 4988.8 3266.5 5.3 5.4 Expect another strong quarter with pricing benefit to lead revenue (1.9) growth. Change in accounting policy at Kaya is also likely to boost revenue growth. Margins still expected to be under pressure during Q1FY12 1871.6 339.0 170.2 2.6 (3.4) 2.6 (11.9) 38.0 34.6 11.1 8872.8 1728.7 924.9 14.5 15.1 (3.8) Expect company to deliver another strong quarter, but there could be some pressure on margins as RM costs have continued to stay high. Upside risk possible to same store sales growth number during the quarter. 55364.8 18546.0 12493.2 1.6 (5.1) 3.7 (2.5) 14.9 15.5 16.7 243107.6 88311.9 56849.1 7.4 7.8 We expect ITC to deliver another strong quarter with cigarette (5.0) business volume growth returning to positive territory. Hotels and Agri business also expected to do well during the quarter. Margins likely to be flat to marginally up during the quarter. 55092.6 8245.0 5886.2 2.7 12.4 17.4 21.2 14.9 14.0 14.4 215378.1 30881.7 23781.6 10.9 11.3 (3.1) Volume growth is expected to moderate to single digits and with pricing benefits still evident, expect robust revenue growth in Q1FY12. Margins are expected to be under pressure, but cut in A&P spends could again mitigate the impact on bottom line. 6361.3 1164.1 832.2 19.8 (12.5) (28.4) (24.8) 15.1 11.4 16.0 29302.6 5619.1 3616.3 86.0 85.4 Expect volume growth to rebound in the quarter although rising RM 0.7 costs is likely to put margins under pressure. 10194.9 1784.1 1344.8 4.2 2.0 0.4 (5.1) 58.5 49.8 76.8 46603.4 8766.1 6154.3 19.0 18.0 5.5 Volume growth is expected to be strong across most geographies and segments. Margins will be under pressure on account of high commodity costs, but outlook is likely to be more supportive for the rest of FY12. 11456.0 2027.7 1476.3 0.8 3.4 (1.4) 0.4 25.0 48.3 38.2 54100.5 10642.9 7733.8 4.5 4.0 Expect another robust quarter with revenue growth led by volume 12.4 growth, pricing benefit and some impact from inorganic growth. 6205.6 1725.1 1330.8 9.8 3.2 19.5 16.6 12.9 7.9 9.2 26867.6 6353.4 4928.0 36.2 33.0 9.8 Volume growth during the quarter is likely to be solid, although expect margins to be under pressure on account of rising RM cost as well as A&P expenses. Net sales 23792.9 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 3973.4 2493.4 26.0 21.0 37.3 34.0 30.0 14.5 12.2 Net sales 92170.1 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 16849.7 10642.6 111.0 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments Volume growth is expected to remain strong, while impact of pricing 106.5 4.1 action is likely to mitigate margin impact somewhat.
Nomura
11
8 July 2011
92
Prabhat Awasthi
Exhibit 11. Electrical equipment Amar Kedia/Indrajit Yadav

Company (INRmn) ABB India ABB IB 860.0 REDUCE BHEL BHEL IB 1982.1 REDUCE Crompton Greaves 26997.0 CRG IB 252.0 BUY Cummins India KKC IB 679.5 NEUTRAL Thermax 9345.0 TMX IB 611.0 NEUTRAL 803.0 541.0 4.5 (46.5) (58.8) (57.2) 20.0 (16.4) (18.3) 58914.4 6244.0 3932.4 33.0 37.4 Expect 20% y-y growth in topline aided by industrial revival as well as (11.7) utility orders execution. Margins are key and we believe -ve surprise is possible due to rising RM costs compared to Q1 11. Watch for order inflows especially from industrial segment. 10628.0 1695.0 1493.0 7.5 5.3 16.8 3.7 16.8 (5.6) 6.5 50411.7 8583.9 7142.8 36.1 37.9 (4.7) Expect exports growth to drop to 14% y-y due to base effect catching up, while domestic growth is expected to be robust too. RM cost decreased y-y but could pose risk to margins 3307.0 2123.0 3.3 (7.2) (11.3) (26.7) 17.3 11.2 11.2 115448.8 15259.4 9968.1 15.5 15.8 Expect flat topline q-q in international business, while domestic power (1.8) systems business is expected to pick up. Margins expected to sustain from previous quarters. Possible negative surprise on domestic business growth on the power side and order inflows are key to watch for. 78076.0 14068.0 9349.0 19.1 (56.4) (67.2) (66.6) 20.5 45.8 40.0 496689.9 101492.6 66700.3 136.3 135.5 0.5 Expect 20.5% topline growth y-y. Expect y-y margins to improve slightly. Net sales 18082.0 Nomura estimates for quarter ended 30 June, 2011 Q-Q growth (%) Y-Y growth (%) Nomura estimates June, 11 Net Net Core Core EPS Net Core profit sales EBITDA Net profit EBITDA Net profit (INR) sales EBITDA 1066.0 1071.0 5.1 1.5 22.5 22.1 25.0 46.4 93.0 Net sales 75445.3 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 5144.7 3622.8 17.1 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments Expect 25% y-y topline growth. 17.6 (3.0) Margins expected to recover on the back of no rural business contribution.
Exhibit 12. Infrastructure & construction Saion Mukherjee, Harish Venkateswaran

