Weekly Review

Weekly Review (in Gujrati)

Growth in the 'Pipeline

Pratibha Industries (PIL) engaged in the business of infrastructure development with focus on water supply, sewerage, road construction, etc., is backward integrating into HSAW pipes. This move will result in margins improving from 12.2% in FY 2007 to 13.4% by FY 2009. Further, we estimate PIL’s Net Sales and Net Profit to grow at a CAGR of 45% and 48% respectively, over FY 2007-09E on the back of a robust order book of Rs2,000cr, which gives visibility for the next three years. At the CMP, the stock trades at 10x FY 2009E earnings. PIL, being a mid-size construction company, we have assigned a P/E multiple of 12x FY 2009E earnings, which is at a 30-35% discount compared to its peers like HCC, NCC, etc. We initiate coverage with a Buy recommendation on the stock and Target Price of Rs 288.

Robust order book provides visibility over the next three years

PIL has a robust order book of 7x FY2007 turnover. Of the total order book, 62% of the orders are in the core competence area of the company, which is designing to distribution of water covering laying of pipelines, WTPs, pump house, etc. Urban infrastructure (32%) and Roads (6%) account for the balance portion of the order book. Buoyancy in order book gives visibility over the next three-four years.

Backward integration to improve margins

PIL plans to backward integrate by setting up a HSAW pipe plant with a capacity of 92,000metric tpa at a total cost of Rs81cr. This plant is expected to manufacture 30,000metric tonnes in FY 2008, which will be used for captive consumption. Backward integration will help the company improve margins going ahead.

Maintaining above average operating margins

Operating in a niche business, PIL enjoys higher operating margins of 12%. The HSAW pipe plant will further bolster OPMs.The company has been maintaining these margins due to substantial order inflow, which has been buoyed by a robust infrastructure sector.

Signing JVs to foray into new businesses

PIL is venturing into new businesses by entering into joint ventures (JVs). PIL will be bidding for water tunneling projects in JV with OSTU-STETTIN, the world's number three company in the water tunneling business. The JV will provide access to superior technology required for the specialised water tunneling projects and augment PIL’s margins.

Demand remains strong

We believe that the recent correction in the stock prices of top-tier software stocks across-the-board, including Wipro, represents a buying opportunity for investors, as fundamentally, there has been no major change in the demand for offshoring. This is to a certain extent substantiated by key operating metrics in Q1FY 2008, which reflect strong volume growth despite it being a seasonally weak quarter, improved client metrics, increased expansion of service lines and robust hiring plans.

Continuing to 'String Pearls'

Wipro continues to focus on its acquisition strategy of 'String of Pearls', implying the building of a complete set of services, technology and domain expertise through plugging gaps in its service offerings to offer to potential clients. With its latest acquisition, Infocrossing, Wipro has acquired 11 companies since December 2005, making it by far the most active top-tier software company in the M&A space.

No major impact of US sub-prime concerns

Wipro has traditionally been more technologically intensive vis-à-vis its peers, with its initial focus on Research and Development (R&D) services. Consequently, the banking, financial services and insurance (BFSI) vertical's share in revenues is much lower than peers like TCS and Infosys (23.8% in Q1FY 2008). The share of the US sub-prime market is less than 1% of BFSI revenues, implying a negligible impact.

Valuations attractive post stock under-performance

Wipro has significantly under-performed the Sensex, showing negative returns of 6.8% and 20.6% over a year and year-to-date respectively (+ 33.4% and + 7.8% for the Sensex). We believe that valuations are attractive at current levels.

Valuation

At the CMP, the stock is trading at 17.5x FY2009E EPS. We reiterate a Buy on the stock with a 12-month Target Price of Rs 605.

Performance Highlights

Wireless Business powers Topline, aided by soaring ARPUs:

