India's economic fundamentals have deteriorated in the near term leaving the country with weaker growth. The country is grappling with problems of rising inflation and booming fiscal and current account deficits. Global macro-economic environment seems equally gloomy. European debt crisis has been escalating with more and more countries finding it difficult to re-finance their government debt without the assistance of third parties. China's growth has also moderated along with other Asian countries. Against the backdrop of weak global growth and high global commodity prices, the Indian economy has taken a severe beating due to weak domestic political climate. Indian government has failed to reduce the fiscal deficit and to device structural reforms to open supply-side bottlenecks. Rising subsidy bills, slow decision making on behalf of the government due to scandals and back-tracking on reforms due to influence of regional political parties have curtailed the growth potential. Any significant economic reform or any serious effort to curtail the fiscal deficit seems unlikely in the face of general elections due in May 2014. The weakness in the Indian economy is reflected in the Indian equity market as well. Over the last two years, the equity market has given a negative return of nearly 4% while in the last year, it gave a negative return of nearly 8%. Thus, investment in the equity market has been quite difficult. We expect the market to consolidate in a broad range in the remaining part of the year, giving us the opportunity to accumulate stocks at reasonable prices. Thus, we have attempted to create a model portfolio to generate superior returns over the market. Given the weak domestic and global economic environment, we prefer to keep more than 70% of out portfolio in liquid funds. The funds would be deployed as and when the time will be ripe.

1. EQUITY RESEARCH
Model Portfolio (Series IV)
10th August 2012
Backdrop
India's economic fundamentals have deteriorated in the near term leaving the country with weaker growth. The
country is grappling with problems of rising inflation and booming fiscal and current account deficits. Global macro-
economic environment seems equally gloomy. European debt crisis has been escalating with more and more
countries finding it difficult to re-finance their government debt without the assistance of third parties. China's
growth has also moderated along with other Asian countries. Against the backdrop of weak global growth and high
global commodity prices, the Indian economy has taken a severe beating due to weak domestic political climate.
Indian government has failed to reduce the fiscal deficit and to device structural reforms to open supply-side
bottlenecks. Rising subsidy bills, slow decision making on behalf of the government due to scandals and back-
tracking on reforms due to influence of regional political parties have curtailed the growth potential. Any significant
economic reform or any serious effort to curtail the fiscal deficit seems unlikely in the face of general elections due
in May 2014.
The weakness in the Indian economy is reflected in the Indian equity market as well. Over the last two years, the
equity market has given a negative return of nearly 4% while in the last year, it gave a negative return of nearly
8%. Thus, investment in the equity market has been quite difficult. We expect the market to consolidate in a broad
range in the remaining part of the year, giving us the opportunity to accumulate stocks at reasonable prices. Thus,
we have attempted to create a model portfolio to generate superior returns over the market. Given the weak
domestic and global economic environment, we prefer to keep more than 70% of out portfolio in liquid funds. The
funds would be deployed as and when the time will be ripe.
research@bmastock.com
033 40110153
BMA Wealth Creators Equity Research

2. Model Portfolio Update
Idea
We, have thus come up with a long term portfolio. The portfolio aims to guide the investors to gain moderate
return through investments in capital markets. This is not a fund management exercise, so investors can
customize this Model Portfolio according to their choice. The investor can expect the risk of significant price
fluctuation.
Recommendation Approach: For fundamental recommendation, we follow bottom up approach of stock
selection. We conduct detailed fundamental analysis of individual companies before giving recommendations.
Sometimes we may recommend stocks based on technical analysis for short term trading. We also wish to
recommend short positions depending on market condition. Positon on futures and options strategies may also
be included.
Current Positions
Position of the Portfolio as on 10-August 2012
Entry Date Company Entry Price Wt %
10-Aug-2012 ING Vysya Bank Limited 384.95 5.0%
10-Aug-2012 Colgate-Palmolive (India) Limited 1178.35 5.0%
10-Aug-2012 IL&FS Transportation Networks Ltd. 164.70 5.0%
10-Aug-2012 Larsen & Toubro Limited 1423.95 2.5%
10-Aug-2012 Ingersoll-Rand (India) Limited 455.50 5.0%
Sector Allocation Company Allocation
Portfolio Highlights
Current market value of the portfolio is Rs 2,25,000
Total cash in the portfolio is Rs 775,000.