Company (INRmn) HCC HCC IB 33.9 NEUTRAL IVRCL Infra. IVRC IB 72.5 BUY IRB Infrastructure 8349.9 IRB IB 175.6 BUY Larsen & Toubro LT IB 1831.0 BUY Nagarjuna Constructions 11935.7 NJCC IB 83.5 BUY Punj Lloyd PUNJ IB 77.9 REDUCE 22579.0 1399.7 43.9 0.1 3.0 88.6 (75.2) 40.6 2217.5 NM 80586.0 2445.7 (2238.0) (6.5) 3.7 (277.4) We expect PUNJ to book orders of about INR25bn in 1QFY12. We expect sales growth of 41% y-y due to the low base in 1QFY11. On a q-q basis, we expect sales growth of 3%. We project EBITDA margin at 6.2%. We expect to report a marginal profit at the net level as against loss in 1QFY11. 1133.9 281.8 1.1 (17.7) (13.4) (21.0) 10.0 8.7 (31.9) 62131.2 6083.0 2015.6 7.9 7.4 94623.7 11354.8 7280.5 11.9 (38.5) (51.5) (51.6) 20.0 12.8 9.3 550563.9 68820.5 44417.5 71.8 74.4 3407.4 1599.9 4.8 5.7 8.3 55.7 56.5 36.7 36.1 29161.3 13193.1 3825.3 11.5 14.8 We estimate revenue growth of 57% y-y. Construction revenues are (22.2) expected to increase 81% y-y as construction of the new projects has picked up. Toll collection is expected to be increase 9% q-q, primarily on account of the 18% revision in toll rate on Mumbai-Pune expressway effective April 1, 2011. We forecast core construction margins at 25.0% and BOT margins at 90%, both stable q-q. We estimate IRBs net profit to grow 36% y-y. (3.6) We expect strong order inflows of ~INR200bn in 1QFY12. The company has already announced orders worth INR132bn in the quarter. We expect revenue growth of 20% y-y as execution momentum from the last two quarters is expected to continue. EBITDA margins are expected to be at 12.0% vs. 12.5% in 1QFY11. We expect adjusted net profit growth of 9% primarily on account of higher depreciation. In 1QFY12, we expect NJCC to report order inflows of INR20bn. We 6.1 expect revenue growth of 10% y-y and flat EBITDA margin y-y. Interest costs are expected to rise 90% y-y resulting in net profit falling by 32% y-y. 12720.8 1144.9 248.3 0.9 (38.0) (35.5) (61.4) 15.0 13.9 (11.6) 66571.9 6069.8 1790.3 6.6 7.1 (6.2) We expect order inflows of INR 9bn in 1QFY12. We expect revenues to grow 15% y-y while EBITDA margins are expected to be flat y-y. We expect reported net profit growth to decline 12% y-y due to a 33% increase in interest costs vs. 1QFY11. Net sales 10916.5 Nomura estimates for quarter ended 30 June, 2011 Y-Y growth (%) Nomura estimates June, 11 Q-Q growth (%) Net Net Core Core EPS Net Core profit sales EBITDA Net profit EBITDA Net profit (INR) sales EBITDA 1364.6 89.9 0.1 (9.7) (21.4) (60.3) 10.0 11.1 (68.3) Net sales 46481.4 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 6042.6 199.6 0.3 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments We expect HCC to book orders of ~INR10bn in 1QFY12. We expect 1.1 (70.4) revenue growth of 10% y-y excl JVs and 8.3% y-y incl JVs in the quarter. We expect EBITDA margin to be stable y-y. We expect interest expense to increase 50% y-y. Due to the high leverage, net profit is expected to fall 68% y-y.
Exhibit 13. Metals & mining: non ferrous Alok Nemani/Prabhat Awasthi
Company (INRmn) Hindustan Zinc HZ IB 131.1 NEUTRAL Nalco NACL IB 83.9 REDUCE Sterlite Industries 94703.3 STLT IB 163.7 BUY 26717.0 16078.1 4.8 (5.8) (12.6) (16.5) 59.9 84.1 59.4 399976.3 123042.5 62605.1 18.6 20.9 Zinc price correction will impact the earnings and even Sterlite energy (10.7) is facing delays in commissioning of 2nd 600MW. 16805.9 4455.9 2833.1 1.1 (7.9) (1.8) (7.2) 28.5 13.2 (0.2) 65147.6 19972.5 14542.7 5.6 5.7 (1.7) Higher aluminium and alumina prices should maintain earnings momentum. Net sales 25009.6 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Net Core Net Net Core Core EPS sales EBITDA profit sales EBITDA Net profit EBITDA Net profit (INR) 14216.8 12253.4 2.9 (22.7) (27.8) (30.8) 28.2 42.3 37.5 Net sales 111260.0 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 64246.0 52710.2 12.5 Bloomberg consensus EPS % diff - Nomura vs Cons. Comments (INR) Metal prices have weakened during the quarter which will keep 15.7 (20.4) earnings under pressure.
Nomura
12
8 July 2011
93
Prabhat Awasthi
Exhibit 14. Metals & mining: steel Alok Nemani/Prabhat Awasthi

Company (INRmn) JSW Steel JSTL IB 881.7 BUY SAIL 119425.2 SAIL IB 136.7 BUY Sesa Goa SESA IB 281.6 NEUTRAL Tata Steel 317750.3 TATA IB 594.6 BUY 43267.0 17552.6 18.3 (6.1) (3.1) (58.1) 16.8 (2.4) (3.8) 1209119.6 161520.9 65208.6 67.4 70.0 23117.5 9152.5 6493.1 7.5 (36.2) (56.8) (55.6) (4.2) (41.0) (50.1) 126235.9 60575.5 60089.5 69.1 48.1 43.9 Iron ore prices are largely flat QoQ but export duty increase from 5% to 20% on fines will be key drag on earnings. Volumes are also expected to be lower as exports from Karnataka has not yet started. Other income would also fall on account of cairn stake purchase. Please note that our estimates dont include any contribution from Cairn earnings. We expect Corus EBITDA of US$75/tonne as impact of coking coal (3.8) won't come in Q1FY12. TATA Steel would also book profit on sale of Riversdale stake (close to US$0.5bn) not built in our estimates. 19947.3 12773.1 3.1 (1.8) (14.8) (15.2) 30.8 8.2 8.6 474945.4 78685.8 49192.1 11.9 13.3 EBITDA/tonne will be impacted by high raw material prices - coking (10.2) coal prices to start flowing from this quarter. Net sales 70549.0 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 13038.2 5626.7 25.2 (0.7) (21.2) (32.4) 52.0 30.9 60.6 Net sales 319049.6 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 52648.7 22188.4 95.3 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments 96.4 (1.1) Capacity expansion will come from Q2FY12. Higher raw material prices will start impacting from mid of Q1FY12. Expect EBITDA/t to fall on higher coking coal prices.
Exhibit 15. Midcaps Lalit Kumar