Reliance Communications (RCOM) recorded a 32.8% yoy and a 9.7% qoq Topline growth in Q1FY2008. This was driven by the Wireless Business unit, which recorded a 38.7% yoy and a 13.6% qoq growth in gross revenues. This business accounted for over 81% of incremental revenues of RCOM on a yoy basis and over 84% on a qoq basis. The company’s mobile subscriber base now stands at 31.9mn, which implies an increase of 3.9mn over the quarter. This is the second-highest ever quarterly addition made by RCOM. This growth comes after a fall of 2.0mn subscribers in the last quarter on account of subscriber disconnections made to comply with the subscriber reverification norms. In fact, due to these disconnections, the company’s average revenues per user (ARPUs) rose significantly this quarter, by 10.0% qoq. On a yoy basis, the fall was just 1.1%. As regards the other segments, the Global Business, which includes longdistance services, carrier-related services and bandwidth capacity sales, grew by a mere 5.6% yoy and by 0.7% qoq. The Rupee appreciation, to some extent, seemingly impacted revenue growth for this business. Revenues per minute continue to witness a secular decline, falling by as much as 37.2% yoy and by 11.2% qoq, even as minutes of usage have soared by an impressive 68.2% yoy and by 13.4% qoq. As for the Broadband Business, this segment clocked a strong 68.8% yoy and a 16.5% qoq growth during the quarter.

Margins continue to surge, at par with Bharti Airtel:

RCOM recorded an impressive 580bp yoy margin expansion on account of operating leverage and cost management. Even on a qoq basis, EBITDA margins rose by 82bp. With this performance, RCOM’s EBITDA margins are now at par with those enjoyed by industry leader, Bharti Airtel.

Bottomline steams ahead on margin expansion, forex gains:

Due to the margin expansion and forex gains (Rs204.2cr), RCOM witnessed a surge in Bottomline by over 138% yoy and by 19.2% qoq during the quarter.

Wireless Business continues to witness robust growth

During Q1FY2008, RCOM recorded a 32.8% yoy and a 9.7% qoq growth in Topline. The key growth driver for this performance was the Wireless Business, which grew by 38.7% yoy and by 13.6% qoq. At the end of June 2007, RCOM had a total of 31.9mn mobile subscribers on its network, recording net adds of 3.9mn over the quarter, giving it an incremental share of 19.6% of industry net adds over the period. The company has clearly made a strong comeback since March, when it had to disconnect 5.6mn subscribers to comply with the subscriber re-verification norms. In June, RCOM added its highest-ever monthly subscriber additions, at over 1.45mn. The company remains the second-largest wireless operator in the country, with a total marketshare of 17.6% (up from 17.4% in March). As far as average revenues per user (ARPUs) are concerned, these saw a spurt of 10.0% qoq to Rs375.5 per user per month on a blended basis (Rs341.3 per user per month in Q4FY2007). On a yoy basis, the fall was not that significant, at just 1.1%. This was primarily due to the low base effect of the last quarter, when RCOM reported a 2mn fall in subscribers over the quarter. Thus, even as the subscribers who were generating negligible revenues have been cleaned out from the company’s network, its other customers and new additions to the network continue to generate revenues at a strong pace, leading to the quarterly spike in ARPUs. However, we believe that this is just a temporary phenomenon and that ARPUs will resume their downward trend going forward.

Outlook and Valuation

RCOM has out-performed our Topline estimates by 5.7%, while the out-performance on the Bottomline front has been a significant 21.3%. EBITDA margins also exceeded our estimates by 42bp. The company’s mobile subscriber base at the end of June has been slightly above our projections, while ARPUs have also been higher than our estimates. Going forward, we expect RCOM to record a 35.7% CAGR growth in Topline over FY2007-09E, while Bottomline CAGR growth is expected to come in at 48.4%. We expect operating leverage to drive a strong 410bp margin expansion over this period. At the CMP, the stock trades at 16.4x FY2009E EPS and an EV/subscriber of US $358.2 on our FY2009E mobile subscriber base. Given the strong growth expected in mobile subscribers and visibility on various initiatives such as the global listing of FLAG Telecom and hiving off of the tower business, there remain significant upside triggers for stock price movement. We maintain a Buy on the stock, with a revised 12-month Target Price of Rs 627.

Q1FY2008 Result Update

Performance Highlights

Net Interest Income up 16%:

ICICI Bank reported a healthy 16% growth in Net Interest Income (NII) to Rs1,714cr (Rs1,475cr). The growth in revenue was on the back of a 35% growth in Advances. Interest Income of the Bank jumped by around 50% yoy to Rs7,566cr (Rs5,038cr), while Interest Expenses increased 64% to Rs5,852cr (Rs3,563cr).

Strong growth in Non-Interest Income:

ICICI Bank’s non-interest income grew by around 70% to Rs1,715cr (Rs1,011cr), which included treasury gains of Rs195cr and sell down gains from sale of investments in its venture capital arm. The share of non-interest income in total income remained firm at 50%, where fee and commission income grew 35% yoy to Rs1,428cr (Rs1,055cr). The Bank also booked a loss on amortisation of premia for Rs235cr.

