Investment Management

Project Report On
Plausible Investment Portfolio of Any Investor

Submitted to Dr. Raju Indukuri

Submitted By SecC2DE/Group4 Sahil Malhotra Sanchit Kumar Vaibhav Garg Anuj Bindlish Anshul Jain 2010195 2010199 2010279 2010288 2010297

Client Information
Name: Mrs. Nidhi Poddar Age: 29 Years Sex: Female Marital Status: Married Birthdate:14th jan 1981 Profession: Teaching Services

Financial Background
Assets: House: 35lak Land: 8 laks Teaching Institute:40 lak Car: 15lack Other deposits: 2lak Total Assets 100lak Loans: Car loan :5 lacks House loan:15 laks Other short and medium term loans:3.5 laks Loan Amount 23.5lacks

Investment History
Invested Money: Rs.80.00 lacs Returns in Past: Average Annualized Return of 20% Past Investment Type: Realty market (immoveable properties such as Land, etc.), Mutual Funds, Stocks, Insurance, Deposits, etc.

Investment Interest
Preferred Type of Investment : Gold, Stocks, Commodities and Mutual Funds.

Investment Objectives
Accumulation of assets and liquidity for future

Risk Taking Ability

Medium

Duration of Investment
More than five years, long term investment 3-5 years ,medium term investment Short term investment-six months-2years

Preferred Sectors
Pharmaceutical, real estate, Information Technology , Gold, banking sectors

Size of Investment Rs . 08.00 lacks in total over a period of time

Economic Analysis
Quick Overview
INDIA'S MACROECONOMIC INDICATORS
INDICATORS 2005-06 2006-07
947.0

2007-08
1231.0

2008-09
1222.0

2009-10
1317.0

2010-11
1529.0#

GDP (at 837.2 current prices, US$ bn) GDP Growth 9.5 (at constant prices, %) Agriculture & 5.2 allied Industry 9.3 Services 11.1 Sectoral Share in GDP (%) Agriculture & 18.1 allied Industry 27.9 Services 53.9 Inflation rate 4.4 (WPI, annual avg. %) Gross Fiscal 4.1 Deficit ( % of GDP) Exchange Rate 44.3 (Rs/US$, avg.) Exchange Rate 53.9 (Rs/Euro, avg.) Exports (US$ 103.1 bn) % change 23.4 Im ports (US$ 149.2 bn) % change 33.8 Trade Balance -46.1 (US $ bn) Services 57.7 Exports (US$ bn) Software 23.6 Exports ( US$ bn) Services 34.5 Im ports (US$ bn) Services 23.2 Balance ( US$ bn) Current -9.9 Account Balance ( US$ bn) CAB as -1.2 percentage of

9.7

9.2

6.7

7.4e

8.5#

3.7 12.7 10.2 17.2 28.7 54.2 5.4

4.7 9.5 10.5 16.4 28.8 54.8 4.7

1.6 3.9 9.8 15.7 28.0 56.3 8.3

0.2e 8.5e 9.3e 14.6e 28.5e 56.9e 9.9 ( Mar '10)

4.5# 9.7# 8.9# 9.97 ( Jul '10)

3.5

2.7

6.0e

6.7e

45.3 58.1 126.4 22.6 185.7 24.5 -59.3 73.8

40.2 57.0 163.1 29.0 251.7 35.5 -88.5 90.3

45.9 65.1 185.3 13.6 303.7 20.7 -118.4 101.7

47.4 67.1 178.7 -3.6 286.8 -5.6 -108.2 93.8

46.81 (Aug 26) 59.45 (Aug 26) 50.8 (Apr-Jun) 32.7 ( Apr-Jun)^ 83.0 (Apr-Jun) 34.2 ( Apr-Jun)^ -32.3 (Apr-Jun) -

31.3

40.3

46.3

49.7

44.3

51.5

52.0

59.6

29.5

38.9

49.6

34.2

-9.6

-15.7

-28.7

-38.4

-1.1

-1.3

-2.4

-2.9

GDP (%) Forex Reserves (US$ bn) External Debt (US $ bn) External Debt to GDP Ratio (%) Short Ter m Debt / Total Debt (%) Total Debt Service Ratio (%) Foreign Investment Inflows (US$ bn) FDI ( US$ bn) GDRs/A DRs (US$ bn) FIIs (net) (US$ bn) FDI Outflow s (US$ bn) (Actual)

151.6

199.2

309.7

252.0

277.0

282.8 (Aug 13)

139.1 17.3 14.1

172.4 18.2 16.3

224.4 18.1 20.4

224.5 20.5 19.3

261.5 18.9 20.1

10.1

4.7

4.8

4.6

5.5

21.5

29.8

62.1

21.3

69.6

10.4 (Apr-Jun)

9.0 2.6 9.9 6.1

22.8 3.8 3.2 13.1

34.8 6.6 20.3 18.7

35.2 1.2 -15.0 16.2

37.2 3.3 29.0 10.3

5.8 (Apr-Jun) 1.0 (Apr-Jun) 3.5 (Apr-Jun) -

Memo Items:
Global GDP (% change) World Merch. Trade (Vol., % change)

2006
5.1 8.8

2007
5.2 6.5

2008
3.0 2.4

2009e
-0.6 -11.8

2010P
4.6 8.0

2011P
4.3 6.2

Source: Economic Survey, Various issues; Union Budget, RBI Monthly Bulletin, Annual Report & Weekly Statistical Supplement; Ministry of Finance; Ministry of Commerce & Industry; CSO; Institute of International Finance (IIF); EIU; NASSCOM; WEO, IMF. e estimates; - Not available; ^ Growth over corresponding period of previous year. P Projections. # PM Economic Advisory Council's projections. Note: (a) Debt-service ratio is the proportion of gross debt service payments to External Current Receipts (net of official transfers). (b) Short term debt coverage increased beginning with the quarter ended March 2005, with the inclusion of (i) suppliers' credits up to 180 days and (ii) investment by Foreign Institutional Investors (FII) in short-term debt instruments.

Economy vis--vis Industry Outlook

TELECOM: The tide has once again turned in favor of telecom companies, reeling under the
impact of intense competition and rock-bottom tariffs. Most frontline operators have raised tariffs in the past few weeks which should gradually help stabilize their existing 2G operations .Besides, the lure of 3G services is strong given the rapidly rising sales of smart phones and tablets. This may help valuation of telecom operators rise once again after a two year lull. Currently TELECOM sector contributes 2.1 % of GDP.
Banking: banking Industry is highly influenced by the inflation and it reflects to economic and financial scenario of a country. Banking stocks though reflect the true sentiment of the market yet it is highly dependent on the monetary policy of a country. Rising in inflation tends to increase the interest rate which adversely reflects on the stock prices. Though the stocks are highly volatile at this juncture, in the long run when the inflation is tamed, we will see a rise in the stock. The future of the industry is also bright as per recent reports which predict that the Indian Banking industry would be third largest by 2025 and also expansion in the rural areas will help banks to foray into untapped market giving rise to its profitability. As our investor has a outlook of four to five years in future we strongly recommend Banking stocks for his portfolio as it would not only help him to be part of the success story but also help him make money by investing.

Indian Infrastructure Brief Overvie w The strong level of economic growth achieved in India in recent years has led to an expansion of industry, commerce and per-capita income, which, in turn, have fuelled the demand for infrastructure services. India is one of the largest and most dynamic infrastruct ure and project finance markets in the world with the total number of project based Special Purpose Vehicles (SPVs) at around 800, according to Ratings Agency Fitch. India's infrastructure financing requirements and the new manufacturing policy being fina lised will open up US$ 1 trillion opportunities for global investors over the next five years, according to Economic Affairs Secretary R Gopalan. The infrastructure sector accounts for 26.7 percent of India's industrial output. Indian Infrastructure Size and Growth The investment in infrastructure is expected to increase to 8.37 per cent in the final year of the 11th Plan and likely to touch 10 per cent of GDP in the 12th Five Year Plan (2012-2017). With the increasing investment, the share of private sector in the total investment on infrastructure has increased rapidly. The contribution of private sector in total infrastructure investment in each of the first two years of 11th Plan (2007-2012) was around 34 per cent. This is higher than the 11th Plan target of 30 per cent and 25 per cent achieved in 10th Plan period. It is expected to rise to 36 per cent by the end of 11th Plan and 50 per cent during the 12th Plan (2012-2017). The government has played a pivotal role in making Indian infrastructure sector an attractive investment destination for both domestic and foreign players. Steps taken by the government such as - opening up the sector to private players, liberalising foreign investment norms and huge spending on projects like National Highway Development Project (NHDP), National Maritime Development Programme (NMDP) et all- have given a stupendous impetus to the sector in the past few years. India's infrastructure sector output grew 5.3 percent in May from a year earlier, slightly higher than an annual growth of 5.2 percent in April, according to government data. During April-May, output rose 4.9 percent from 7.9 percent a year ago.