Company (INRmn) Maharashtra Seamless MHS IB 374.8 BUY Pidilite Industries 7944.3 PIDI IB 170.6 BUY Raymond RW IB 386.0 BUY Redington India 40372.8 REDI IB 88.5 BUY Sterl Technologies SOTL IB 55.3 BUY Tube Inv India 8426.0 TI IB 149.4 BUY Voltas VOLT IB 165.4 BUY 16016.7 1408.3 1021.7 3.1 (6.0) (9.2) (6.8) 16.9 24.0 20.8 60646.2 5122.9 3736.5 11.3 11.9 (5.0) Revenue growth for EMP, EPS and UCP business is expected to be 5%, -10% and 30% respectively. While EBIT margin expectation for these three business is 8%, 20% and 10% respectively. Margin in EMP business will continue to be under pressure due to low orders and stiff competition in Middle East. Rohini is expected to start making profit. Unitary cooling product business performance can be below expectation as monsoon came early this year. Transfer of material handling business to JV with KION group will lower revenue in EPS business. 1010.8 410.8 2.2 7.7 11.9 (11.6) 18.1 23.0 1.5 35320.9 4291.1 1792.7 9.7 9.7 6008.5 685.0 324.3 0.9 (11.9) 39.9 214.9 22.2 (17.5) (41.7) 28885.4 4038.1 2270.6 6.4 5.5 17.3 Sales volume for power business, optical fibre and optical fibre cables business is expected to be 34000 MT, 2.3 mn km and 1.1 mn kms respectively. Power conductor segment performance will be key to watch. Stock underperformance over last 6 months has been mainly due to poor performance in power conductor business. This segment margin dropped drastically in Q3FY11 as company executed very low margin orders. Most of these low margin orders have been executed in Q3-Q4FY11 and we expect margin to increase in Q1FY12. Also company has received new orders from PGCIL. We are expecting YoY growth rate of 12%, 20% and 25% in Cycle, 0.2 Engineering and Metal form product business respectively. We expect margin to be 7%, 9% and 14% respectively. Slowdown in auto sector in Q2FY12 will be key risk to our estimate 1225.0 610.4 1.5 (25.9) (23.8) (19.9) 14.5 33.3 27.8 197830.3 5865.9 3086.7 7.8 7.3 2766.7 47.5 -207.3 (3.4) (33.1) (93.2) NM 14.8 11.0 NM 36030.6 4108.5 1252.9 20.4 25.3 1413.2 912.0 1.8 26.5 81.9 97.5 13.8 (10.0) (12.3) 30586.2 5460.6 3393.4 6.7 7.0 Our expectation on YoY revenue growth for consumer & Bazaar (4.5) business and Industrial Products business to be 14% and 16% respectively. Key to watch here will be margin especially in consumer and bazaar segment as oil prices have increased in Q1FY12. We expect 20% and 16% EBIT margin in consumer & Bazaar and Industrial products business respectively. (19.2) Our expectation for YoY revenue growth in textile, shirting fabric, garmenting, denim, apparel, files & tools and auto components business is 15%, 40%, 5%, 6%, 8%, 5% and 12% respectively. Wool price has reached 16 year high while cotton price has come down in Q1FY12. Our expectation on margin for textile business is 5% as Q1 historically been weak quarter with very low margin. Management commentary on status of Thane land will be key to watch. We expect Q4FY11result to be good backed by performance of non 6.9 IT business and consolidation of recently acquired subsidiary (Arena) in Turkey. We expect YoY revenue growth for India and overseas operation to be 19% and 10% respectively. While margin for India and overseas business is expected to be 3.9% and 1.8% respectively. Net sales 4243.4 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Net Core Net Net Core Core EPS sales EBITDA profit sales EBITDA Net profit EBITDA Net profit (INR) 1154.6 828.5 11.7 (22.6) (18.6) (8.6) 6.6 18.2 (17.5) Net sales 19358.7 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 4853.4 3488.3 49.5 Bloomberg consensus EPS % diff - Nomura vs Cons. Comments (INR) 49.1 0.9 We expect sales volume for seamless and ERW pipes to be 57738 MT and 26325 MT and sales realisation to be INR52975 and INR45003 per MT, respectively. EBITDA per MT for seamless and ERW pipes is expected to be INR18000 and INR4000 respectively.
Nomura
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Exhibit 16. Oil & gas / chemicals Anil Sharma & Ravikumar Adukia
Company (INRmn) BPCL BPCL IB 664.0 NEUTRAL Cairn India CAIR IB 323.4 BUY GAIL India 89346.6 GAIL IB 461.1 BUY Gujarat Gas GGAS IB 406.9 NEUTRAL Guj. St. Petronet 2624.4 GUJS IB 96.8 BUY HPCL HPCL IB 391.3 NEUTRAL Indraprastha Gas 5607.5 IGL IB 389.5 BUY Indian Oil IOCL IB 338.0 NEUTRAL Petronet LNG 43831.9 PLNG IB 142.5 BUY Reliance Industries RIL IB 853.1 BUY 765178.7 101578.6 56462.9 17.2 5.3 3.2 5.0 31.4 8.7 16.4 3266679.1 422045.4 259492.1 78.4 73.2 3628.8 1882.9 2.5 11.2 3.3 (8.7) 74.8 46.5 69.1 188569.3 15165.5 7913.8 10.6 9.7 1056137.8 28381.1 11944.5 4.9 6.6 (46.7) (69.4) 47.4 NM NM 3868522.1 165599.0 86171.7 35.5 36.1 (1.8) We estimate gross under-recovery of INR239.2bn, and assume INR79.7bn (1/3rd of total U/Rs) as upstream discount and INR119.6bn (50% of total U/Rs) as Govt compensation. Sharing mechanism remains a big unknown and lower compensation from Government could lead to reported losses in 1QFY12, similar to 1QFY11. Inventory gains (due to q-q increase in oil prices) could pose upside risks to our estimates . We estimate PAT at INR1.88bn (up 69% y-y, down 9% q-q). We 8.8 estimate EBITDA to increase 3% q-q, but lower other income and higher expected tax rates likely to impact the bottomline (One off other income and lower tax rate in 4Q). We expect 5-6 spot/shortterm LNG cargoes in 1Q. 1Q expected volumes imply that Dahej terminal is running at close to its full capacity. 7.1 We expect 16% y-y earnings growth, driven by refining. We expect GRM of US$10.4/bbl (up 42% y-y, 13% q-q) driven by middle distillates. However, reported premium to Singapore complex likely to remain low at ~US$1.8/bbl due to higher Brent linked crude costs and increased gas costs (supply cut of KG-D6 gas and higher LNG prices). We estimate Pet-chem EBIT to decline ~10% q-q declines in key petchem prices and increase in feedstock prices. E&P likely to disappoint with declining production at KG-D6. 1443.4 720.4 5.1 10.1 6.4 4.2 67.4 35.3 26.1 25132.7 6149.0 3187.5 22.8 21.4 426631.2 4622.5 749.8 2.2 7.6 (76.6) (93.3) 46.0 NM NM 1628157.7 18841.2 6500.3 19.2 44.9 (57.2) We estimate gross under-recovery of INR 93.1bn for 1Q, and assume INR 31.0bn (1/3rd of total U/Rs) as upstream discount and INR46.6bn (50% of total U/Rs) as Govt compensation. Sharing mechanism remains a big unknown and lower compensation from Government could lead to reported losses in 1QFY12, similar to 1QFY11. Inventory gains (due to q-q increase in oil prices) could pose upside risks to our estimates . We estimate 26% y-y and 4% q-q PAT growth. We expect 14% y-y 6.6 growth in CNG volumes and sharp 83% y-y growth in PNG volumes. We expect price hikes will offset increase in input gas costs. EBITDA/scm likely to remain resilient. 2468.4 1271.4 2.3 2.9 6.1 (15.6) 4.2 2.5 21.0 11757.7 10962.3 5650.6 10.0 9.4 We estimate 1Q PAT at INR1.3bn. We expect flat transmission 7.2 volumes at 36mmscmd. We expect average tariff realisation to remain largely flat q-q at INR800/mscm. 5645.5 1026.9 661.9 5.2 8.5 (5.6) (8.2) 37.9 9.9 15.0 25574.7 5281.0 3311.1 25.8 25.6 14454.1 9021.1 7.1 0.5 13.6 15.2 26.0 0.7 1.7 388368.6 68376.3 44390.9 35.0 33.3 41076.1 35594.7 28548.8 15.0 12.4 13.4 16.2 388.7 450.0 914.5 171850.1 143693.6 104007.6 54.7 Net sales 493349.2 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 5089.7 928.3 2.6 9.0 (69.0) (90.1) 44.2 NM NM Net sales 1991733.3 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 48848.8 19233.4 53.2 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments We estimate gross under-recovery of INR102.7bn, and assume 50.9 4.4 INR34.2bn (1/3rd of total U/Rs) as upstream discount and INR51.4bn (50% of total U/Rs) as Govt compensation. Sharing mechanism remains a big unknown and lower compensation from Government could lead to reported losses in 1QFY12, similar to 1QFY11. Inventory gains (due to q-q increase in oil prices) could pose upside risks to our estimates . 49.6 10.3 We estimate PAT at INR28.5bn - up ~10x y-y and 16% q-q. We assume - Mangala production at 125kbpd and Cairn's total working interest production at 99kbpd (up 121% y-y, 5% q-q). We assume 12% discount for waxy Mangala crude. If Cairn is made to share royalty on Rajasthan crude, One time hit (from production start till FY11end) is estimated at INR14bn. We estimate PAT at INR9.0bn (up 2% y-y, 15% q-q). We estimate 5.1 gas transmission volumes (at 118mmscmd) to decline marginally due to lower domestic gas production partly offset by higher LNG imports. Expect pet-chem sales volumes to decline by 37% after a sharp 78% increase in 4Q last year. We assume - 1. Upstream sharing at 1/3rd of under-recoveries 2. GAIL would share under-recoveries only on cooking fuels @~13.7% of 1/3rd of upstream share. 0.9 We estimate 2QCY11 PAT at INR662mn. Gas sales at 3.3mmscmd. We expect price hikes taken by the company to largely offset for increase in gas costs and assume gross margins to remain largely flat at INR4.5/scm.
Nomura
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Exhibit 17. Pharmaceuticals Saion Mukherjee & Aditya Khemka