Net Profit grows 25% in line with expectation:

During Q1FY2008, ICICI Bank clocked a 25% growth in Net Profit to Rs775cr (Rs620cr) as against our expectation of Rs761cr. We believe that the treasury gain have turned out be a major savior for the Bank in terms of growth in Net Profit. However, we believe post deployment of the capital raised into the business, profitability of the Bank would improve.

NIMs under pressure:

ICICI Bank’s net interest margins (NIMs) were under pressure during Q1FY2008 on the back higher cost of funds. The Bank has high-cost bulk deposits in its books, which resulted in depressed margins. The Bank’s NIMs slipped 20bp yoy and 36bp qoq to 2.3%. The decline in margins was also on account of the lower share of low-cost deposits or CASA. The Bank’s share of CASA deposits for the period under review stood at 22%. We believe that with the addition of 200 branches to the existing 950 branches during the period will fructify and help improve margins towards Q4FY2008.

Outlook and Valuation

During Q1FY2008, the Bank managed to deliver a good performance despite cost pressures and deteriorating asset quality. The impact of higher cost of funds is expected to continue to depress NIMs during FY2008 however, there might be an improvement in margins towards Q4FY2008. On the flip side, it will be quite important to keep a watch on the Bank’s asset quality. We maintain a positive outlook on the stock over the longer term and maintain our full-year estimates. At the CMP of Rs970, the stock trades at 21.0x and 2.2x FY2009E EPS of Rs46 and Adjusted Book value of Rs 432, respectively. We maintain a Hold on the stock with a target Price of Rs 1100.

Performance Highlights

Net Interest Income up 59%: During Q1FY2008, LIC Housing Finance’s (LICHF) clocked a 33% yoy growth in Interest Income to Rs442cr (Rs332cr), whereas Interest Expenses moved up 31% to Rs338cr (Rs256cr). Net Interest Income (NII) of the company grew 59% to Rs104cr (Rs76cr). This growth in NII was backed by a strong 18% growth in loans and improved spreads.

Improved Interest Spreads: LICHF’s Interest Spreads improved 7bp sequentially to 1.4% (1.3%). This improvement in spreads was seen on the back of a 40bp improvement in the yield on loans to 10.0%, while cost of funds improved 33bp to 8.6%. The company’s interest spreads moved up 43bp from 0.9% in the previous year. However, Net Interest Margins (NIMs) declined sequentially by 10bp to 2.4% (2.5%), while it has improved by 62bp yoy from 1.7%. We maintain our FY2008 estimate for NIM at 2.5%

Net Profit grew 25%: LICHF’s Net Profit for Q1FY2008 rose 25% to Rs47cr (Rs38cr). Increase in the effective tax rate and higher provisions restricted the Bottomline growth. Hence, we believe that Bottom-line growth in FY2008 will be muted at Rs288cr (3.2%). Moreover, we can expect positive surprises on the bad loan recovery front.

Increase in Tax rate: During Q1FY2008, the effective tax payout of the company increased to 25% (12%). For FY2008, the company’s effective tax rate will stand increased from 20% to 26% on the back of reduction in tax benefit on Special Reserves from 40% to 20%.

Higher provision on loans: During Q1FY2008, LICHFL created provision on housing loan of Rs35cr (Rs21cr), up 66% yoy on the back of the historical trend of higher NPAs in the first quarter.

In line growth in Disbursements: Home loan portfolio grew in line with our expectations, moving up 18% yoy to Rs18,185cr (Rs15,393cr). Sanctions and Disbursements grew 16% and 12% to Rs1,156cr (Rs993cr) and Rs1,222cr (Rs1,080cr), respectively. The sluggish growth witnessed in Sanctions and Disbursements was seasonal in nature and would improve going forward.

Fixed Deposit scheme to contain cost of funds: The company has initiated its maiden Fixed Deposit scheme to mobilise funds. This is in line with the company’s strategy to contain its cost of funds and maintain margins. During Q1FY2008, the company mobilised close to Rs10cr.