Indian Roads India built about 1,800 kilometres (km) of roads in the fiscal year 2010-11. The government has announced constructing 35,000 km of highways by 2014 for which it has estimated an investment of over US$ 67 billion. A major chunk of this is expected from the private sector. During 2010-11, 50 road projects of 5,060 km were awarded, while around 15,450 k ms of national highways have been completed under the NHDP until March 31, 2011. Also, the Road Transport and Highways Ministry has requested the World Bank for financing the projects that include conversion of 20,000 km of state highways into national highways, besides upgrading 17,000 km of the latter. Seven projects involving widening of roads in five states were approved by a panel in the Finance Ministry at an estimated cost of US$ 1.69 billion and will be built under public-privatepartnership (PPP) mode. The Public Private Partnership Appraisal Committee (PPPAC) chaired by R Gopalan, Secretary of Department of Economic Affairs, granted the approvals, according to the official statement. Meanwhile, the Indian government will award a record 7,300 km of road building contracts in 2011 worth about US$ 12 billion, said J.N. Singh, member finance at National Highways Authority of India (NHAI). Indian Ports India is going global with its maritime ambitions. The government is setting up Indian Ports Global a dedicated company like Dubai Port International and Singapore's PSA International that will invest and acquire stakes in overseas ports and container terminals. To begin with, the cash-rich port trusts that are owned by the government will pump in US$ 556 million into India Ports Global, which will initially act as the shipping ministry's investment arm. The company will then leverage this amount to raise another US$ 1 billion from the market by issuing tax-free bonds, officials involved with the initiative said. The capacity of Indian ports during 2010-11 crossed 1 billion tonnes per annum. Foreign direct investment (FDI) inflow into ports has been

registered at US$ 1.64 billion from April 2000 to April 2011

Power Generation:

The Eleventh Plan (2007-12) called for the addition of 78,000 MW of power from all sources. It is unlikely that this target will be realised, though a late surge during the past few years has resulted in the rapid addition of generating capacity. It is envisioned that the final capacity addition at the end of the Eleventh Plan will be somewhere between 60,000 and 65,000 MW. The Twelfth Five-Year Plan (2012-17) is even more ambitious, calling for the addition of over 100,000 MW of power. Planners are confident of realising this target given that the policy reforms of the Electricity Act would have had time to play out, leading to greater private sector participation is concerned. Indeed, private sector participation in power generation is expected to increase from 10% during the Eleventh Plan to 34% during the Twelfth plan. Thus while the government is heavily investing in ramping up the capacities of the state-owned National Thermal Power Corporation (NTPC) and the National Hydro Power Corporation (NHPC), which until now were the predominant thermal and hydro power producers, respectively, power sector liberalisation has led to a rapid increase in the number of private-sector players and a resultant decrease in the share of power produced by state-owned enterprises.

Health Services: There is a saying whether economic downturn or upturn when people are sick they would still visit a doctor. This is an industry which is not affected by the economic scenario hence we can say that it is a defensive stock. Indian health industry is highly untapped and it has a lot of scope for expansion beyond tiered one city where it is concentrated at present. The healthcare sector, anticipated to reach USD 75 billion by 2012 is expected to grow at 7.4 per cent. The healthcare industry would continue to lead 13 industry sectors in the country in generating new jobs in 2011, a Ma Foi Randstad Employment Trends survey said.

Oil and Gas: Market linked pricing of petrol has helped oil and gas companies to reduce their losses which has in turn helped them to have a good steady performance in their stock prices. This industry is highly dependent on exploration and refining which demand high initial cost. There is lot of risk involved in these explorations because there is high uncertainty in initial finding and actual realization of the quantity of oil or gas finding in the field. Though there is high cost there is also high incentive involved as India is a energy hungry country and much of demand is met by imports. The refineries are dependent upon imports from Gulf countries and are highly dependent upon international crude prices. We have seen lots of efforts from the Government in ensuring the profitability of these companies and deregulation of prices. As our investor is not risk averse we recommend him to include these stocks in portfolio as they are high return stocks.

Industry Analysis
This analysis makes an investor aware of all happenings in the industry or sector for example, IT, Banking, Automobile, etc, which would be helpful in understanding future functioning and performance of specific industries and respective companies. In specific following are the important areas where an investor or analyst can get an idea of the industry environment after doing a qualitative industry analysis Stages of Industry Life Cycle Prices of the products and services Demand and Supply Condition New Investments Level of competition Regulatory environment

Herfindahl index The Herfindahl index is a measure of industry concentration. It was developed to provide an alternative measure of the relative market control of the largest firms to that found with the fourfirm and eight- firm concentration ratios. The Herfindahl index is named after Orris C. Herfindahl, the economist first credited with using it to analyze industry concentration. However, upon further review, another economist, Albert O. Hirschman, was found to have used this index earlier. As such, it is often termed the Herfindahl- Hirschman Index. The Herfindahl Formula The formula for calculating the Herfindahl index (HI) is: HI = (Share 1)^2 + (Share 2)^2 + (Share 3)^2 + ... + (Share n)^2

We would look the analysis as I. Why did we chose the following industry

Pharmaceuticals
The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (around 330 in the organised sector). The top ten companies make up for more than a third of the market. The Indian pharma industry grew by a robust 17% YoY in 2009 to '401 bn (approx. US$ 8.5 bn). It accounts for about 1% of the world's pharma industry in value terms and 8% in volume terms. Indian pharma companies also have a large chunk of their revenues coming from exports. While some are focusing on the generics market in the US, Europe and semi-regulated markets, others are focusing on custom manufacturing for innovator companies. Biopharmaceuticals is also increasingly becoming an area of interest given the complexity in manufacture and limited competition. The R&D spend of the top five companies is about 5% to 10% of revenues. Some Indian companies entered into collaboration and partnership agreements with innovator companies, others have out-licensed their molecules for milestone payments. Hiving off R&D units into separate companies has also become a preferred option for many Indian pharma players. That said, given that the research pipelines of Big Pharma are drying up, they have now begun to dabble in generics. In this regard, these innovator companies are either buying out Indian firms or are forging alliances with them. Key Points Supply Higher for traditional therapeutic segments, which is typical of a developing market. Relatively lower for lifestyle segment. Demand Very high for certain therapeutic segments. Will change as life expectancy, literacy increases. Barriers to entry Licensing, distribution network, patents, plant approval by regulatory authority.

Bargaining power of Distributors are increasingly pushing generic products to earn higher margins. suppliers Bargaining power of High, a fragmented industry has ensured that there is widespread competition in customers Competition almost all product segments. (Currently also protected by the DPCO). High. Very fragmented industry with the top 300 (of 24,000 manufacturing units)

players accounting for 85% of sales value. Consolidation is likely to intensify.

FY10 In the domestic market, FY10 was a decent year for the pharmaceutical industry with most of the top players managing to clock a double-digit growth. Continuing with the trend last year, MNC companies did well during FY10/CY09 too. On an average, they were able to clock topline growth in the range of 10% to 13%. On the margin front, performance was mixed. While GSK Pharma and Novartis witnessed an expansion in operating margins, Aventis and Pfizer witnessed declines. Aventis was impacted by the termination of the agreement with Novartis Vaccines for the sale of the anti-rabies vaccine 'Rabipur'. Prospects In the longer run, domestic companies would face fresh competition from MNCs, as they would make aggressive new launches. However, the latter would most likely be subject to price negotiation. Drugs having estimated sales of over US$ 108 bn are expected to go off patent between CY09 and CY13. With the governments in the developed markets looking to cut down healthcare costs by facilitating a speedy introduction of generic drugs into the market, domestic pharma companies will stand to benefit. The life style segments such as cardiovascular, anti-diabetes and anti-depressants will continue to be lucrative and fast growing owing to increased urbanisation and change in lifestyles. Growth in domestic sales in the future will depend on the ability of companies to align their product portfolio towards the chronic segment. Contract manufacturing and research (CRAMS) is expected to gain momentum going forward. India's competitive strengths in research services include English-language competency, availability of low cost skilled doctors and scientists, large patient population with diverse disease characteristics and adherence to international quality standards. As for contract manufacturing, both global innovators and generic majors are finding it profitable to outsource production. Although there has been a considerable slowdown in this area, the scenario is expected to improve going forward as the pressure to prune c osts increases. The efforts of global innovators to entrench in the domestic market intensified with Abbott Laboratories buying out the domestic formulations business of Piramal Healthcare. Thus, with Daiichi also having acquired a majority stake in Ranbaxy, 2 of the top 3 players in the Indian market are MNCs.

