1

Market Outlook India Research

September 13, 2010

Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

Dealer’s Diary The market cut gains after hitting a 31-month high at the onset of the trading session. Stocks came further off highs in mid-morning trade. A bout of volatility was witnessed in early afternoon trade as the key benchmark indices came off lows. The market held the positive zone in afternoon trade before surging in mid-afternoon trade, as European stocks and US index futures moved into the green from red. The market cut gains, soon after hitting a fresh 31-month high in late trade. The Sensex and Nifty closed with gains of 0.7% and 0.6%, respectively. BSE mid and small-cap indices gained 0.7% and 0.3%, respectively. Among the front liners, M&M, SBI, HDFC Bank, ICICI Bank and Tata Steel gained 2–3%, while Cipla, Tata Motors, Reliance Infra, ACC and Sterlite Industries lost 1–2%. Among mid caps, BASF India, Whirlpool, Coromandel International, Sigrun Holdings and KEC International gained 6–10%, while Shree Global Trading, MVL, Indraprastha Gas, Gammon Infra and Radico Khaitan lost 3–20%. Markets Today The trend deciding level for the day is 18764 / 5632 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18859 – 18918 / 5656 - 5671 levels. However, if NIFTY trades below 18764 / 5632 levels for the first half-an-hour of trade then it may correct up to 18705 – 18610 / 5616 - 5593 levels.

Indices S2 S1 R1 R2

SENSEX 18,610 18,705 18859 18918 NIFTY 5,593 5,616 5656 5671

News Analysis

Indosolar IPO opens on September 13, price band Rs29–32/share Ispat Industries - Management Meet Note IRS 2Q2010 Analysis - Print Sector Update

Refer detailed news analysis on the following page.

Net Inflows (September 07, 2010) Rs cr Purch Sales Net MTD YTD

FII 2,650 2,449 201 2,940 62,322

MFs 883 529 354 600 (15,514)

FII Derivatives (September 09, 2010)

Rs cr Purch Sales Net Open

Interest

Index Futures 1,560 1,348 212 19,055

Stock Futures 1,507 1,036 472 38,190

Gainers / Losers

Gainers Losers

Company Price (Rs)

chg (%)

Company Price (Rs)

chg (%)

KSK Energy 177 6.5 GSPL 116 (2.4)

Bank of India 488 5.5 Ashok Leyland 72 (2.2)

Ispat Ind 21 5.2 Madras Cem 113 (1.8)

Godrej Ind 244 5.1 IndusInd Bank 235 (1.8)

Aditya Birla Nuvo 871 4.8 Petronet LNG 111 (1.7)

Domestic Indices Chg (%) (Pts) (Close)

BSE Sensex 0.7% 133.0 18,800

Nifty 0.6% 32.2 5,640

MID CAP 0.7% 54.3 8,051

SMALL CAP 0.3% 33.2 10,249

BSE HC -0.2% (9.1) 5,679

BSE PSU 0.7% 73.8 10,053

BANKEX 2.2% 278.0 12,984

AUTO 0.2% 17.2 9,097

METAL 0.4% 65.9 16,131

OIL & GAS -0.3% (27.7) 10,175

BSE IT 0.2% 14.1 5,664

Global Indices Chg (%) (Pts) (Close)

Dow Jones 0.5% 47.5 10,463

NASDAQ 0.3% 6.3 2,242

FTSE 0.1% 7.5 5,502

Nikkei 0.8% 73.8 9,098

Hang Seng 0.4% 78.4 21,167

Straits Times 0.4% 10.9 3,022

Shanghai Com -1.4% (38.9) 2,656

Indian ADRs Chg (%) (Pts) (Close)

Infosys 0.8% 0.5 62.33

Wipro 1.0% 0.1 13.22

Satyam -0.4% (0.0) 5.23

ICICI Bank 0.9% 0.4 45.64

HDFC Bank 1.0% 1.6 168.56

Advances / Declines BSE NSE

Advances 1,556 705

Declines 1,408 657

Unchanged 89 41

Volumes (Rs cr)