Asset quality: LICHF’s Asset quality was under pressure following an increase in Gross NPAs to Rs 739cr (Rs585cr), i.e., up at 4.1% (3.8%). Sequentially, Gross NPA increased by 144bp from 2.58% in Q4FY2007, which was disappointing. While the Net NPAs ratio improved to 2.6% (3.0%) on the back of improvement in the provision coverage to 36% (21%) during the period. Higher NPAs are more of a historical trend in the first quarter. However, going forward, we believe that LICHF’s recovery policy would facilitate an improvement in its asset quality and would be one of the key factors for a re-rating of the stock on the bourses going ahead.

Outlook and Valuation

Considering seasonality of the housing finance business and historic trends of the first quarter having higher NPAs, the company’s performance for the period under review was in line with expectation. Going ahead, the company would focus on improving its asset quality and NIMs. We maintain a positive outlook on the company and expect a 20% growth in its home loan portfolio in FY2008, and around 3.2% growth in Bottomline. At the CMP of Rs214, the stock trades at 5.7x and 1.0x FY2009E EPS of Rs38 and Adjusted Book Value of Rs220. We maintain a Hold on the stock with a target price of Rs 220.

Angel Broking has maintained buy recommendation on Infosys Technologies with a 12-month target price of Rs 2,220, revised downwards by nearly 5%.

Performance Highlights

Q4FY2007 :

For Infosys, Q1FY2008 was a virtual repeat of Q4FY2007 in terms of the company witnessing strong volume growth and an up-tick in pricing on the positive side, but with a strong Rupee on the negative side. Topline for the quarter was flat, recording a rise of just Rs 10 million to Rs37.73 billion. This was the case, even as volumes grew at an impressive 7.0% qoq (6.3% qoq onsite, 7.2% qoq offshore) and blended billing rates rose by 1.0% qoq (1.4% qoq onsite, 1.0% qoq offshore). Consequently, revenues in Dollar terms (IT Services) grew at an impressive 8.1% qoq. The Rupee appreciation impacted Topline adversely by Rs 2.87 billion. Assuming there was no impact, Topline growth in Rupee terms would have been 7.6% qoq. On a yoy basis, Rupee revenues witnessed a 25.1% growth.

Rupee movements, salary hikes and visa costs hammer Margins:

During Q1FY2008, Infosys recorded a significant 300bp fall in EBITDA Margins. An appreciating Rupee, as also salary hikes and higher visa costs combined impacted this variable. Employee costs, as a percentage of sales, rose to 54.4% (51.0% in Q4FY2007), while Overseas travel expenses rose to 4.7% of sales (3.9% in Q4FY2007). Thus, Development expenses rose to 57.5% of sales (53.6% in Q4FY2007). Scale benefits through lower SG&A costs provided some relief, reducing to 13.7% of sales this quarter, including employee costs (14.7% in Q4FY2007).

Other Income rockets up, enabling marginal growth in Bottomline:

Infosys recorded a marginal 0.8% qoq rise in its Bottomline this quarter, to Rs 10.28 billion (excluding extraordinary items) despite the EBITDA Margin contraction. This was mainly on account of significantly higher other income (up 112.6% qoq). Forex gains amounted to Rs 680 million (Rs 50 million loss in Q4FY2007).

Robust trend in volume growth, pricing continues

During Q1FY2008, Infosys recorded impressive volume growth of 7.0% qoq, including 6.3% qoq onsite and 7.2% qoq offshore volume growth. On a yoy basis, onsite volumes witnessed a 30.2% growth, while offshore volumes grew by 33.3% yoy. This signifies continuing strength in the business environment for offshoring. Dollar revenues (IT Services) witnessed an impressive 8.1% qoq growth (7.8% qoq onsite, 8.4% qoq offshore), while yoy, the growth was an outstanding 39.6% (38.9% yoy onsite, 40.4% yoy offshore), indicating no let-up whatsoever in core business volumes.

Adds gross 7,004 employees in Q1, to add 26,000 in FY2008, attrition at 13.7%

Infosys added a gross of over 7,000 employees during the quarter, while on a net basis, the figure was 3,730. The company plans to add a gross 26,000 employees for the fiscal, including over 10,000 employees in Q2FY2008. The attrition rate for Infosys, on a trailing 12-month (TTM) basis, stood at 13.7%, the same level as in Q4FY2007.

Raises forex hedges to USD 925 million

Infosys has increased its forex hedges to USD 925 million from USD 470 million at the end of FY2007 on account of the strong appreciation seen in the Rupee. This was necessary, given the pressure on realisations that the company has seen in recent times due to currency fluctuations.