Herfindahl index-The present Herfindahl index is 0.07

Cement
The Indian cement industry is the 2nd largest market after China. It had a total capacity of about 260m tonnes (MT) in FY10. Consolidation has taken place with the top five players alone controlling over 60% of the total industry capacity. However, the balance capacity still remains quite fragmented. Despite the fact that the Indian cement industry has clocked production of more than 100 MT for the last five years, registering a growth of nearly 9% to 10%, there exists tremendous scope for growth in the Indian cement industry in the long term. Considering the government's thrust on infrastructure long term demand remains intact. Given the high potential for growth, quite a few foreign transnationals have been eyeing the Indian markets and are planning to acquire domestic companies. Already, while companies like Lafarge, Heidelberg and Italicementi have made a couple of acquisitions, Holcim has increased stake in domestic companies Ambuja Cements and ACC to gain full control. The global players put together account for a quarter share of the domestic market. During the first half of FY11, UltraTech Cement merged itself with Samruddhi Cement to become the largest cement company in the country. Considering the long term growth story, fair valuations, fragmented structure of the industry and low gearing, another wave of consolidation would not come as a surprise. Key Points Supply Demand The demand-supply situation is tightly balanced, supply being marginally higher. Housing sector acts as the principal growth driver for cement. However, recently industrial and infrastructure sectors have also emerged as demand drivers. Barriers to entry High capital costs and long gestation periods. Access to limestone reserves (key input) also acts as a significant entry barrier. Bargaining power Licensing of coal and limestone reserves, supply of power from the state grid etc are of suppliers all controlled by a single entity, which is the government.

Bargaining power Cement is a commodity business and sales volumes mostly depend upon the of customers distribution reach of the company. However, things are changing and few brands have started commanding a premium on account of better quality perception. Competition Intense competition with players expanding reach and achieving pan India presence.

FY10 In FY10 the industry added nearly 50 MT of capacity taking the total capacity to nearly 260 MTPA. While the demand was steady during the fiscal, average industry realisations (average price per bag of cement) witnessed a modest growth. The growth in realisations slowed down as additional capacities coming on stream resulted in oversupply. Owing to the general economic slowdown financial institutions tightened their credit norms. This led to a credit crunch and impacted upcoming real estate, infrastructure and other projects. With that, demand for cement moderated. However, stimulus packages announced by the government and agricultural income gave a fillip to the demand for the commodity. Prospects The cement industry is likely to maintain its growth momentum and continue growing at around 8% to 9% in the medium to long term. Government initiatives in the infrastructure sector and the housing sector are likely to be the main growth drivers. During the first half of FY11, a series of huge capacity expansions (through the brownfield or greenfield route) against a corresponding poor offtake in cement demand due to subdued construction activity created excess supply, thus putting downward pressure on realisations. This has been coupled with significant rises in input costs, especially prices of coal and petroleum products. As a result, both the topline and bottomline have been badly hit. Good agricultural income will support demand for the commodity despite slowdown in the real estate sector. The importance of the housing sector in cement demand can be gauged from the fact that housing sector consumes almost 60%-70% of the country's cement. In the Budget 2010, the government increased the excise duty from 8% to 10% on cement and clinker. However, the government has also increased budgetary allocation for roads under NHDP. Further, with more incentives being spelled out for the infrastructure and housing sector, cement manufacturers will continue to benefit. The budget measures such as increasing excise duties have proved to be futile and in the future too, we believe that it is the market dynamics that will determine these variables. Going forward, we believe the government's initiatives in the infrastructure and housing sectors are likely to be the main drivers of growth for the industry in the long run.

Herfindahl index-The present Herfindahl index Is 0.062

Automobile
The Indian automobile segment can be divided into several segments viz. two-wheelers (motorcycles geared and ungeared scooters and mopeds), three wheelers, commercial vehicles (light, medium and heavy), passenger cars, utility vehicles (UVs) and tractors. Demand is linked to economic growth and rise in income levels. While the industry is highly capital intensive in nature in case of four-wheelers, capital intensity is a lot less for two-wheelers. Though threewheelers and tractors have low barriers to entry in terms of technology, four wheelers is technology intensive. Costs involved in branding, distribution network and spare parts availability increase entry barriers. With the Indian market moving towards complying with global standards, capital expenditure will rise to take into account future safety regulations. As compared to their global counterparts, both the two-wheeler as well as four wheeler segments are relatively lesser fragmented. Foreign majors are eyeing the Indian market. As a result, pricing power is likely to diminish going forward. Automobile majors increase profitability by selling more units. As number of units sold increases, average cost of selling an incremental unit comes down. This is because the industry has a high fixed cost component. This is the key reason why operating efficiency through increased localization of components and maximizing output per employee is of significance. Key Points Supply The Indian automobile market has some amount of excess capacity. Demand Largely cyclical in nature and dependent upon economic growth and per capita income. Seasonality is also a vital factor. Barriers to entry High capital costs, technology, distribution network, and availability of auto components. Bargaining power of suppliers Low, due to stiff competition. Bargaining power of customers Very high, due to availability of options. Competition High. Expected to increase even further. FY10 A total of 9.4 m two-wheelers were sold in India in FY10, a growth of a strong 27% over the previous year. Motorcycles accounted for 78% of the total two wheelers sold. Although economic growth came in

much below than 9%, low interest rate, availability of credit and a low based effect helped two wheeler sales to grow strongly. The 3-wheeler segment also performed well as domestic volumes improved 26% YoY, led by 31% growth in passenger carriers. The goods segment on the other hand grew more than 11%. The medium and heavy commercial vehicles (M/HCVs) segment saw its volumes grow by a huge 34%. This came on the back of 37% drop in volumes in the previous year, the industrys second in eight years. High cost of borrowings and economic slowdown affected growth in FY09, the reversal of these factors helped growth in FY10. LCVs on the other hand, outperformed their HCV peers as LCVs volumes increased at an even better rate of 43%. The growth in the segment was largely propelled by low tonnage vehicles of the likes of Ace, the sub one tonner from Tata Motors. Domestic volumes grew by 32% for tractors as against a marginal growth in the previous year. Sales of passenger vehicles increased by 26% in FY10, primarily due to availability of finance and low interest rates. Utility Vehicles also logged in a strong growth of 21% in FY10. Prospects The government spending on infrastructure in roads and airports and higher GDP growth in the future will benefit the auto sector in general. We expect a slew of launches in the Segment 'B' and Segment 'C' of passenger cars. Utility vehicle segment is expected to grow at around 8% to 9% in the long-term. In the 2-wheeler segment, motorcycles are expected to witness a flurry of new model launches. Though the market size is expected to grow by 10% to 12%, competitive pressure could keep prices and margins under control. TVS, Honda and Hero Honda are poised t o benefit from higher demand for ungeared scooters in the urban and rural markets. Riding the wave of structural changes taking place in the country, the tractor industry has registered good growth in FY10 despite sub-par monsoons. The longer-term picture is impressive in light of poor mechanisation levels in the countrys farm sector and the thrust of the government on improving rural infrastructure. With an estimated 40% of CVs plying on the roads 10 years old, demand for HCVs is expected to grow by 7% to 8% over the long term. The privatisation of select state transport undertakings bodes well for the bus segment.

Indian Automobile Industry has seen a phenomenal growth in the past 20 years and is one of the core industries of the growing Indian Econo my. This has happened due to a lot of positive factors like

Friendly and favorable government economical policies Rise in Agriculture and Industrial Output Rise in per capita income (individual) Better Roads and Infrastructure leads to higher Auto demand Rising Middle Class and Working Class ( higher buying power) Availability of Easy Finance Schemes for purchasing Automotive

By 2016 the size of the Indian automobile industry is expected to grow by 13%, to reach a mark of USD $ 120-159 billion. Presently, India is the 2nd largest two wheeler market in the world and fourth largest commercial vehicle market worldwide. India is the 11th largest market in the passenger car segment globally which is expected to become the 7th largest market by 2016. Indian Economy is growing at a rate of little over 8.5% GDP and is expected to do even better in the time to come. Along a rising economy, rising middle class income, rising purchasing power, easy finance options at low interest rates, all together is going to provide substantial growth to this sector by boosting demand for both two wheelers as well as four wheelers. This makes the Indian Automotive sector one of the most promising sector to invest from the Indian Economy and Stock Market. Be with this sector for few years to come and you will make money.