Company (INRmn) Cipla CIPLA IB 332.4 NEUTRAL Net sales 17805.0 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 3443.0 2315.0 2.9 6.7 6.8 8.2 20.3 (6.3) (10.1) Net sales 71983.9 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 16274.2 11950.4 14.9 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments The domestic formulation as per AIOCD is showing some signs of slowdown in the branded segment. However, there is a weak base as 14.8 0.8 Q1FY11 recorded just 4% growth. The slowdown in Q1FY11 was due to competition in generic segment and disposal of I Pill business. Therefore we project domestic sales growth of 15%. We project 26% export growth on back of pick up in API sales momentum recorded in Q4FY11. We expect YoY decline in EBITDA margin due to unabsorbed overheads of the newly commissioned Indore SEZ, rise in raw material prices and higher contribution of low margin API business. We keep margins flat QoQ and estimate 10% decline in net profits. 41.7 (4.1) We factor in sequential drop in Hospira JV sales as we expect lower Taxotere sales during the quarter. This is based on the assumption that substantial sales were booked in the previous quarter (as commented by Hospira). Overall we project revenue growth of 17% with domestic formulation growth at 20%. We expect EBITDA margins to remain flat sequentially (adjusted for one time employee exp in the previous quarter) and decline YoY on higher material costs. We expect the global generic business to grow at 23%, driven by the 11.5 US and Russia. India growth is estimated at 12.5% for the quarter. The US revenues are likely to fall sequentially due to discontinuation of Allegra D24 and stoppage of Rx Allegra sales. Marginal expansion in gross margins YoY and slower growth in SG&A should result in 33% net profit growth. 0.3 We estimate growth to accelerate for Glaxo in Q1FY12. The recent AIOCD data suggests acceleration in growth above 15%. Further the previous year sales were adversely impacted by non availability of vaccines. Overall we project 16% net sales growth and 13% profit growth as we build in some margin pressure on rising material prices.
Cadila Healthcare CDH IB 940.0 BUY Dr Reddy's Laboratories
12327.5
2887.6
2050.7
10.0
5.5
26.7
10.2
16.8
(2.9)
0.8
53408.8
11880.9
8194.3
39.9
19794.0 DRRD IB 1546.0 BUY GlaxoSmithkline Pharma GLXO IB 2311.6 NEUTRAL Glenmark Pharma 8480.0 GNP IB 310.0 BUY 5865.0
4396.0
2785.0
16.4
(1.9)
(6.5)
(9.2)
17.6
29.3
32.9
92227.8
23837.8
15311.1
90.8
81.4
2053.0
1578.0
18.6
(3.8)
(5.8)
(15.3)
15.6
7.3
13.0
24642.5
8986.1
6636.1
78.3
78.1
2780.0
1911.0
7.1
12.0
16252.9
135.6
21.8
18.8
22.9
36808.2
9551.2
6653.3
24.7
20.0
Glenmark shall report in IFRS and hence YoY comparison is difficult. 23.3 The net profit is boosted by US$25m licensing income. Excluding the licensing income we expect net profit at INR 899m. We expect domestic market growth at 17%. Other branded generic markets are expected to grow between 20-30%. We project Glenmark generic growth at 25% on back of higher revenues from API (assuming sales momentum to continue from Q4FY11). We project EBITDA margins at 22.5% ex licensing income, in line with management guidance of 22-23%. 68.0 We expect Jubilant to register a sequential growth of 2.1% in sales. Jubilant launched generic Aricept in US in Jun 2011. Due to adverse macro-economic environment, we pencil in a marginal decline in EBITDA margins sequentially (29 bps). Jubilant also received milestone payments from Astrazeneca and Endo Pharmaceuticals in 1QFY12. As per the management, the quantum may not be significant. We project India business growth at 17% on a high base last year. (9.1) There are no material launches in the US during the quarter. We see the base effect slowing down growth. There were significant ramp up during Q1FY11 for Lotrel and hence on higher base we expect growth to slow down. Further, as company started reporting net of rebates from Q3FY11, the growth shall be muted for the branded generic business as well. Margins will continue to remain under pressure as a) lotrel pricing has come down and b) there is impact of newly commissioned facilities. The company may book some licensing fees from Salix. 64.7 Ranbaxys performance in the previous quarters were materially impacted by sales of exclusivity products in the US. The impact of exclusivity sales are likely to be very limited in Q2CY11. We project US$18m exclusivity Aricept sales during the quarter. We expect domestic sales growth to accelerate to 20% during the quarter. We project core EBITDA excluding Aricept at INR 1.65bn. We project interest cost of rise materially post the repayment of FCCB during the quarter. The interesting bearing debt is likely to increase by INR 25bn. We expect domestic business to record robust 21% growth YoY. The 0.2 export business growth is aided by the Taro acquisition. We are conservative on upside from Taxotere. The margins in Q1FY11 were boosted by high margin Protonix, Eloxatin sales and lower staff and R&D expense. Hence we expect EBITDA margins to fall substantially YoY. Expect net profit to decline 14% YoY despite addition of Taro.
Jubilant Organ. JOL IB 210.5 BUY Lupin
9128.0
1324.0
697.0
4.4
2.1
0.1
13.0
(7.0)
(15.5)
11.2
50053.4
9830.4
5334.8
33.8
20.1
15221.0 LPC IB 459.0 BUY
3047.0
2056.0
4.6
(2.0)
(2.0)
(9.5)
14.1
7.1
4.7
65596.3
13218.0
8944.1
20.2
22.2
Ranbaxy Laboratories RBXY IB 551.0 REDUCE
20799.0
2307.0
1200.0
2.8
(4.6)
(42.8)
(60.5)
(3.3)
(44.6)
(63.9)
106482.5
24845.9
16496.7
39.2
23.8
Sun Pharma 16879.0 SUNP IB 502.0 NEUTRAL 5333.0 4867.0 4.7 15.3 20.2 9.9 20.6 (13.4) (13.8) 75512.5 24320.9 20941.2 20.2 20.2
Exhibit 18. Power Utilities Anirudh Gangahar & Nishit Jalan