Hikes offshore salaries by 12-15%, onsite salaries by 6%

As has been customary for Infosys in Q1 of each fiscal year, the company raised salaries by 12-15% for its offshore staff and by 6% for its onsite staff. This was one of the factors that pressurised EBITDA Margins in the quarter, with employee costs as a percentage of sales increasing to 54.4% (51.0% last quarter). Visa expenses (Overseas travel expenses) also increased to 4.7% of sales, vis-à-vis 3.9% in Q4FY2007.

Client data continues to impress

Infosys’ client mining abilities continue to impress. The number of clients in the USD 1 million-plus revenue basket now stands at 285 (275 in Q4FY2007, 221 in Q1FY2008). As many as eight clients now give the company annual revenues in excess of USD 80 million compared to just four at the end of FY2007 and three at the end of Q1FY2007. This is a clear indication that Infosys’ impressive client mining continues and the steady expansion of its service lines is helping it successfully get a greater share of its clients’ IT budgets. The company added a gross of 35 clients during the quarter and its active client base now stands at 509.

Outlook and Valuation

Infosys under-performed our Topline estimates for Q1FY2008 by 2.1%, while on the Bottomline front, there has been an out-performance to the tune of 1.3% (excluding extraordinary items). On the EBITDA Margin front, the company’s margins were in line with our estimates at 28.7%. We believe that the business momentum for offshoring remains strong. Major operating metrics such as strong volume growth, upward billing rate trends and expansion of service lines have continued to play out this quarter as well. This is also borne out by the fact that Infosys has raised its Dollar revenue guidance for FY2008 by around 1%, even as the Rupee guidance has been revised downwards. Thus, even as this quarter has been difficult for Infosys (the second successive quarter when the company has missed its guidance) and is likely to be so for the other top-tier software companies as well, over the longer term, we believe that the story remains intact. We expect Infosys to record a 26.1% CAGR growth in Topline over FY2007-09E, while Bottomline is expected to record a 19.4% CAGR growth in the mentioned period. EBITDA Margins, on the other hand, are expected to steadily decline over the period to hit 29.0% vis-à-vis 31.6% in FY2007. We have downgraded our Topline projections for FY2008 and FY2009 by a significant 10.2% and 8.6% respectively, on account of a lower Rupee rate taken for our forward numbers (Rs40.50 for FY2008, Rs39.80 for FY2009). The EPS has been downgraded by 5.0% for FY2008 and by 7.4% for FY2009. On the EBITDA Margin front as well, our revised margin picture factors in 100-150bp decline from our original estimates. At the CMP of Rs 1,930, the stock trades at 20.0x FY2009E EPS. We maintain our Buy recommendation on the stock with a 12-month Target Price of Rs 2,220, revised downwards by nearly 5%.

Flat Topline growth for the quarter:

ABG Shipyard posted a flat growth in Topline to Rs 1.931 billion (Rs 1.928 billion) for Q4FY2007. Topline was flat as revenue was booked on percentage completion method and on delivery of vessels. Building of four vessels is nearing completion and is expected to be delivered in the next quarter.

Decline in Operating margins:

The company recorded a decline of 89bp in OPM to 25.7% for Q4FY2007. OPM fell as a result of higher expenditure due to one-time payment of octroi for the Surat shipyard.

Q4FY2007 Net Profit increases by 6.7%:

Bottomline increased by 6.7% to Rs 330 million (Rs 309 million). Net Profit Margin expanded by 105bp to 17.1%. Higher Other Income, which rose by 31% and lower provision of taxes by 50%, resulted in the improvement in Bottomline.

Strong Order book size:

ABG Shipyard’s order book has grown at 85% over the last one year. The company’s current order book size is worth Rs 40.74 billion of which the unexecuted order book size is to the tune of Rs 32.20 billion giving revenue visibility for the next three-four years. The order book comprises diverse mix of vessels catering to various sectors with major contribution from the offshore segment (around 45%). Of the current order book, export orders account for around 75% vis-a-vis a 62% a year ago.