BMA Wealth Creators Equity Research

3. Model Portfolio Update
ING Vysya Bank Limited Target - Rs. 450/-
Target - 55
Investment Rationale
Healthy CASA ratio: Despite turbulent movement in interest rates, ING Vysya
Bank has been able to maintain its CASA over last year. Its CASA – as a
proportion to aggregate deposit – has increased by over 720 bps to 34.2%
over last 7 years. The CASA per branch has increased to INR 229 bn in FY12
from INR 149 bn in FY08. KEY MARKET DATA
Sector Banking
Diversified Asset book as well as liability structure – Advances book is BSE Code 531807
well diversified across segments viz. Corporate (43%), SME (32%), Retail NSE Code INGVYSYA
(20%) as well as across sectors reducing the concentration risk. Asset mix is CMP (as on 10.08.12) 384.95
also much better than peer banks in the corporate banking as well as 52 Wk. High/Low 399.90/275.00
business banking segments. Corporate banking book is well diversified with
Sensex/Nifty 17557.70/5320.40
NBFCs accounting for 26.3% while telecom accounts for 14.8%. All the other
sectors account for less than 10% exposures which translate into below 4% of Shares outstanding (Cr.) 150.82
the total book. Face Value 10
Market cap (Rs. Cr.) 5660.27
Improving Asset Quality with Low Slippage, Higher Provisioning for Bad Daily avg. Volume 18510600
Assets: To improve the asset mix, the bank majorly lent to services related Free Float (%) 59.99%
business in the sectors related to consumption in the economy. It lent mainly
towards working capital requirement which ensured timely repayments ING Vysya Bank vs. Nifty
keeping the asset quality intact. This has reduced the slippage ratio to 0.7% in
FY12 from 2.3% in FY10. In addition to this, ING Vysya Bank has been
consistently provisioning higher for their bad assets which has reduced the
Net NPA to 0.18% hiking the provision coverage ratio to 90.7%.
Improvement in Profitability and Efficiency: The management took
significant steps to boost the profitability after it took over in 2006 which has
resulted in volume growth, improving the efficiency. Business per branch has
risen from INR 751 mn in FY08 to INR 1,135 mn in FY12 while profit per
branch has risen from INR 4 mn to INR 8.8 mn in the corresponding period.
Employee efficiency has also improved with business per employee growing
from INR 55.8 mn in FY08 to INR 81.3 mn in FY12 while profit per employee
rising from INR 0.29 mn to INR 0.63 mn during the corresponding period. SHAREHOLDING PATTERN
As on 30th June,2012
Improving Trend in NIMs: Bank has been able to improve NIMs on the back
of improving CASA and better balance sheet management. Promoters 43.73%
FIIs 26.91%
Financial Snapshot
DIIs 13.91%
Public 15.45%
FY11 FY12 Y-o-Y %
Interest Earned 2693.93 3856.93 43.17%
Total Income 3348.65 4526.46 35.17%
Expenditure 3030.24 4070.10 34.32%
Net Profit 318.41 456.36 43.32%
P/B 1.92 12.97 -
EPS 26.45 31.85 20.42%
BMA Wealth Creators Equity Research

4. Model Portfolio Update
ING Vysya Bank Limited
Company Background Diversified Loan Book
ING Vysya Bank Limited is an entity formed with the culmination of the
erstwhile Vysya Bank Limited, a premier bank in the Indian Private sector and
a global financial powerhouse, ING of Dutch origin during October 2002. It was
previously known as the Vysya Bank Limited and it was in 2002 that the name
was changed.