BSE 5,160

NSE 15,246

September 13, 2010 2

Market Outlook | India Research

Indosolar IPO opens on September 13, price band Rs29–32/share Indosolar Ltd. will be accessing the capital market with an initial public offering (IPO) of Rs357cr through the 100% book building process. The IPO price band has been fixed between Rs29 and Rs32 per equity share of face value Rs10 each. The issue opens on September 13, 2010, and closes on September 15, 2010. The issue proceeds would be deployed to finance the expansion of its solar photo-voltaic (SPV) cell manufacturing capacities by adding a third line of 100MW. Indosolar manufactures poly-crystalline SPV cells from silicon wafers utilising the crystalline silicon SPV cell technology. The company’s products are primarily sold to module manufacturers on a business-to-business (B2B) platform, who in turn supply the competed modules to system integrators for its final assembly in solar PV installations for grid and off-grid (roof top) applications. Indosolar’s clientele are spread across the domestic market as well as markets in Europe, Spain, Japan, Asia, Canada and US. Operations commence backed by robust order book: Indosolar commenced the manufacture of SPV cells from its first line of 80MW capacity from July 2009 and has commissioned an identical second line of another 80MW capacity from March 2010. Total capacities as on date are at 160MW. Data sourced from the RHP indicate that the company has been able to achieve a run-rate of ~6MW per month for the past four months (i.e., April 2010–July 2010), despite having a monthly operational capacity of over 13MW. Order book as on July 31, 2010, was at Rs1,012cr and pertains to delivery of ~170MW of SPV cells. Use of proven technology; tie-up with Schmid: The crystalline silicon SPV cell technology used by Indosolar to manufacture PV cells has been tested and commercially implemented by major PV players and accounts for more than 93% of the global PV manufacturing capacity. The production lines have been procured from Schmid, one of the world leaders in PV technology, whose clients include REC and Moser Baer PV. Under the contract, Schmid is mandated to provide operational efficiency of 15.5% within six months of commercial production. The tie-up also entitles the company to free transfer of any improvement in technology within five years of installation of the facility, free of cost. Financials impacted by high manufacturing cost: For the year ended March 31, 2010, Indosolar booked sales revenue of ~Rs113cr (19.38 MW of SPV sold) and incurred manufacturing costs of ~Rs132cr. Total expenditure including depreciation and interest add up to ~Rs198cr, resulting in a loss of over Rs66cr for FY2010. Fixed assets as on March 31, 2010, stood at ~Rs663cr, while net current assets stood at ~Rs25cr. Debt in books was at Rs543cr. The resultant net worth of ~Rs144cr translates into a book value per share of Rs6.78 per share as against the face value of Rs10. Losses incurred during FY2010 had wiped out ~32% of the company’s net worth. Heavily dependent on government subsidies: The high cost of solar PV installations makes it necessary for the industry to be heavily dependent on government subsidies. Political or market changes may result in significant reductions or eliminations of subsidies or economic incentives, such as a more accelerated reduction of feed in tariffs (FIT) than planned. German subsidies are expected to decline at a rate of 5% to 6.5% p.a., while Italy is contemplating FIT to decline by 6% every four months in 2011 and a further 6% in the two years thereafter. Spanish markets, which incidentally were the largest for PV products during 2009, had already collapsed on account of a subsidy decline for budget-tightening purposes. The subsidy cuts across the globe would adversely impact the new solar PV installation and would result in a renewed bout of pricing pressure.