Company (INRmn) Adani Power ADANI IB 109.1 NEUTRAL JSW Energy JSW IB 67.7 REDUCE Lanco Infratech 20060.0 LANCI IB 24.5 BUY NTPC NTPC IB 191.0 BUY Power Grid Corp 23261.0 PWGR IB 109.0 BUY Reliance Power RPWR IB 117.8 REDUCE 4946.0 1342.0 1113.0 0.4 (0.2) (13.8) (40.4) 255.1 1358.7 (43.0) 36354.5 11519.6 9671.4 3.4 2.7 29.4 Expect healthy operating financials for Rosa, driven by a PLF of ~90% in 1QFY12. However, net profit is expected to decline qoq due to oneoffs in 4QFY11 - (1) tax write back, and (2) RoE recovery for previous quarters. Non operating income (treasury gains) could surprise 19615.0 6872.0 1.5 5.4 5.8 (7.9) 24.6 26.7 15.3 103843.8 86930.1 30001.7 6.5 6.6 We expect ~7% sequential growth in transmission revenues, driven (1.4) by higher base of capitalized transmission assets. Expect net profit would be up 15% YoY, but dip 8% qoq largely due to lower non operating income (which could surprise on the upside) 140321.0 33097.0 20740.0 2.5 (4.1) (0.8) (18.3) 8.7 12.3 12.9 646900.6 165892.3 94496.0 11.5 11.8 (2.5) We assume RoE gross-up at MAT rate in 1QFY12 (gross-up was at corporate tax rate). Together with a 6% qoq decline in gross power generation, our forecast implies a ~4% qoq decline in revenues and 18% decline in net profit. YoY EPS growth would appear healthy at ~13% 4428.0 61.0 0.0 (2.4) 11.1 (63.9) (5.6) (25.6) (96.9) 157653.7 44852.1 9706.8 4.0 3.5 We expect a ~11% qoq rise in consolidated EBITDA driven primarily 14.7 by higher power generation at its Kondapalli and Amarkantak facilities. However, post the impact of eliminations of profits from subsidiaries & associates, higher interest and depreciation expense, we see a negligible consolidated net profit for the quarter 11350.0 3211.0 1041.0 0.6 (21.1) (25.9) (48.8) 21.7 (29.0) (65.1) 70773.5 29174.0 14072.3 8.6 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Core EPS Net Core Net Net Core Net sales EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 9228.0 5538.0 2244.0 1.0 7.9 6.5 28.7 161.3 159.8 96.2 FY12 estimates Nomura estimates Core EPS Net sales EBITDA Net profit (INR) 73521.3 45277.7 21852.0 10.0 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments Despite lower PLF (primarily due to planned maintenance shutdown 10.5 (5.0) of 330MW at Mundra-I, backdown issues at 660MW of Mundra-II), we expect ~8% QOQ revenue growth driven by higher effective capacity and greater proportion of merchant sales. Realizations expected to be up 4% qoq, net profit up 28.7% qoq on lower effective tax rate, in our view 7.3 17.9 We expect ~21% sequential decline in revenues due to 1) lower PLF (two-week planned maintenance shutdown at SBU-II) and 2) surprising dip in merchant realizations. Fuel costs continue to remain high, leading to a ~26% qoq decline in EBITDA and a 48.8% qoq decline in net profit
Nomura
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Exhibit 19. Property Aatash Shah