Herfindahl index-The present Herfindahl index is 0.141

Banking
Influenced by the global financial turmoil and repercussion of the subprime crisis, the global banking sector has been witness to some of the largest and best known names succumb to multi-billion dollar write-offs and face near bankruptcy. However, the Indian banking sector has been well shielded by the central bank and has managed to sail through most of the crisis with relative ease. Having said that, the latent demand for credit (both from the food and non food segments) and structural reforms have paved the way for a change in the dynamics of the sector itself. Besides gearing up for the compliance with Basel II accord, the sector is also looking forward to consolidation and investments on the FDI front. Public sector banks have been very proactive in their restructuring initiatives be it in technology implementation or pruning their loss assets. While the likes of SBI have made already attempts towards consolidation, others are keen to take off in that direction. On the liabilities side, with better penetration in the semi urban and rural areas the banks garnered a higher proportion of low cost deposits thereby economising on the cost of funds. Apart from streamlining their processes through technology initiatives such as ATMs, telephone banking, online banking and web based products, banks also resorted to cross selling of financial products such as credit cards, mutual funds and insurance policies to augment their fee based income. Key Points Supply Liquidity is controlled by the Reserve Bank of India (RBI).

Demand India is a growing economy and demand for credit is high though it could be cyclical.

Barriers

to entry Licensing requirement, investment in technology and branch network.

Bargaining power of suppliers High during periods of tight liquidity. Trade unions in public sector banks can be anti reforms. Depositors may invest elsewhere if interest rates fall.

Bargaining power of customers For good creditworthy borrowers bargaining power is high due to the availability of large number of banks

Competition High- There are public sector banks, private sector and foreign banks along with non banking finance companies competing in similar business segments. FY10 After a difficult FY09 Indian banks managed to grow their balance sheets in FY10 albeit at a lower average rate than that projected by the RBI. The monetary stimuli (reduction in repo rate, cash reserve ratio (CRR) and statutory liquidity ratio (SLR) offered to the banks by the RBI early in the fiscal made it easier to sustain margins. Indian banks grew their advances and deposits by 16.9% YoY and 17.2% YoY respectively in FY10. The growth was mainly driven by a expansion in low cost deposits and growth in agricultural and large corporate credit.. In the retail portfolio, while home loans grew by 11% YoY, personal loans enjoyed a much smaller growth of 6% YoY due to bank's reluctance towards uncollateralized credit. Credit card outstanding in fact dropped by 27% YoY. Indian banks, however, enjoyed higher levels of money supply, credit and deposits as a percentage of GDP in FY10 as compared to that in FY09 showing improved maturity in the financial sector. Despite poor pricing power, lower cost of funds helped Indian banks grow their net interest margins in FY10. While few like ICICI Bank chose to reduce their balance sheet size, most entities chose to reasonably grow their franchise as well as assets. Some PSU banks may witness some capital infusion from the government in FY11. Prospects With banks having complied with Basel II and having sufficient capital in their books; it will be a challenge to deploy the same safely and profitably in the event of persistence of economic slowdown. Banks are likely to concentrate more on non funded income in this scenario. Banks, especially the private sector ones, are likely to face penetration concerns. The lack of credit penetration and the geographic concentration of bank credit is evident from the fact that 5 states having the highest proportion of per capita credit enjoy 55% of the total credit disbursals in the country. RBI's roadmap for the entry of foreign banks and the acquisition of stake by the foreign entities in India n private banks has been deferred for the time being. However, the tussle for higher market share in the already fragmented sector is only set to aggravate.

The proposal for Cabinet's approval to allow PSU banks to bring down the government's stake in the m below the stipulated 51%, which is yet to be tabled, can help the bank raise substantial capital without borrowing at high rates and give the entities an opportunity to enhance their capital adequacy ratios besides competing with their private sector peers.

Banking industry is said to be a mirror of an economys health. A Sound banking system serves as a significant trade enabler to the country. During the recent global crisis, Indian banking industry came out with flying colors on the back of stringent stipulations laid down the Central bank. With the opening up of the sector in early Nineties by the government, the industry ha s received a significant boost by the emergence of the private sector banks which increased competitiveness and enhanced the level of banking facilities to a top notch level. However, during the recent global recession, even the lagging public sector banks have made a big come back on the back of large up gradations to suit the hi-tech services provided by the private sector and foreign banks. For a sustained economic growth for the country, unmatched banking and financial services is a must in order to facilitate the increasing need of swift and hassle- free transactions. Banking sector is an enabler to the economic growth. The credit growth has picked up over the last few months and is expected to remain strong with improved economic conditions and pick-up in corporate demand. The interest rates are also expected to go up in the short term which favors banks. Loans are reprised immediately. Therefore, the net interest margins (NIM) are likely to go up. A higher NIM along with loan growth results in improved earnings in the medium to long terms. So it is sensible o invest in banking industry. Herfindahl index-The herfindalh index is 0.034.

Telecom
India's teledensity has improved from under 4% in March 2001 to around 53% by the end of March 2010. Cellular telephony has emerged as the fastest growing segment in the Indian telecom industry. The mobile subscriber base (GSM and CDMA combined) has grown from under 2 m at the end of FY00 to touch 584 m at the end of March 2010 (average annual growth of nearly 76% for mobile subscribers during this ten year period). Tariff reduction and decline in handset costs has helped the segment to gain in scale. As far as broadband connections (>=256 kbps) are concerned, India currently has a subscriber base of 8.8 m. Broadband connection base has grown at an average annual growth rate of 40% since 2008. The auction for broadband wireless license and spectrum has concluded recently. The government is expected to allocate spectrum before the end of this year. This will further boost the broadband penetration in the country. Key Points Supply Intense competition has resulted in prompt service to the subscribers. Demand Given the low tariff environment and relatively low rural and semi urban penetration levels, demand will continue to remain higher in the foreseeable future across all the segments. Barriers to entry High capital investments, well-established players who have a nationwide network, license fee, continuously evolving technology and lowest tariffs in the world. Bargaining power of suppliers Improved competitive scenario and commoditisation of telecom services has led to reduced bargaining power for services providers. Bargaining power of customers A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers.

Competition Competition has intensified with the entry of new cellular players in circles. Reduced tariffs have hurt all operator

FY10 FY10 saw the continuance of strong growth for the Indian telecom market, which witnessed a 45% YoY increase in its subscriber base during the 12-month period. At the end of March 2010, the country's total telecom subscriber base (fixed plus mobile) stood at about 621 m. The tele-density level stood at about 53% by the end of the fiscal. Growth remained robust in the GSM mobile space. GSM added 87 m subscribers during the year. After a strong 50% YoY increase in subscriptions during FY09, the GSM industry recorded another good performance during FY10, growing subscriber base by 22% YoY to about 479 m. During FY10, India's mobile subscriber base grew by 49% YoY, from 392 m to 584 m, while the fixed subscriber base declined by about 3%, from 37.9 m to about 36.9 m. Prospects As far as the fixed line business goes, the low penetration levels in the country and the increasing demand for data based services such as the Internet will act as major catalysts in the growth of this segment. The PSUs will however continue to retain their dominant position. This is on account of high capital investments required in setting up a nationwide network. Increasing choice and one of the lower tariffs in the world have made the cellular services in India an attractive proposition for the average consumer. The segment's subscriber base has grown by over 49% YoY in FY10. As per Pricewaterhouse Coopers, India's mobile subscriber base is expected to exceed 1 bn by 2014 and will be driven by additions in the rural areas. India's rural tele-density for mobile subscribers currently stands at 32.7%. During FY10, the Government completed the auction of 3G as well as the Broadband Wireless Access (BWA) spectrum auctions. The final price for a pan India 3G spectrum stood at a whopping '16,751 crores. As a result, there was no single operator with a pan India license. During the year the Telecom Regulatory Authority of India (TRAI) also proposed new guidelines for charging spectrum fee and for mergers and acquisitions in the sector. Mobile number portability (MNP) which allows subscribers to switch networks without changing the number has lead to an increase in churn in the sector with each operator vying for subscriber attention to their own networks. In addition to this, the government has allocated 3G spectrum later during the year. The operators have started rolling out 3G services in almost all circles and are growing at good pace.