The Bank operates in four segments: Treasury, Retail Banking, Wholesale
Banking and Other Banking Operations. The Treasury segment includes the
net interest earnings on investments of the bank in sovereign bonds, corporate
debt, and mutual funds; income from trading; income from derivative, and
foreign exchange operations and the central funding unit. The Retail banking
segment includes the business with individuals and small businesses through
the branch network and other delivery channels, such as automated teller
machine (ATM) and Internet banking. The wholesale banking segment Break-down of Consumer
Banking
provides loans and transaction services to corporate, emerging corporate and
institutional customers.
The bank has continued to introduce new personalized services in order to
make banking easier for its customers. On the wholesale banking front, ING
Vysya launched ‘ING Coverage’, integrated banking solutions and on the
retail banking front, the bank has launched ‘ING Zwipe’ a new savings
account targeted at the young mobile customers.
Industry Overview
The Rs 64 trillion (US$ 1.22 trillion) Indian banking industry has made
exceptional progress in last few years, even during the times when the rest of
the world was struggling with financial meltdown. Break-down of Corporate
Segment (%)
Recently, the RBI took a few important steps to make the Indian Banking
industry more robust and healthy. This includes de-regulation of savings rate, Gems & Jewellery 8.4
guidelines for new banking licenses and implementation of Basel Norm III. Rental Discounting 7.2
Since March 2002, Bank index (Index tracking the performance of leading food Processing 6.8
banking sector stocks) has grown at a compounded annual rate of about 31%.
Auto 6
After a very successful decade, a new era seems to have started for the Indian
Banking Industry. According to a Mckinsey report, the Indian banking sector is Contractor 5.9
heading towards being a high-performing sector. Textiles 5.3
Iron & Steel 4.6
If we look at 5 years historical performance of different types of players in the Service Enterprises 3.1
banking industry, as far as net interest income is concerned, private banks are Pharma 2
ahead in the race by reporting 24.2% growth, followed by pubic banks (21.4%)
Other Manufacturing 9.2
and then by foreign banks (14.8%). We can say that the current position of
Trader 32.7
ROA, Net NPA and CAR of different kinds of players in the industry indicates
that going ahead; private banks will face relatively lesser problems as Others 8.8
compared to public banks.
BMA Wealth Creators Equity Research

5. Model Portfolio Update
ING Vysya Bank Limited
Investment Concerns
Company Performance
Growth and Asset Quality levered to Economic Conditions: Development
of the banking industry is correlated to the economic growth of the country. A
slowdown in economic activity could impact loan growth and, hence, is likely to
pose a risk to our estimates.
Changes in Regulatory Norms could affect Business Dynamics: A change
in regulations governing private banks is likely to impact business dynamics
and, hence, could impact our estimates.
High Interest Rate Scenario: Increasing NPA concerns due to high interest
rate and deteriorating asset quality across the sector on the back of economic
scenario may cause reduction in upgrades and recoveries and may hurt the
asset quality of bank in the near-term.
FY09 FY10 FY11 FY12 FY13E
Net Interest Income (NII) 649.62 829.84 1,006.52 1,208.35 1549.30
NII Growth 25% 28% 21% 20% 28%
EBITDA 424.81 641.95 635.47 767.9 1011.32
EBITDA Margins 84.15% 79.47% 80.60% 85.63% 82.46%
Profit Before Tax 294.65 371.51 483.87 654.17 862.80
Profit After Tax 188.78 242.22 318.65 456.3 598.10
Earnings Per Share 18.06 19.76 25.85 29.67 39.54
FY09 FY10 FY11 FY12 FY13E
Equity 1702.89 2330.92 2624.29 3979.79 4477.42
Debt 3185.32 3671.39 4146.91 5696.49 6493.68
Cash/Deposit Ratio 8.94 8.12 8.05 6.37 7.68
Number of shares 10.26 11.997 12.099 15.012 15.025
FY09 FY10 FY11 FY12 FY13E
NIM 2.84 3.21 3.25 3.30 3.41
Book Value 155.94 187.04 201 255 286
Int Expended/Int Earned 71 62.84 65.64 68.67 65.27
Price to Earnings Ratio 21.32 19.48 14.89 12.97 9.74
Price to Book Value Ratio 2.47 2.06 1.92 1.51 1.35
Valuation
At the current market price of Rs 384.95, the stock is trading at 9.74x FY2013E earnings estimate. We expect
ING Vysya to outperform due to its healthy CASA ratio, stable NIMs, .and one of the best asset qualities in
domestic banking space. We recommend a Buy on the stock with a price target of Rs 450. At our price target
the stock will be valued at 11.38x FY2013E earnings.