Company (INRmn) DLF DLFU IB 235.0 BUY Godrej Properties 1409.0 GPL IB 770.0 NEUTRAL HDIL HDIL IB 172.6 BUY Puravankara Projects 1620.0 PVKP IB 91.3 BUY Unitech UT IB 36.4 BUY 8375.0 2711.0 1693.0 0.6 (20.6) 29.0 65.2 1.1 (12.2) (5.9) 33499.9 12368.7 7358.0 2.8 3.1 377.0 286.0 1.3 4.4 36.6 69.2 39.3 (3.3) (22.1) 10801.1 3487.0 2737.3 12.8 6.8 4352.0 2280.0 1776.0 4.3 (20.5) (18.4) (10.0) (10.3) (24.4) (24.2) 18808.2 13126.3 6924.9 16.4 29.4 400.0 253.0 3.6 (57.0) (58.2) (57.8) 242.0 2976.9 12.9 8286.6 3569.8 2532.1 36.2 24.6 On a QoQ basis revenues and profits will be lower as in 4QFY11, 47.1 GPL had simultaneously started recognizing revenues on three projects, a scenario which will not occur in 1QFY12. We expect steady margins on a QoQ basis but on a YoY basis margins are expected to expand significantly as higher number of projects under construction have led to operating leverage kicking in (44.2) We expect lower revenues on both a QoQ and YoY basis on account of lower TDR volumes and prices. Also on a QoQ basis we expect lower recognition of revenue from FSI sales. In 4QFY11, the company had recognised INR3bn from FSI sale in Andheri. We expect flat margins QoQ but 10pp lower on a YoY basis due to lower TDR prices and higher costs While we expect better revenue recognition on a YoY basis on higher 87.9 under construction area, margins are likely to be lower as more revenue gets recognized on lower margin projects launched in 2009 and 2010. Margins though are likely to pick up from the 4QFY11 levels which were very subdued on account of one -time cost revisions (7.9) Revenues could be down QoQ as execution still faces challenges in terms of labour and fund availability. Margins should improve sequentially as the company had started recognising revenues on a couple of low margin projects during 4QFY11 which led to very low margins in 4QFY11. On a YoY basis margins could be as much as 700bps lower on account of cost increases Net sales 26612.0 Nomura estimates for quarter ended 30 June, 2011 Q-Q growth (%) Y-Y growth (%) Nomura estimates June, 11 Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 12319.0 4503.0 2.7 (7.3) 44.4 30.5 23.2 10.8 9.6 Net sales 95318.3 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 45549.2 17274.4 10.2 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments 11.5 (11.7) While revenues may be lower QoQ due to seasonal factors, margins will show a much improved picture as DLF had taken a one-time cost increase in 4QFY11. On a YoY basis margins may be lower by 500bps though due to cost increases and change in product mix since then
Exhibit 20. Software & IT services Ashwin Mehta & Pinku Pappan
Company (INRmn) HCL Technologies HCLT IB 503.0 BUY Infosys Technologies INFO IB 2967.3 BUY Patni Computer Systems 8469.0 PATNI IB 342.0 REDUCE Tata Consultancy Services TCS IB 1170.8 NEUTRAL Tech Mahindra 12703.4 TECHM IB 733.5 NEUTRAL Wipro WPRO IB 431.0 NEUTRAL 83865.4 14607.0 12950.8 5.3 1.4 0.9 (5.8) 16.6 4.1 (1.8) 362383.5 71780.4 55709.5 22.8 23.7 (3.8) 1. We expect US$ revenue growth of 2.1% q-q, along with EBIT margin decline of 130bps q-q due to partial impact of wage hikes and SAIC acquisition, in the in IT services division. 2. Net profit decline of 5.8% q-q expected 3. Wipros 2Q FY12 revenue growth guidance would be keenly watched to ascertain impact (if any) of its management restructuring on growth 2524.6 1493.4 11.8 0.7 (2.5) (27.7) 12.1 18.7 3.4 54088.6 10239.9 7018.8 56.6 58.4 105805.3 30093.9 21975.4 11.2 4.2 (2.1) (8.5) 28.8 23.2 17.0 457254.0 134376.5 99818.5 51.0 52.7 1166.4 1111.3 8.3 (0.1) (1.6) (5.8) 8.9 (7.7) (24.6) 33589.7 5711.8 4551.4 34.7 39.1 1. We expect flat US$ revenue growth sequentially (11.2) 2. EBIT margins likely to decline by 20bps sequentially 3. Net profit decline of 5.8% q-q due to lower forex gains. Our estimates for 2Q do not include integration related expenses & any one-off charges related to the Igate deal. We see a downward bias to our margin and EPS estimates. (3.2) 1. We expect US$ revenue growth of 6% q-q, and EBITDA margin dip of 180bps q-q on account of wage hikes 2. Net profit decline of 8.5% q-q expected 3. We believe a key thing to watch out for TCS will be its pricing momentum, where we have detected a distinct moderation in commentary over the past three quarters 1. We expect 2.5% q-q US$ revenue growth and EBITDA margin (3.1) decline of 70bps q-q on account of partial impact of wage hikes 2. Net profit decline of 27.7% q-q, primarily on account of operating margin decline and lower other income 74881.9 22101.8 17289.6 30.1 3.3 (4.9) (4.9) 20.8 12.6 16.2 334641.1 102028.3 79985.5 140.0 Net sales 42577.5 Nomura estimates for quarter ended 30 June, 2011 Y-Y growth (%) Nomura estimates June, 11 Q-Q growth (%) Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 7717.4 4811.7 7.0 4.4 13.4 9.6 24.3 25.7 51.2 Net sales 195600.0 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 34529.3 22108.3 32.2 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments 1. We expect 4.2% q-q US$ revenue growth, and 140bps q-q 31.7 1.7 improvement in EBITDA margin (in-line with management guidance) 2. Net profit growth of 9.6% q-q expected, primarily on account of operating margin improvement 3. Management commentary on FY12 margins will likely be keenly watched. 139.5 0.4 1. We expect US$ revenue growth of 4.6% q-q, and an EBITDA margin decline of 250bps q-q on account of wage hikes 2. Net profit decline of 4.9% q-q expected 3. We expect Infosys to raise FY12 revenue guidance to 21% growth (from 20%) and EPS guidance to INR130 (from INR128)
Exhibit 21. Telecommunications Sachin Gupta, Natarajan Neeraja