The Indian steel industry has witnessed steady growth, on the back of various initiatives taken by the Government of India. The soaring demand from different sectors, such as, infrastructure, real estate and automobile has put the steel industry in India on the world map. Some of the growth drivers helping the sector to grow are:

Abundant availability of iron ore in the country with states such as Orissa, Jharkhand and Chhattisgarh are rich in iron ore reserves. The National Minerals Development Corporation (NMDC) plans to expand its iron ore production capacity from its existing capacity of 30 million tonnes per annum (MTPA) to 50 MTPA by 201415 through the capacity expansion of current mines as well as by setting up new mines.

The country has well established facilities for the production of steel.

Market Size Steel industry is of great significance to the economic growth of the country. India has been ranked the worlds fifth largest producer of crude steel in 2009 and is projected to become the worlds second largest producer by 20152016, with a production volume of 54.5 million tonnes (MT). Various states have signed around 222 memorandums of understanding (MoUs), with a projected capacity of about 275.7 MT and an investment of more than US$ 229 billion. The Eleventh Five Year Plan (20072012) has allocated investments worth US$ 490 billion for the infrastructure sector, comprising power, roads, highways, railways, ports, airports, mining and irrigation. Steel giants such as JSW Steel and Tata Steel are investing to enhance the capacities of products such as TMT bars (rebars) and many more. Government Initiatives

The Indian Government has laid more importance on infrastructure development in the Union Budget 2011. This would help in development of highways, ports, power projects, bridges and others, which will therefore increase the demand for steel.

With effect from May 24, 1992 steel industry was incorporated in the list of high priority industries for automatic approval for foreign equity investment up to 51 per cent. This limit has since been increased to 100 per cent.

Import duties on key steel- making raw materials, comprising of mineral products, ores and concentrates have seen noteworthy reductions in successive budgets during the last few years.

The government introduced special economic zones (SEZs) in June 2005, with the plan of creating internationally competitive regions. Steel plants operating in SEZs receive some advantages like tax holiday; they can freely source inputs domestically or externally without any specific approval or duty payable. Herfindahl index-The present Herfindahl index is 0.13215

Steel Industry:
The Indian steel industry has witnessed steady growth, on the back of various initiatives taken by the Government of India. The soaring demand from different sectors, such as, infrastructure, real estate and automobile has put the steel industry in India o n the world map. Some of the growth drivers helping the sector to grow are:

Abundant availability of iron ore in the country with states such as Orissa, Jharkhand and Chhattisgarh are rich in iron ore reserves. The National Minerals Development Corporation (NMDC) plans to expand its iron ore production capacity from its existing capacity of 30 million tonnes per annum (MTPA) to 50 MTPA by 201415 through the capacity expansion of current mines as well as by setting up new mines.

The country has well established facilities for the production of steel.

Market Size

Steel industry is of great significance to the economic growth of the country. India has been ranked the worlds fifth largest producer of crude steel in 2009 and is projected to become the worlds second largest producer by 20152016, with a production volume of 54.5 million tonnes (MT). Various states have signed around 222 memorandums of understanding (MoUs), with a projected capacity of about 275.7 MT and an investment of more than US$ 229 billion. The Eleventh Five Year Plan (20072012) has allocated investments worth US$ 490 billion for the infrastructure sector, comprising power, roads, highways, railways, ports, airports, mining and irrigation. Steel giants such as JSW Steel and Tata Steel are investing to enhance the capacities of products such as TMT bars (rebars) and many more. Government Initiatives

The Indian Government has laid more importance on infrastructure development in the Union Budget 2011. This would help in development of highways, ports, power projects, bridges and others, which will therefore increase the demand for steel.

With effect from May 24, 1992 steel industry was incorporated in the list of high priority industries for automatic approval for foreign equity investme nt up to 51 per cent. This limit has since been increased to 100 per cent.

Import duties on key steel- making raw materials, comprising of mineral products, ores and concentrates have seen noteworthy reductions in successive budgets during the last few years.

The government introduced special economic zones (SEZs) in June 2005, with the plan of creating internationally competitive regions. Steel plants operating in SEZs receive some advantages like tax holiday; they can freely source inputs domestically or externally without any specific approval or duty payable.

Indian Steel Industry: Road Ahead The Indian crude steel production will grow at a compound annual growth rate (CAGR) of around 10 per cent during 2010-2013, according to a research report by RNCOS titled, Indian

Steel Industry Outlook to 2012.Additionally, various initiatives have been taken by the Government to boost economic growth, by injecting funds in industries such as construction, infrastructure, automobile, and power. This will provide an impetus for growth for the steel industry in future. The report also states that steel consumption in India is expected to grow considerably in coming years. Another report by Global Consultancy firm Ernst & Young states that India would have annual production capacity of 101 MT in 2011-12. Herfindahl index-Value of Herfindahl index for Indian Steel Industry is .170.It implies that the competition in the steel industry is medium to high and high concentration.

Company Analysis
TELECOM INDUSTRY Top Telecom companies in India are : Bharti Airtel ROE 14.7% Beta: IDEA Cellular 8.4% Reliance Comm. TATA Comm.

Bharti Airtel
Bharti Airtel is the largest mobile telephony operator in the GSM space with 22% share of the Indian wireless market (as at the end of June 2010). The company, apart from being the largest player in the mobile segment with subscribers in all the 22- telecom circles of the country, also provides varied services like fixed line, broadband and retail internet access. Bharti's network spans over 440,023 non-census towns and villages in India. During the period FY05 to FY10, the company grew its sales and profits at compounded annual rates of 39% and 50% respectively. BHARTI AIRTEL Financial Summary

12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 373,521 40.2 78,590 2.00 4.8 22.7 27.0 0.3 1,388,563 3.7

12 31/03/2010 418,472 12.0 40.0 90,610 1.00 4.2 24.2 21.5 0.2 1,469,644 3.5

12 31/03/2011 594,672 42.1 33.5 71,673 1.00 5.3 11.3 14.7 1.1 1,196,222 2.

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011) IDEA CELLULAR

27.2 14.69

Idea was originally incorporat ed as Birla Communications Limited, with t he license to provide cellular services in Maharashtra and Gujarat. Post an acquisition of stake by A T& T and t he Tata Group, the company was renamed Birla-Tata-A T& T, with operations spread in Andhra Pradesh and Chhattisgarh. The company seeking brand positioning changed its name to Idea Cellular Limited in 2001. The company has, in the past few years, seen expone ntial growth in terms of additions to its subscriber base. Idea currently caters to 11 circles in India, effectively covering around 57% of the countrys population. IDEA CELLULAR Financial Summary

12 31/03/2008

12 31/03/2009

12 31/03/2010

Net Sales Sales Growth Gross profit margin PAT PAT Growth

67,200 33.2 10,423 -

101,313 50.8 27.4 8,815 -15.4

123,979 22.4 27.2 9,540 8.2

Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales

0.00 0.0 17.2 29.5 1.5 276,713 4.1

0.00 0.0 9.4 6.7 0.5 229,407 2.3

0.00 0.0 9.6 8.4 0.6 229,339 1.8

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

37.8 2.65

RELIANCE COMM (RCOM)

Reliance Communication Ltd. (RCL) is the second largest private sector mobile telephone operator in India with a wireless (CDMA and GSM) subscriber base of nearly 50 m. The business of the company is spread across three segments - Global, Enterprise and Personal. The 'Global' business caters to voice and data market. In the voice market, RCL is the carrier of national and int ernational voice traffic for telecom operators, telecom service providers and its internal customers. The data business owns the largest private submarine cable system in the world, which carries data across six continents. The 'Enterprise' segment serves 750 of the top 1,000 enterprises in India, by offering a wide array of products that comprise of voice, data, Internet, and IT infrastructure management services. The 'Personal' segment offers voice, data and value added services for the individual consumers and ent erprises, via its CDMA and GSM -based mobile and fix ed wireless services.

RELI ANCE COMM Financial Summary

12 31/03/2008

12 31/03/2009

12 31/03/2010

Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share

188,274 42.4 56,377 0.75

222,505 18.2 39.3 60,450 7.2 0.80

214,964 -3.4 33.4 46,549 -23.0 0.85

Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales

2.7 16.6 19.5 0.5 1,272,474 6.8

2.7 11.6 14.3 0.5 760,595 3.4

3.8 10.6 10.8 0.4 521,168 2.4

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

14.9 6.01

TATA COMM. (VSNL)

Tata Communications (erstwhile VSNL) is the largest and incumbent international long distance (ILD) telephony services operator in the country. Being t he pioneer of Int ernet services in the country, VSNL provides international telecommunication services, operates a network of eart h stations, switches, submarine cable systems and value added service nodes to provid e international telephony, telex and telegraph and Int ernet services. The company also operates DLD (domestic long distance) and broadband services in the count ry.

