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ICICI Bank : The ICICI Bank's Q3FY09 performance on core operating front was in-line with our estimates. In Q3FY09, net interest income (NII) and net profit showed flat growth of 1.6% and 3.4%, respectively. With the strategy of lightening the Balance sheet and prioritizing capital conservation, the bank was able to achieve this on back of robust growth in treasury profit (Rs.9.76 bn in Q3FY09 vs. Rs.2.82 bn in Q3FY08) and 18.5% decline in total operating expenses (YoY). Improving NIMs: NIM of the bank rose to 2.4% at the end of Q3FY09 from 2.3% at the end of Q3FY08. Capital adequacy: The bank's capital adequacy at the end of Q3FY09 was 15.6% (including Tier-I capital adequacy of 12.1%) as against the regulatory requirement of 9.0%. Asset quality: At the end of Q3FY09, the bank's net NPA (net of technical write-offs) stands at 2.07% of net customer assets, deteriorating from 1.50% in Q3FY08. Gross NPA (net of technical write-offs) increased from Rs.64.75 bn at the end o

Crompton Greaves : Crompton Greaves' (CGL) third quarter numbers are largely in line with expectations. The company has been guiding towards a 20% plus growth on domestic as well as international front. The power segment revenues rose 20% yoy to Rs 5.7 bn. The main client segment for this division is the utilities sector including PGCIL. PGCIL has plans to spend Rs80 bn in FY09 up from Rs 65 bn in FY08. We expect healthy growth to sustain in Power division. Consolidated profits up 49% yoy but flat sequentially.EBITDA margins stable for CGL as well as its overseas subsidiaries.Maintain earnings in view of in-line results. Industrial growth has slackened further since the third quarter raising downside risk to FY10 earnings. Maintain Accumulate given slowdown in domestic industrial production.Overseas subsidiaries also face pressure as the Euro Zone has been slowing down. ACCUMULATE with a price target of Rs 187 based on DCF.

Everest Kanto Cylinders : EKC reported excellent set of Q3FY09 results which are above estimates both on the revenues and profitability front. However we factor in slowdown in economy and sharp decline in CV sales. On a consolidated basis EKC sold 1.5 lakh cylinders in Q3FY09, which is down 3.2% YoY and down 14.5% on sequential basis. This is primarily due to lower sales of cylinders to the OEM players like TATA motors and Ashok Leyland. However the average realizations per cylinder have improved by 106.6% YoY and up 33.0% on sequential basis as the company is concentrating more on value added cylinders like jumbo cylinders. The sale of jumbo cylinders has gone up by 49% on YoY basis to 719 cylinders with average realizations of Rs.7.9 lakh per jumbo cylinder. FY10 EPS is estimated at Rs.18.0.Long term investors can buy with a price target of Rs.200.

Sun–Taro acquisition: The stalemate continues In line with the directive issued by the Israeli Supreme Court, Sun Pharmaceuticals (Sun Pharma) had sent a revised proposal to the promoters of Taro Pharmaceuticals (Taro) for the completion of its long-standing acquisition of Taro. In its proposal Sun Pharma had raised its offer price for Taro shares and outlined two options to buy out the remaining stake in Taro. For the first option, Sun Pharma had offered to amend the original merger agreement to buy the Taro shares at $9.50 each instead of the earlier $7.75 per share, which would raise its acquisition cost by 23%. In addition, Sun Pharma would also end the tender offer. For the second option, Sun Pharma had offered $9 per share for all shareholders other than Taro Chairman Barrie Levitt and $8.5 per share for the five million odd shares held by the promoter group, subject to Israeli Supreme Court’s withdrawal of the injunction on Sun Pharma’s open offer. The tender offer will close te

Key points Ashok Leyland's total vehicle sales for December 2008 were below our expectations. The sales of the company plunged during the month amidst weaker demand and financing constraints. The total sales (including exports) declined by 63% to 2,321 units from 6,340 units in the same month a year ago. On a month-on-month basis, the total sales grew by a meagre 1%, taking the year-till-date (YTD) sales volume down by 22%. Sales in the medium duty vehicle (MDV) passenger segment slumped by 38% on a yearly basis to 1,211 vehicles, with the sales of domestic passenger vehicles declining by 42% and exports dropping by 28%. However, on a monthly basis, the total MDV passenger sales surged by 18% during the month. The MDV goods segment’s sales dropped by 76% year on year (yoy) to 1,061 vehicles. The domestic sales declined by a whopping 85% yoy to 637 vehicles. On the other hand, the exports showed an impressive growth of 119% to 424 vehicles. On a YTD basis (April-December 2008), the

Result highlights: Tata Consultancy Services (TCS) Q3FY2009 results were below our as well as street expectations. The resuls came below our expectations largely on account of lower-than-expected revenues primarily due to sharp cross currency movement and a lower-than-expected volume growth. The consolidated revenues in rupee terms grew by 4.7% quarter on quarter (qoq) to Rs7,277 crore driven by favourable exchange rate (contributing 3.4% to the top line growth). In constant currency terms, the revenues grew by 1.23% sequentially driven by a 2.4% volume growth. This was partially offset by higher proportion of offshore revenues (-1.6%) and pricing (-0.1%). In dollar terms, the revenues declined by 5.8% qoq to US$1,483 million below our expectations on account of sharp cross currency movement and a lower-than-expected volume growth. The earnings before interest and tax (EBIT) margin improved by 53 basis points to 24.8% in Q3FY2009 on account of favourable exchange rate (136 basis point