BMA Wealth Creators Equity Research

6. Model Portfolio Update
Colgate-Palmolive (India) Limited Target - Rs. 1350/-
Target - 55
Investment Rationale
Market leader with excellent financial matrix: Colgate is one of the few
FMCG companies with real pricing power with dominant and increasing
market share across oral hygiene products. The company has continued to
achieve excellent business results year after year despite difficult economic
conditions coupled with fierce competition, and high inflationary market
conditions resulting in higher input cost. The company achieved a healthy KEY MARKET DATA
double-digit sales growth during the year 2011-12. Cash generation has Sector FMCG
therefore been excellent, and has also been aided by its move to tax free BSE Code 500830
location of Baddi (Himachal Pradesh). Apart from the strong growth in profits, NSE Code COLPAL
the balance sheet metrics with fixed asset turns of over 4x, ROCE of over CMP (as on 10.08.12) 1178.35
100% is remarkable as well.
52 Wk. High/Low 1252.00/889.75
Innovation to drive growth: The Company's growth is sparked by the Sensex/Nifty 17557.70/5320.40
innovative products that it brings to the market. During 2011-12, innovative Shares outstanding (Cr.) 13.6
products like Colgate Sensitive Pro-Relief (the only product that provides Face Value 1
instant relief from hypersensitivity), variants of Plax Mouth Wash with Market cap (Rs. Cr.) 16236.86
sensorial and functional benefits, were successfully launched further Daily avg. Volume 72400
enhancing the broad range of oral care benefits that Colgate provides to the Free Float (%) 50.00%
consumers. During 1Q FY13, the company launched Colgate 360 battery
toothbrush with dual action brush head and Colgate Max fresh toothbrush with
Colgate Palmolive vs. Nifty
multi height bristles.
New Projects for sustainable development: To support the growth
momentum and to cater to the increasing requirement of the products, the
company acquired a plot of land from Gujarat Industrial Development
Corporation on long-term lease for setting up a new Toothpaste
manufacturing facility. In April 2012, the company acquired land in Andhra
Pradesh on a long term lease for setting up a toothbrush manufacturing
facility. Both the manufacturing facility is expected to be operational in the
year 2013.
SHAREHOLDING PATTERN
P&G entry in toothpaste likely to be delayed: P&G has indicated that it will
not enter new categories in emerging markets, but continue to focus on As on 30th june,2012
existing products. This delayed entry in toothpaste category is a significant Promoters 51.00%
positive for Colgate. The fear of margin contraction due to increased
aggression in the category is also likely to be wiped off. FIIs 21.16%
DIIs 5.98%
Financial Snapshot Public 21.86%
FY11 FY12 Y-o-Y %
Net Sales 2220.56 2623.85 18.16%
Total Expenditure 1801.41 2158.05 19.80%
Interest 1.61 1.51 -6.21%
Profit After Tax 402.58 446.47 10.90%
P/Ex 39.81 35.89 -
EPS 29.60 32.83 10.91%
BMA Wealth Creators Equity Research

7. Model Portfolio Update
Colgate-Palmolive (India) Limited
Company Background Products
CPIL was incorporated in 1937 as a wholly owned subsidiary of its US parent. Oral Care
Currently the parent company holds 40.06% stake in the company. The Toothpastes
products of the group include soaps, shampoos, cosmetics and toilet Toothbrushes
preparations, toothpaste, tooth powder, toothbrushes, shaving brushes, fatty Toothpowder
acids, glycerin and calcium phosphate. Whitening Products
Mouthwash
The company launched ‘Colgate Dental Cream’ in the same year as it was
incorporated in 1937. This was followed in 1948 by the launch of Colgate Personal Care