TATA COMM. Financial Summary

12 31/03/2008

12 31/03/2009

12 31/03/2010

Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW

82,974 10.2 103 4.50 1,245.1 4.5 0.2

99,632 20.1 13.6 3,159 2,967.0 4.50 40.6 8.1 6.3

110,256 10.7 7.8 -5,977 -289.2 0.00 0.0 -1.7 -13.1

Debt to equity ratio Mkt Cap Mkt Cap / Sales

0.6 163,020 2.0

1.2 128,963 1.3

1.2 131,670 1.2

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011) Companys considered Bharti and Idea Cellular

-9.90 -24.90

BANKING INDUSTRY
Top Banking companies in India are : State Bank of India (SBI) ROE 12.8% ICICI Bank HDFC Bank ROE - 15.6% Punjab National Bank

State Bank of India (SBI)

SBI is India's largest banking company in the country with an asset size of over Rs 9 trillion (Rs 9,000 bn). Although the bank's loan book is largely skewed towards corporate (52% of total advances in FY10), the retail side is also fast catching up. SBI has a network of over 12,600 branches and 16,300 ATMs across the country.
SBI Financial Summary
12 31/03/2009 Gross profit margin PAT PAT Growth Dividend per share Dividend payout 2.7 109,552 29.00 16.8 12 31/03/2010 -9.0 117,338 7.1 30.00 16.2 12 31/03/2011 -0.9 106,850 -8.9 30.00 17.8

RoA RoNW Net NPAs Mkt Cap

0.8 16.0 1.8 867,881

0.8 14.9 1.7 1,104,691

0.6 13.6 1.6 1,755,747

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

13.2 154.03

ICICI Bank
ICICI Bank is amongst the few Indian banks that actually reduced their share of India's total non-food credit disbursements from 9.6% in FY08 to 6.6% in FY10. Being the second largest bank in the country after SBI in terms of asset size, the bank had a franchise of over 5,220 ATMs and 1,707 branches at the end of March 2010. Retail assets constituted 44% of advances in FY10, down from 59% in FY08.
ICICI BANK Financial Summary
12 31/03/2009 Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoA RoNW Net NPAs Mkt Cap Mkt Cap / Sales -50.8 35,770 11.00 34.2 0.7 8.2 2.1 675,676 1.9 12 31/03/2010 -60.7 46,703 30.6 12.00 28.6 1.0 9.5 2.1 729,591 2.4 12 31/03/2011 -68.4 60,933 30.5 14.00 26.5 1.1 11.4 1.1 1,197,151 4.0

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011) HDFC Bank

18.2 50.41

With 3.6% share of India's total non-food credit disbursements in FY10, HDFC Bank is the second largest private sector bank in the country (after ICICI Bank) in terms of asset size. At the end of March 2010, it had a franchise of 4,232 ATMs and 1,725 branches. Retail assets constituted 60% of advances in FY10. The bank is focusing on loan origination in the retail, SME (small and medium enterprises) and agriculture segments and on non-fund based products and services. Its group companies, HDFC Standard Life (insurance), HDFC AMC (mutual funds) and HDFC Securities (equities) add scalability to the bank's offerings.

HDFC BANK Financial Summary

12 31/03/2009 Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoA RoNW Net NPAs Mkt Cap Mkt Cap / Sales 10.8 22,490 10.00 18.9 1.2 15.5 0.6 499,609 3.1 12 31/03/2010 14.5 30,036 33.6 12.00 18.3 1.3 14.3 0.3 672,420 4.1 12 31/03/2011 16.5 39,926 32.9 16.50 19.2 1.4 16.0 0.2 1,000,878 5.0

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

29.3 16.55

Punjab National Bank

Punjab National Bank is the third largest banking entity in the country (in terms of asset size) with 4.6% share of the total credit disbursals at the end of FY10. An operating overhaul in terms of asset quality and retention of high margins has helped the bank position itself favourably amongst its peers and marginally enhance its share this fiscal. Thereon, adequate capital, high NPA coverage and interest rate insulation has pegged the bank amongst the frontrunners in the public sector banking space.
PNB Financial Summary
12 31/03/2009 Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoA RoNW Net NPAs Mkt Cap Mkt Cap / Sales 14.1 31,970 20.00 19.7 1.3 21.4 0.2 136,525 0.7 12 31/03/2010 17.7 39,726 24.3 22.00 17.5 1.3 21.9 0.5 222,444 1.0 12 31/03/2011 20.3 45,748 15.2 22.00 15.2 1.2 20.9 0.9 348,649 1.3

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

6.8 140.64

Companys Considered: State Bank and HDFC Bank

PHARMA INDUSTRY
Top Pharma companies in India are : Ranbaxy ROE 26.7% Dr Reddy's Laboratories Cipla Sun Pharma Industries ROE 19.6%

RANBAXY
Ranbaxy is the largest Indian pharmaceutical company (in terms of revenues). The company manufactures and markets generic formulations and APIs in India and geographies across the world namely the US, Europe, Japan, Latin America, Asia, Africa and Russia among others. In 2008, the promoters of the company sold their stake to the Japanese company Daiichi Sankyo for a consideration of ` 737 per share. Daiichi Sankyo now has a 64% stake in Ranbaxy.
RANBAX Y LAB Financial Summary
12 31/12/2008 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 74,140 8.4 -9,512 0.00 0.0 -17.6 -22.1 0.7 163,524 2.2 12 31/12/2009 75,971 2.5 9.5 2,965 0.00 0.0 15.2 6.8 0.6 141,051 1.9 12 31/12/2010 89,608 18.0 20.8 14,967 404.8 2.00 5.6 32.4 26.7 0.2 208,204 2.3

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011) Dr Reddy's Laboratories

34.5 14.72

Dr. Reddy's Laboratories is a leading Indian pharmaceutical company, with presence across the pharmaceutical value chain. The company derives revenues from APIs (21% of sales), formulations (32%), generics (28%) and the rest from custom pharmaceutical services, critical care and biotechnology businesses.
DR. REDDY`S Financial Summary

12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 69,006 18.7 -9,172 6.25 -11.5 -12.7 -26.0 0.3 92,322 1.3

12 31/03/2010 70,310 1.9 20.2 3,189 11.25 59.6 16.1 8.5 0.0 151,458 2.1

12 31/03/2011 74,233 5.6 19.9 9,989 213.2 11.25 19.1 26.4 24.8 0.1 255,144 3.4

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

21.7 68.29

CIPLA
Cipla is among the top three companies in the domestic retail market (ORG survey) and has presence in formulations and bulk drugs manufacturing. All the bulk drug manufacturing facilities of the company have been approved by the US FDA and the formulation facilities have been approved by regulatory authorities in the UK, South Africa and Australia and other international agencies. Cipla has strategic alliances with major global generic companies such as Watson, Mylan, Barr and Teva/Ivax for supply of bulk drugs and has a very wide product range in the domestic market. CIPLA Financial Summary
12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 49,606 14.7 7,710 2.00 20.2 21.3 17.7 0.0 151,572 3.0 12 31/03/2010 53,595 8.0 19.9 10,826 40.4 2.00 14.8 22.8 18.3 0.0 230,057 4.3 12 31/03/2011 61,303 14.4 18.6 9,672 -10.7 2.80 23.2 17.6 14.5 0.0 267,774 4.3

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

24.4 11.91

Sun Pharma Industries

Sun Pharma holds 3.7% share of the domestic pharma market (as per the latest ORG IMS MAT data) and has a strong presence in the lifestyle therapeutic segments. The company started focusing on the exports market in FY02, when it increased its stake to 48% in the US-based Caraco Pharma. Currently, the stake in Caraco stands at 76%. Exports contribute around 56% to revenues. With the help of Caraco, Sun Pharma has been able to grow its US business, which brings in synergies by way of backward integration in both manufacturing and R&D.
SUN PHARMA Financial Summary
12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 42,723 43.6 18,177 13.75 15.7 26.7 25.8 0.0 260,039 5.9 12 31/03/2010 40,075 -6.2 34.2 13,583 -25.3 13.75 21.0 18.2 17.3 0.0 296,285 7.3 12 31/03/2011 57,214 42.8 35.2 18,589 36.9 3.50 19.5 20.5 19.6 0.0 421,481 7.3