Lowest in almost last 10 months; Downward movement to continue India's wholesale price index (WPI) dropped to 5.91% for the week ended December 27, 2008 from 6.38% for the week ended December 20, 2008,lowest in almost last 10 months. The index number of Primary articles and manufactured products declined week-on-week for the week ended December 20, 2008, whereas it was flat for fuel groups.We expect headline Inflation (read WPI) to continue to fall at an accelerated pace before touching 2.0-2.5% levels by the end of FY09. We also expect continuation of monetary and fiscal policies. Although not much scope is left for any more fiscal stimulus on Keynesian philosophy,our planners are likely to apply more of monetary instruments.

Economy Update: November IIP – Bounced back into positive zone. The index of industrial production (IIP) for November 2008 increased 2.4%, as compared to 4.9% growth in November 2007. Mining, manufacturing and electricity grew at 0.5%, 2.4% and 3.1%, respectively during November, 2008.The capital goods declined 2.3%, whereas intermediate good and consumer goods rebounded into positive zone by growing at 2.6% and 4.4%, respectively. The cumulative growth for April-November 2008-09 stands at 3.9% over the corresponding period of the previous year. At the same time, IIP growth for October 2008 has been revised upwards to 0.3% decline from the previously reported decline of 0.4%. The recent fall in inflation would provide greater leeway to RBI for taking softer monetary stance, going forward. In our view, further fiscal stimulus by the government is less likely, given their fiscal position.

Banking sector under our coverage universe is expected to register NII growth of 22.4% (YoY), Pre-provisioning profit growth of 11.7% (YoY) and Net income growth of 7.2% (YoY). Credit off take (as on December 05, 2008) has been robust at 26.3% (YoY) and 12.5% (YTD). During the same period (as on December 05,2008), deposits grew 21.4% (YoY) and 11.4% (YTD). Margins to be stable; PLR cut would be compensated by recent cut in CRR, SLR, Repo and Reverse repo rates. Write-back of MTM provisions as 10-year government bond has fallen by around 320 bps during Q3FY09. NPAs to rise; Write-back of MTM provision to provide cushion in overall provionings. Top Picks: Axis Bank , HDFC Bank , Union Bank, BOB , Indian Bank , PNB In the challenging global and domestic environment, policy makers (both Govern- ment and RBI) are busy prescribing booster doses to minimize the spill-over effect of global financial crisis. India's growth trajectory has been impacted by both finan cial crisis and the fol

IT companies to report volume growth and constant currency revenues largely within the guidance range (wherever applicable). Rupee depreciation will further help revenue growth in INR terms. While part of the moderation in revenue growth in 3QFY09will be attributed to seasonality, guidance for the January - March quarter will be the key variable. We expect muted growth guidance in the backdrop of uncertain macro environment. Management comments on pricing, employee hiring and cost control initiatives will also be watched closely. All-in-all we expect lack-lustre constant currency performance and guidance. However, we believe most negatives are in the price. Infosys remains our large cap pick in the sector; Infotech is the preferred mid-cap. Largely in-line volume growth expected We expect the companies to report volume growth which should be largely in-line with guidance / expectations. We note that, the guidance for the quarter was already muted. The situation has deteriorated furt

Automobiles Downturn continued in December 2008. Top automobile makers Bajaj Auto, Hero Honda Motors and Maruti Suzuki have announced their December 2008 sales numbers and the same continued to be depressed, much in line with our expectations. Automobile sales are usually modest in December because many consumers try to postpone their purchases to the new year when companies push sales through heavy discounts and offers. Most automakers have already cut production and resorted to the annual maintenance shutdown of their manufacturing units due to the drop in demand. In fact, many are even extending the period of the shutdown. Though the liquidity situation at the ground level remains tight, the recent measures announced by the Reserve Bank of India to inject liquidity into the economy are likely to have some positive impact in the coming months.

Economy Update: Another Monetary & Fiscal Stimulus Package • RBI has cut the Cash Reserve Ratio (CRR) by 50 bps from 5.5% to 5.0% with effect from fortnight beginning January 17, 2009. • RBI also reduced the Repo and Reverse repo rate under LAF window by 100 bps each to 5.5% and 4.0%, respectively with immediate effect. • The reduction in CRR is likely to inject additional liquidity Rs.200 bn to the financial system. • The cut in policy rates as well CRR would further enable banks to reduce their lending rates (of course accompanied by reduction in deposit rates!!) • The government in tandem with the Central Bank has also announced second stimulus package to invigorate the sagging economic activities. Economy Update: Market Strategy In January, markets will focus on potential government (fiscal measures) and RBI actions (further interest rate cuts). A rise in geopolitical tensions in the South Asian region may keep markets nervous. Markets would focus attention on the US as the new