Company (INRmn) Bharti Airtel BHARTI IB 400.0 BUY Idea Cellular IDEA IB 82.0 NEUTRAL Reliance Communications 54794.1 RCOM IB 97.7 REDUCE Tulip Telecom TTSL IB 157.3 BUY 6354.7 1858.5 825.0 5.7 (0.4) (0.4) (0.2) 21.0 31.1 28.6 28215.3 8127.5 3550.7 24.5 22.5 8.7 We expect Topline growth of slightly over 20% y-y in 1Q and continued margin improvement from transition to fibre. 17067.2 1809.6 0.9 2.7 7.2 0.5 7.2 4.6 (61.5) 225564.9 78006.8 18836.4 9.1 6.4 42.7 For RCOM, we expect 3% growth in revenues and margins of 31% 44088.5 10889.9 1804.6 0.5 4.1 1.3 (29.0) 20.7 22.6 (11.6) 183248.0 46695.7 8792.5 2.7 2.3 15.4 IDEA's strong execution should continue and we expect revenue growth of ~5%, margins of 24.7%. But we also believe 3G related D&A/interest cost should also come in and impact NPAT. Net sales 167493.4 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 57221.3 14731.1 3.9 3.0 5.0 3.1 36.9 29.6 (26.9) Net sales 699403.7 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 248687.1 75638.2 19.9 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments We look for 3% q-q growth in revenue led by growth in minutes and 20.8 (4.1) moderating pricing pressure domestically, as well as momentum in Africa. We look for some margin improvement to 34%
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Exhibit 22. Transport infrastructure Amar Kedia/ Indrajit Yadav