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

28.4 17.36

Companys Considered: Ranbaxy and Sun Pharma

CEMENT INDUSTRY
Top Cement companies in India are : ACC Limited ROE 17.2% Gujarat Ambuja Cements Limited ROE -17.2 Ultratech ROE Shree Cement

ACC Limited
ACC is the oldest cement manufacturer in the country. The company's total capacity for the year ended CY09 stood at 26 million tonnes (MT). With a strong dealer network, ACC is one of the few cement companies to have a pan India presence. The company has focused its efforts on being a cement player and has therefore exited its non-core businesses. Ambuja Cements, one of the leading players in the industry, in consortium with Switzerland's Holcim, has acquired 46% stake in the company.
ACC LIMITED Financial Summary
12 31/12/2008 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 76,940 21.6 10,996 20.00 34.1 32.7 22.8 0.1 133,159 1.5 12 31/12/2009 84,796 10.2 29.1 15,639 42.2 23.00 27.6 36.6 26.7 0.1 131,136 1.4 12 31/12/2010 82,587 -2.6 18.7 10,775 -31.1 30.50 53.1 21.7 17.2 0.1 172,073 1.9

P/E Ratio (09/09/2011)

19.7

EPS (Rs.) (09/09/2011)

53.98

Gujarat Ambuja Cements Limited

Ambuja Cements (previously known as Gujarat Ambuja) has a cement capacity of 22 m tonnes (MT). The company, which pioneered the concept of transport of cement by sea, is particularly strong in the northern and western markets. Holcim Mauritius, an indirect wholly owned subsidiary of Holcim (Europe), over a period of time has acquired close to 46% stake in the company.
AMBUJA CEMENT Financial Summary
12 31/12/2008 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 62,475 27.8 13,897 2.20 24.1 33.4 24.5 0.0 146,931 2.1 12 31/12/2009 70,768 13.3 26.4 12,169 -12.4 2.40 30.1 28.0 18.8 0.0 131,039 1.7 12 31/12/2010 73,902 4.4 24.7 12,629 3.8 2.60 31.5 23.7 17.2 0.0 200,412 2.4

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

19.6 7.48

Ultratech Cement
UltraTech, an Aditya Birla Group Company and a 51% subsidiary of Grasim, has a capacity of 23.1 MT at the end of FY10. However, once the merger with Samruddhi Cement culminates Ultratech will catapult to being the number one cement company with an aggregate capacity of 49 MT. The company has presence in the western, eastern and southern regions. It also manufactures ready mix concrete (RMC) and is the largest exporter of cement clinker. Its export markets span out around the Indian Ocean, Africa, Europe and the Middle East.
ULTRATECH CEMENT Financial Summary
12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 65,637 26.0 9,781 5.00 6.4 28.9 27.1 0.4 68,034 0.9 12 31/03/2010 71,750 9.3 27.6 10,952 12.0 6.00 6.8 27.7 23.7 0.3 105,070 1.3 12 31/03/2011 136,911 90.8 18.7 13,673 24.8 6.00 12.0 14.2 12.9 0.4 273,355 1.8

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

23 48.45

Shree Cement
Shree Cement, promoted by the Calcutta -based Bangur group, is North India's largest cement producer with an installed capacity of 12 MTPA as of FY10. The company is an efficient cement manufacturer and is the market leader in the north. It is also amongst the least cost producers of cement in India and is almost self sufficient in meeting its power requirements. Riding on the back of rising demand and improved realizations, the company has been able to improve its overall performance. Taking into consideration the rising demand, the company plans to increase its capacity to 15 MTPA by the end of FY11.
SHREE CEMENT Financial Summary
12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 27,106 35.1 5,780 10.00 6.0 32.2 47.8 1.0 25,747 0.8 12 31/03/2010 36,321 34.0 41.1 6,761 17.0 13.00 6.7 30.0 36.9 0.8 53,758 1.3 12 31/03/2011 35,119 -3.3 25.1 2,097 -69.0 14.00 23.3 9.1 10.6 0.9 70,499 1.8

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

27.5 59.60

Companys Considered: ACC and Ambuja Cement

AUTOMOBILE INDUSTRY
Top Auto companies in India are : Maruti Suzuki India Limited ROE 16.6% Bajaj Auto Hero Motocorp Mahindra & Mahindra Limited

Maruti Suzuki India Limited

Maruti Suzuki, incorporated in 1981, is the country's largest passenger car manufacturer with a domestic market share of 50% in FY10. While Suzuki Japan holds a 54% equity stake in the company, the government of India has completely exited the company through a three-stage divestment process. After remaining a near monopoly till 1992, the entry of other multinationals and the emergence of domestic competition have resulted in the company losing market share. However, it has been able to steady its share in the Indian passenger car segment through aggressive capacity expansion and new product introductions.
MARUTI SUZUKI Financial Summary
12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 206,622 6.6 12,274 3.50 8.2 17.3 12.8 0.1 185,191 0.8 12 31/03/2010 295,915 43.2 12.1 26,247 113.8 6.00 6.6 30.2 21.5 0.0 358,537 1.1 12 31/03/2011 368,117 24.4 8.2 23,824 -9.2 7.50 9.1 22.2 16.7 0.0 393,207 1.0

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

14.2 79.92

Bajaj Auto Ltd.

Bajaj Auto, with a capacity of around 4.3 m vehicles, has a 24% market share in the two-wheeler segment. The company's sales mix (in terms of units sold) consists of motorcycles (88%) and three-wheelers (12%). Though the company has traditionally been a key player in the geared scooter segment, aggressive pricing coupled with a slew of new launches has resulted in increasing market share in the motorcycle segment from 16% in FY00 to 30% in FY10. Exports of motorcycles have played a stellar role in increasing the market share and have grown by a stupendous 46x over the past eight years.
BAJAJ AUTO LTD. Financial Summary
12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 84,461 8.2 5,359 22.00 59.4 28.7 32.9 0.8 90,570 1.0 12 31/03/2010 115,431 36.7 17.8 15,946 197.6 40.00 36.3 79.9 58.7 0.1 191,412 1.6 12 31/03/2011 160,287 38.9 17.4 43,099 170.3 40.00 26.9 107.0 89.7 0.0 384,717 2.3

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

18.1 89.62

Hero Motocorp
Hero Honda Motors, the largest manufacturer of motorcycles in the world, is a joint venture promoted by Hero Cycles (P) Limited and Honda Motor Company of Japan. Each partner holds 26% stake in the company. The company has been solely engaged in manufacturing and sale of motorcycles. The technology agreement with Honda, which expired in 2004, has been extended for a further period of ten years. The company ended FY10 with a close to 55% market share.
HERO MOTOCORP Financial Summary
12 31/03/2008 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 103,318 13.1 9,679 19.00 39.2 46.1 32.4 0.0 134,491 1.1 12 31/03/2009 123,191 19.2 13.8 12,817 32.4 20.00 31.2 46.1 33.7 0.0 172,532 1.3 12 31/03/2010 157,582 27.9 16.9 22,319 74.1 110.00 98.4 81.0 64.4 0.0 308,421 1.8

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

21 103.23

Mahindra & Mahindra Limited

Mahindra & Mahindra (M&M) is engaged in the manufacture of utility vehicles (UVs), tractors, light commercial vehicles (LCVs) and three-wheelers. While the automotive division comprising UVs, LCVs and three -wheelers contributed to 57% of FY10 revenues, farm equipment division accounted for 42.6% of revenues. Through investment in its subsidiaries, M&M has interests in sectors like software, hotels, real estate and financial services as well. While M&M had a 63.3% market share in the UV segment in FY10, it had a 41.4% share in the tractor sector.
M&M Financial Summary
12 31/03/2009 Net Sales Sales Growth Gross profit margin PAT PAT Growth Dividend per share Dividend payout RoCE RoNW Debt to equity ratio Mkt Cap Mkt Cap / Sales 267,563 13.7 13,614 10.00 20.5 15.8 19.5 1.5 132,579 0.5 12 31/03/2010 315,686 18.0 17.4 24,785 82.1 9.50 22.2 21.1 24.4 1.2 227,612 0.7 12 31/03/2011 368,424 16.7 16.2 30,797 24.3 11.50 21.9 18.2 21.6 1.1 386,704 1.0

P/E Ratio (09/09/2011) EPS (Rs.) (09/09/2011)

17.3 45.73

Companys considered: Maruti and Mahindra & Mahindra

Technical Analysis
Bharti airtel

Bharti airtel is currently trading at Rs. 400.35. Its 52 week high low is Rs. 260-444 at BSE. From the above graph its clearly showing Exponential moving average at RS.361 ans moving average at Rs.339. Right now it it trading way above than average and somewhat more close 52week high point. Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return 382.9 321.1 242.2 461.8 523.6 .67 18.94

Expected return-CAPM

15.33

It seems that it will move further down hence it is advisable to wait a little and then enter into a stock after coming down

Idea Cellular:

Idea cellular is currently trading at Rs. 99. Its 52 week high low is Rs. 101-94 at BSE. From the above graph its clearly showing moving average at Rs.70. Right now it it trading way above than average and somewhat more close 52week high point. Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return Expected return-CAPM 98.75 95.8 91.7 102.85 105.8 1.02 -2.5 -2.78

Over the period it has given a negative return and also moving above average , hence it is advisable to avoid the stock as of now

SBI:

SBI is currently trading at Rs. 1954. Its 52 week high low is Rs. 2049-1945 at BSE. From the above graph its clearly showing moving average at Rs.2400. Right now it is trading way below the average and somewhat more close 52week low point. Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return Expected return-CAPM 1982 1916 1878 2020 2086 1.11 36.39 39.51

Over the period it has given a very high return and also moving way below average , hence it is advisable to grab the stock at the earliest.