Orders bagged during the quarter:

ABG secured a repeat order from Gujarat Ambuja Cements (GACL) for the construction of bulk cement carriers at a price of USD 9.9 million (Rs 450 million). GACL currently owns seven vessels all built by ABG Shipyard in the past. This will be 8th vessel built for GACL by ABG Shipyard.The company bagged a major order from M/s Pacific First Shipping Pte, Singapore for 12 vessels of which the order is for the construction of nine AHTS vessels and three dry bulk carriers. Total value of the order is Rs10.305 billion with the last vessel to be delivered in December 2009. With this, the company has started accepting orders for its upcoming Dahej Shipyard where vessels up to 120,000dwt can be constructed. The company secured a repeat order for the construction of tug at a price of USD 13.5 million (Rs 600 million) from Lamnalco Limited, Cyprus. This is the 12th ship order from Lamnalco Limited, Cyprus to ABG Shipyard.

Acquisition during the quarter:

ABG Shipyard has signed a Memorandum of Understanding (MoU) for the acquisition of Vipul Shipyard situated adjacent to the company's existing shipyard at Magdalla Port in Surat, Gujarat. Post this acquisition, the company would be able to increase its capacity by about 25% from its
current 32 vessels built on modular basis to 40 vessels. This acquisition will aid the company to reduce the lead time for the expansion which otherwise would have taken around 24 months. The company has acquired the Shipyard at the right time to take advantage of the growth in the shipbuilding activities. This acquisition will facilitate optimal use of resources in the company's existing shipyard and new facility to synergize productivity and achieve economies of scale. The company would incur Rs 1 billion towards the cost of acquisition and modernisation of Vipul Shipyard, which would be funded through internal accruals.

FY2007 Performance

Robust Revenue growth:

ABG Shipyard posted a yoy revenue growth of 30% to Rs 7.044 billion (Rs 5.417 billion) for FY2007. The huge growth was seen as a result of capacity expansion done at the Surat shipyard. EBIDTA margin for FY2007 stood at 27.7% (26.0%). This improvement was seen on the back of better operating efficiencies due to a more streamlined production process and modular shipbuilding process. Going ahead, we expect the company to sustain the operating margin at 26-28% levels.

Net Profit zoomed by 39%:

The company reported 39% Net Profit growth yoy for FY2007 to Rs 1.163 billion (Rs 837 million) on the back of robust topline growth and improved operating performance.

Outlook and Valuation

The company expects to sustain growth given the competitive advantage it has in terms of project management, lower design costs, cheap skilled labour available and its capability to set up a large facility at a lower cost which is evident from the current acquisition of Vipul Shipyard. At the CMP, the stock trades at 10.8x FY2008E and 7.9x FY2009E fully diluted Earnings of Rs 37.1 and Rs 50.4, respectively. We remain positive on the company’s growth prospects. We maintain a Buy on the stock. We have upgraded our 12-month Target Price to Rs 520, giving a 30% upside from current levels.

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Strategy

Angel Broking report on ABG Shipyard:

Investment Argument

Increased capacity to drive growth:

ABG Shipyard has done expansion at its existing Magdala yard, which now enables the company to simultaneously construct around 27 vessels on modular basis. Apart from this, the company is also doing a Greenfield expansion at Dahej, Gujarat. This shipyard, once completely functional will be able to built vessels up to 120,000 dwt and will be able to construct about 20 vessels per annum. The yard is expected to be completely operational by December-2008.

Orderbook on a high growth trajectory:

Riding on the robust demand for vessels, the company has witnessed a 20.5% CAGR of orderbook size over the period Q3FY2006 to Q1FY2008E (till 13 April, 2007). The existing orderbook of Rs 4,074cr is 5.67 times the revenues of FY2007E, which gives good visibility of revenues for the next 3-4 years. The last vessel to be delivered in the current orderbook is in FY2011.

FY2009 Revenue estimates revised upwards:

ABG Shipyard bagged repeat order from Lamnalco group for a value of Rs 60cr and Cyprus based Essar Shipping and Logistics Ltd. for a value of Rs 618cr. On back of these orders, we have revised our Revenue estimates for FY2009E from Rs 1399.4cr to Rs 1506.5cr and Net Profit estimates for FY2009E from Rs 231.3cr to Rs 248.9cr.

Valuation

At CMP, the stock trades at 10.0x FY2008E and 7.6x FY2009E on fully diluted Earnings of Rs 37.4 and Rs 48.9, respectively. Given the attractive valuation and robust growth, we continue to remain positive on the company's growth prospects and hence continue to maintain a Buy on the stock. We have upgraded our 12-month Target Price to Rs 500, giving a 34% upside.

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