Company (INRmn) Container Corporation CCRI IB 1138.7 BUY Mundra Port MSEZ IB 157.8 NEUTRAL 5425.0 3720.0 2809.0 1.4 2.6 3.2 (16.1) 33.7 33.0 32.9 29141.6 21082.7 16758.8 8.4 6.3 33.7 Expect port traffic of 17 mn te. No SEZ sales expected. Pick up in port traffic expected to remain muted. Net sales 10009.0 Nomura estimates for quarter ended 30 June, 2011 Nomura estimates June, 11 Q-Q growth (%) Y-Y growth (%) Core EPS Net Core Net Net Core EBITDA Net profit (INR) sales EBITDA profit sales EBITDA Net profit 2235.0 2336.0 18.0 0.6 (4.1) 16.0 9.3 (9.5) 20.7 Net sales 48471.8 FY12 estimates Nomura estimates Core EPS EBITDA Net profit (INR) 13437.1 10792.5 83.0 Bloomberg consensus EPS % diff - Nomura vs (INR) Cons. Comments Expect EXIM volume growth of 5.8% y-y and domestic volume growth 70.5 17.8 of 11.6% y-y. Q-Q Margins are expected to remain stable, though +ve surprise not ruled out due to pick up in exports.
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Analyst Certification
We, Prabhat Awasthi, Nipun Prem and Sanjay Kadam hereby certify (1) that the views expressed in this Research report accurately reflect our personal views about any or all of the subject securities or issuers referred to in this Research report, (2) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of our compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc., Nomura International plc or any other Nomura Group company.
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The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock. Analysts may also indicate absolute upside to target price defined as (fair value - current price)/current price, subject to limited management discretion. In most cases, the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as discounted cash flow or multiple analysis, etc. STOCKS A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral', indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company. Benchmarks are as follows: United States/Europe: Please see valuation methodologies for explanations of relevant benchmarks for stocks (accessible through the left hand side of the Nomura Disclosure web page: http://go.nomuranow.com/research/globalresearchportal);Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology. SECTORS A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months.
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A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.
Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published from 30 October 2008 and in Japan from 6 January 2009
STOCKS Stock recommendations are based on absolute valuation upside (downside), which is defined as (Target Price - Current Price) / Current Price, subject to limited management discretion. In most cases, the Target Price will equal the analyst's 12-month intrinsic valuation of the stock, based on an appropriate valuation methodology such as discounted cash flow, multiple analysis, etc. A 'Buy' recommendation indicates that potential upside is 15% or more. A 'Neutral' recommendation indicates that potential upside is less than 15% or downside is less than 5%. A 'Reduce' recommendation indicates that potential downside is 5% or more. A rating of 'Suspended' indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company. Securities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. Investors should not expect continuing or additional information from Nomura relating to such securities and/or companies. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.
Explanation of Nomura's equity research rating system in Japan published prior to 6 January 2009 (and ratings in Europe, Middle East and Africa, US and Latin America published prior to 27 October 2008)
STOCKS A rating of '1' or 'Strong buy', indicates that the analyst expects the stock to outperform the Benchmark by 15% or more over the next six months. A rating of '2' or 'Buy', indicates that the analyst expects the stock to outperform the Benchmark by 5% or more but less than 15% over the next six months. A rating of '3' or 'Neutral', indicates that the analyst expects the stock to either outperform or underperform the Benchmark by less than 5% over the next six months. A rating of '4' or 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark by 5% or more but less than 15% over the next six months. A rating of '5' or 'Sell', indicates that the analyst expects the stock to underperform the Benchmark by 15% or more over the next six months. Stocks labeled 'Not rated' or shown as 'No rating' are not in Nomura's regular research coverage. Nomura might not publish additional research reports concerning this company, and it undertakes no obligation to update the analysis, estimates, projections, conclusions or other information contained herein. SECTORS A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next six months. A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next six months. A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next six months. Benchmarks are as follows: Japan: TOPIX; United States: S&P 500, MSCI World Technology Hardware & Equipment; Europe, by sector - Hardware/Semiconductors: FTSE W Europe IT Hardware; Telecoms: FTSE W Europe Business Services; Business Services: FTSE W Europe; Auto & Components: FTSE W Europe Auto & Parts; Communications equipment: FTSE W Europe IT Hardware; Ecology Focus: Bloomberg World Energy Alternate Sources; Global Emerging Markets: MSCI Emerging Markets ex-Asia.
Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published prior to 30 October 2008
STOCKS Stock recommendations are based on absolute valuation upside (downside), which is defined as (Fair Value - Current Price)/Current Price, subject to limited management discretion. In most cases, the Fair Value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as Discounted Cash Flow or Multiple analysis etc. However, if the analyst doesn't think the market will revalue the stock over the specified time horizon due to a lack of events or catalysts, then the fair value may differ from the intrinsic fair value. In most cases, therefore, our recommendation is an assessment of the difference between current market price and our estimate of current intrinsic fair value. Recommendations are set with a 6-12 month horizon unless specified otherwise. Accordingly, within this horizon, price volatility may cause the actual upside or
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downside based on the prevailing market price to differ from the upside or downside implied by the recommendation. A 'Strong buy' recommendation indicates that upside is more than 20%. A 'Buy' recommendation indicates that upside is between 10% and 20%. A 'Neutral' recommendation indicates that upside or downside is less than 10%. A 'Reduce' recommendation indicates that downside is between 10% and 20%. A 'Sell' recommendation indicates that downside is more than 20%. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.
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Rpt. 17836023 08-Jul-2011

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Company FundamentalsCompany Fundamentals\Company Profile

A Wright Investors' Service Research Report:

Bharti Airtel Limited

440 Wheelers Farms Road Milford, CT 06461 U.S.A.

Figures in Indian Rupees

Most Recent Qtr Last 12 Months

3.06 % Held by Insiders 67.83%

Phone +91 11 4666-6100/4266-6500 Home Page http://airtel.in

Company Fundamentals\Comparative Business Analysis

A Wright Investors' Service Research Report:

Bharti Airtel Limited

Wright Comparative Business Analysis Report

374 270 184 117

13.356 14.602 14.836 7.020

Singapore Telecommunications Limited Mar 2011

2.51 31.70% 0.66 -10.00% 2.84 2.88% 4.04 28.07%

Singapore Telecommunications Limited 2011

Singapore Telecommunications Limited 2011

Company Fundamentals\Summary Analysis

Per Share- Indian Rupees

Bharti Airtel Limited

Earnings 12 Month Earnings % Per Share Change

77.90 103.70 206.38 381.95 413.13 312.88 312.55 357.40 392.95

3.26 107.2% 5.39 65.1% 98.9% 57.3% 22.8% 16.6%

10.72 16.86 20.70 24.13

15.94 -34.0% 15.94 n/c

Company Fundamentals\Sales Analysis

Figures in millions of Indian Rupees

Bharti Airtel Limited

Sales Amount Year-toin year millions Growth 15,005 n/c

Year 2002 2003 2004 2005

Number 4,500 4,900 5,750

7,827 10,364,512 n/a n/a n/a n/a

25,543 10,575,203 24,538 15,222,138 18,354 22,790,379 n/a n/a

Company Fundamentals\Price Analysis

Per Share- Indian Rupees

Bharti Airtel Limited

High Price 15.850 22.000 40.950 56.000 83.850 94.500 85.375

Low Price 10.325 14.000 18.000 35.000 52.650 57.000 65.425

Closing Price 14.100 19.525 39.725 52.550 77.900 68.275 73.150

70.900 108.175 97.000 103.700 96.250 121.550

183.625 114.900 174.425

485.000 365.050 418.750

4.4% -21.3% -5.2% -15.9% 39.4% -2.0% -0.4% 10.5% 5.5%

6.7% -7.8% -0.1% -34.5% -12.5% 8.8% 14.3% 50.3% 31.7%

Company Fundamentals\Earnings & Dividends Analysis

EARNINGS AND DIVIDENDS ANALYSIS:

Bharti Airtel Limited

Earnings BH 0.03 BG -0.53 BG -0.56 1.58

% Change n/c n/c n/c n/c

2011 (A): (B):

ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS - 2:1 ON 07/24/2009

CHANGE FROM UNCONSOLIDATED TO CONSOLIDATED REPORTS

NAME CHANGED FROM BHARTI TELE-VENTURES LTD IN 2006