HDFC:

HDFC is currently trading at Rs. 472.75. Its 52 week high low is Rs. 485.5-471 at BSE. From the above graph its clearly showing moving average at Rs.1600. Right now it is trading way below the average and somewhat more close 52week low point.

Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return Expected return-CAPM 476 467 461 481 490 .95 7.18 7.22

Over the period it has given a positive return and also moving way below average , hence it is a safe optionto enter into the stock .

Ranbaxy:

Ranbaxy is currently trading at Rs. 501.45. Its 52 week high low is Rs. 517-499 at BSE. From the above graph its clearly showing moving average at Rs.500. Right now it is trading at moving average only.

Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return Expected return-CAPM 505 494 487 512 524 .7 6.44 6.9

Over the period it has given a positive return and also moving at average , hence it is a safe option to enter into the stock .

Sun Pharma:

Sun Pharma is currently trading at Rs. 483. Its 52 week high low is Rs. 496-477 at BSE.

From the above graph its clearly showing moving average at Rs.490. Right now it is trading at moving average only.

Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return Expected return-CAPM 485 474 466 494 505 .32 2.03 6.09

Over the period it has given a positive return and also moving at average , hence it is a safe option to enter into the stock .

Ambuja Cement:

Ambuja Cement is currently trading at Rs. 138. Its 52 week high low is Rs. 147-137 at BSE. From the above graph its clearly showing moving average at Rs.137. Right now it is trading at moving average only.

Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return 141 134 130 145 151 .76 8.49

Expected return-CAPM

8.37

Over the period it has given a positive return and also moving at average , hence it is a safe option to enter into the stock .

Maruti Suzuki Ltd:

Maruti Suzuki is currently trading at Rs. 1103. Its 52 week high low is Rs. 1149-1100 at BSE. From the above graph its clearly showing moving average at Rs.1200. Right now it is trading below average only.

Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return Expected return-CAPM 1117 1085 1068 1135 1166 .71 11.08 10.18

Over the period it has given a positive return and also moving at below average , hence it is a good and advisable option to enter into the stock.

Mahindra and Mahindra:

Maruti Suzuki is currently trading at Rs. 791. Its 52 week high low is Rs. 802-788 at BSE. From the above graph its clearly showing moving average at Rs.750. Right now it is trading above average only.

Some facts: Pivot Point First Support Second Support First resistance Second resistance Beta Market return Expected return-CAPM 793 785 779 799 807 1.11 7.44 7.38

Over the period it has given a positive return but also moving at above average , hence it is a good option to enter but after some time. It is expected to come down in the future.

Portfolio Selection
Portfolio It is a collection of different investment options composed with different wightage which give returns with an element of risk or no risk. Diversification is key to optimal risk management Analysis required because of the infinite number of portfolios of risky assets How should investors select the best risky portfolio? How could riskless assets be used? Objectives of a portfolio Maximize the returns and minimize the risk through diversification. Portfolio return It is the return of all securities together for a given Investment size, Weightage and Time period.

PORTFOLIO ANALYSIS Portfolio Returns Portfolio refers to the combination of investments owned by one investor or company at a given point of time. Portfolio return is the average of returns on individual investments which are the parts of the common portfolio. Weighted Ave rage Return for Single Period It is the average return on an investment portfolio for a given set of individual investments, returns and period of time. If an investor invests in more than one investment it is important to assess the returns on individual investments as well as total return on total investment. Following is the formula for Weighted Average Return (WAR), Where R is the return on individual investment, W is the weight or proportion of individual investment compared to total investment and n represents number of investments in a portfolio. WAR W1 R1 W2 R2 W3 R3 .............Wn Rn

On the basis of above analysis we have choosen few selected industries ,which have high potential and are expected to have a rapid growth. They are : Telecom Banking Pharmaceuticals Cement Automotive

They showed high level of potential and detailed analysis about them is already mentioned earlier. After choosing the best industries with diversified risk we selected the few stocks for the portfolio based of Capital Asset Pricing Model. Capital Asset Pricing Model is based on the assumption that risk free returns would easily fetch a return of 8% per annum. Market return for varied stocks are averaged out for the past six years. This was done to remove the volatility factor from the stocks. After going through various stocks and completing the detailed company and technical analysis we short listed few stocks for the portfolio with varied returns and different beta. This was done to achieve the objective of diversifying the risk and return. Stocks are choosen on the assumption that money would be invested for at least a year. The following stocks are choosen for the portfolio: Bharti Airtel State Bank of India HDFC Ranbaxy Sun Pharma Ambuja Cement Maruti Suzuki Mahindra and Mahindra

Now we are going to suggest few portfolio with varied weight :

Portfolio 1 Weighted Returns 4.599 15.804 0 0 0 0.837 2.036 0 23.276

Stocks Expected Return Bharti Airtel 15.33 SBI 39.51 HDFC 7.22 Ranbaxy 6.9 Sun Pharma 6.09 Ambuja Cement 8.37 Maruti Sujuki 10.18 Mahindra and Mahindra 7.38 Expected Wighted Average Returns

Weights 0.3 0.4

0.1 0.2

Portfolio 2 Weighted Returns 12.264 7.902 0 0 0 0 0 0 20.166

Stocks Expected Return Bharti Airtel 15.33 SBI 39.51 HDFC 7.22 Ranbaxy 6.9 Sun Pharma 6.09 Ambuja Cement 8.37 Maruti Sujuki 10.18 Mahindra and Mahindra 7.38 Expected Wighted Average Returns

Weights 0.8 0.2

Portfolio 3 Stocks Expected Return Bharti Airtel 15.33 SBI 39.51 HDFC 7.22 Ranbaxy 6.9 Sun Pharma 6.09 Ambuja Cement 8.37 Maruti Sujuki 10.18 Mahindra and Mahindra 7.38 Expected Wighted Average Returns Weights 0.125 0.125 0.125 0.125 0.125 0.125 0.125 0.125 Weighted Returns 1.91625 4.93875 0.9025 0.8625 0.76125 1.04625 1.2725 0.9225 12.6225

Portfolio 4 Weighted Returns 0.2 0.25 0 0.15 0 0.15 0.15 3.066 9.8775 0 1.035 0 1.2555 1.527

Stocks Bharti Airtel SBI HDFC Ranbaxy Sun Pharma Ambuja Cement Maruti Sujuki

Expected Return 15.33 39.51 7.22 6.9 6.09 8.37 10.18

Weights

Mahindra and Mahindra 7.38 Expected Wighted Average Returns Portfolio 5

0.1

0.738 17.499

Stocks Expected Return Bharti Airtel 15.33 SBI 39.51 HDFC 7.22 Ranbaxy 6.9 Sun Pharma 6.09 Ambuja Cement 8.37 Maruti Sujuki 10.18 Mahindra and Mahindra 7.38 Expected Wighted Average Returns

Weights 0.25 0.1 0.1 0.1 0.1 0.1 0.2 0.05

Weighted Returns 3.8325 3.951 0.722 0.69 0.609 0.837 2.036 0.369 13.0465

On the basis of the risk appetite of the client we and the desire of return we suggest her to go for either portfolio 1 or Portfolio 4. They do have certain moderate degree of risk but seem to be promising in tough time also where too much of dependency is not there on any single stock or sector. It is also suggested of timely rebalancing of portfolio to reduce the further risk and achieve higher returns in the future.