September 13, 2010 3

Market Outlook | India Research Outlook and valuation: Indosolar is a relatively new entrant to the solar PV business and is yet to demonstrate its capabilities in managing raw material and other manufacturing costs. FY2010 has been the initial year of operations during which the company incurred losses of over Rs66cr on sales of ~Rs113cr. Though the robust order book of ~Rs1,012cr provides revenue visibility in the medium term, we do not have clarity on the company’s EBITDA and profitability margins embedded in the current order backlog. Over 80% of the order book is derived from European markets, where the declining FIT has the potential to trigger downward pricing pressures, going forward. Given the volatile global demand for PV products and the limited operating history of the company, ascribing a valuation multiple to Indosolar seems challenging at this point of time. P/BV seems to be the most conservative basis on which companies such as Indosolar can be valued vis-a-vis their global peers. At the lower price band of Rs29 per share, the implied P/BV would be ~1.94 compared to the average P/BV of 1.0 for its global peers. The company’s total capacity as on date stands at 160MW. Annual production for FY2011 is expected to be 90–100MW. Despite having low capacity utilisation rates, Indosolar is planning to add a third line of 100MW capacities at a capital cost of over Rs337cr. Post the ramp up in capacities by FY2012, Indosolar would emerge as one of the largest Indian manufacturers of PV solar cells, which would enable the company to exploit the domestic opportunities unfolding in the Indian solar PV space. We recommend Neutral on the IPO. Ispat Industries - Management Meet Note We met management of Ispat Industries. Key takeaways of our meeting are as follows: Joint venture with Stemcor to set up a coke oven plant: Ispat has entered into a JV (Amba River Coke) with Stemcor for setting up a 1mn tonne coke oven plant at a cost of Rs1,124cr. Ispat holds 26% equity stake & the balance is held by Stemcor. The project will be funded through debt-equity ratio of 2:1 and is yet to achieve the financial closure. Ispat’s equity contribution will be Rs100cr (Rs50cr will be through land and infrastructure support and balance Rs50cr through cash infusion). Once commissioned, the plant will cater to 100% coke requirement of the company. 110MW power plant to lead to cost savings: Ispat under its subsidiary, Ispat Energy, is setting up 110MW captive power plant (CPP) comprising of two units of 55MW each. The plant will primarily use gases from coke oven and blast furnace. Land for the project has been acquired and the civil work has also started. Total cost of the project is expected to be Rs491cr and the company expects savings of Rs1,300cr post commissioning of the power plant. Captive raw material holds the key for future performance: Ispat has already secured the prospecting license for developing iron ore mines in Maharashtra. The management expects to start mining in FY2012 and targets iron ore production of 2mn tonnes. The company in a JV with Essar Steel, Mukand, Kalyani Steel and Ind Synergy has also been allotted Behrabad (North) coking coal block in Madhya Pradesh. The mine has reserves of 170mn tonnes, with Ispat’s share being 76mn tonnes. Outlook and Valuation: At the CMP, the stock is trading at P/BV of 1.4x and EV/EBITDA of 7.8x FY2010. We believe that future stock performance would be dependent upon improvement in raw material integration and successful commissioning of the power and coke oven plants.

September 13, 2010 4

Market Outlook | India Research IRS 2Q2010 Analysis – Print Sector Update Key Takeaways Four of the top 10 dailies witness declines: According to the IRS 2Q2010 survey, the top 10 order in print media remains largely unchanged. However, Dainik Jagran, Dainik Bhaskar, Amar Ujala and Mathrubhumi have registered a 0–2% ror decline in their readership. Dainik Jagran and Dainik Bhaskar, although securing the top positions amongst Hindi dailies, witnessed ror declines of 2.4% and 0.2%, respectively. TOI remains the undisputed leader, DNA is the surprise package: Out of the 20 English dailies, 14 dailies showed growth in AIR figures, with Times of India (TOI) retaining its leadership position reporting an AIR of 7.1mn in 2Q2010. Hindustan Times (HT) reported an AIR of 3.5mn, posting a marginal dip from the 1Q2010 survey, but retained its second position, followed by The Hindu with an AIR of 2.2mn. DNA put up an impressive show, registering 16.6% growth in its AIR. Hindi dailies show mixed trend, Dainik Jagran remains the leader: Among Hindi publications, Dainik Jagran retained its No. 1 position with AIR of 15.9mn, while competitors Dainik Bhaskar and Hindustan reported AIR of 13.3mn and 10.1mn, respectively. Incidentally, Hindustan is the only newspaper to have witnessed growth amongst the top three Hindi dailies with readership growth of 2.3% ror. Our Universe Jagran Prakashan – Dainik Jagran registered a 2.4% ror decline in its AIR to 15.9mn, but retained its leadership position in its home market of Uttar Pradesh (UP). The daily reported a 0.8% ror increase in its readership in Delhi and NCR region, but lost ground in Bihar and Punjab. HT Media (HTML) – HTML put up a good show across all its publications (HT, Hindustan and Mint), with Hindustan registering a 2.3% ror increase in readership, while HT and Mint reporting flat readership. Deccan Chronicle – Deccan Chronicle put up a strong show, adding 33,000 more readers and reporting AIR of 1.2mn, growth of 2.5% ror, primarily aided by readership growth in its home market in Andhra Pradesh and increasing footprints in the Bangalore market.

September 13, 2010 5

Market Outlook | India Research

Economic and Political News

IPO norms for non-life insurance companies in three weeks: IRDA

Food inflation rises to 11.47% from 10.86%

IIP grows 13.8% yoy in July 2010

Govt to introduce two new CPI indices for tracking inflation by January 2011

Corporate News

Lanco Infra achieves financial closure of 1,320MW project

Kotak Realty invests Rs250cr in Emaar MGF projects

Emami, Marico join fray for Paras Pharma

Power Grid's Rs8,000cr FPO to hit street in November

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

September 13, 2010 6

Market Outlook | India Research Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com

DISCLAIMER

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546

Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302

Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059. Tel : (022) 3952 4568 / 4040 3800