toothbrushes and toothpowder. In the early 1950s the company launched Bodywash
three more brands, ‘Palmolive’ shaving cream, ‘Halo’ shampoo and ‘Charmis’ Liquid Hand Wash
cold cream. The company offered 60% of its shareholding to the public Shave Preps
through an IPO in 1978. Skin Care
Hair Care
Colgate is one of the few FMCG companies with real pricing power with
Household Care
dominant and increasing market share across oral hygiene products (51% in
the toothpaste segment, 48% in the tooth-powder market and 30% in the Surface Care
toothbrush market) and 4.6 mn outlets providing it the widest distribution reach From the Dentist
among peers. Several market surveys have rated Colgate as India’s most Gingivitis Treatment
trusted brand and it is backed by a strong parent, which is the largest oral care Sensitivity Treatment
player globally. Tooth Whitening
Fluoride Therapy
Mouth Ulcer Treatment
Industry Overview Speciality Cleaning
The Indian Fast Moving Consumer Goods (FMCG) sector is booming from last
several years and given steady returns to its investors despite slowdown in the
economy. The India Brand Equity Foundation (IBEF) estimates a total market
size in excess of US$13.1 billion for FMCG industry in 2012. There is stiff
competition among domestic companies, unorganized segment and MNC
companies to increase their sales year-on-year, due to which they operate on
low operational cost and margins.
Key drivers for growth in FMCG sector include rapid increase in the rate of
urbanization, rise in disposable incomes enabling the companies to focus on
premium product brands, constant innovation in existing products, penetration
to rural markets with strong distribution channels, rise in rural non-agricultural
income and benefits from government welfare programs which contributes to
top-line growth for FMCG companies.
According to Nielsen’s research report entitled “Consumer 360”, the Indian
FMCG market is estimated to grow to USD 100 billion by 2025 from USD 13
billion in 2012. According to report, the key areas driving this growth would be
increase sales and acceptance of branded products, regular consumption of
FMCG goods, etc.
BMA Wealth Creators Equity Research

8. Model Portfolio Update
Colgate-Palmolive (India) Limited
Investment Concerns
Company Performance
Competition from New entrants: P&G's entry in the oral care market with its
Crest/Oral B brand and heightened competitive intensity from HUL and Dabur
could hit the company hard.
Increase in raw material price: Higher packaging cost due to rise in crude
prices along with flavours like mint and menthol may push raw material cost
further. Further risks arise from down trading by consumers in response to
recent price hikes, which could hurt the company’s top line.
Deficient Rainfall: Colgate’s substantial turnover is derived from the rural
market. Deficient rainfall could impact agricultural activity which in turn could
hit rural demand.
FY09 FY10 FY11 FY12 FY13E
Sales Revenue 1,694.81 1,962.46 2,220.56 2623.85 3023.40
Sales Revenue Growth 15% 16% 13% 18% 18%
EBITDA 369.36 523.87 555.81 629.21 670.07
EBITDA Margins 22% 27% 25% 24% 23.98%
Profit Before Tax 345.31 484.80 519.95 588.39 698.00
Profit After Tax 290.22 423.26 402.58 446.47 365.75
Earnings Per Share 21.34 31.12 29.60 32.83 39.00
FY09 FY10 FY11 FY12 FY13E
Equity 216.30 326.11 384.05 435.39 593.06
Debt 4.69 4.59 0.05 0 0
Debt-Equity ratio 0.02 0.02 0.01 0.00 0.00
Number of shares 13.6 13.6 13.6 13.6 13.6
FY09 FY10 FY11 FY12 FY13E
Current Ratio(x) 0.91 1.05 1.12 1.12 1.12
Book Value 15.90 23.98 28.24 32.01 45
Interest Coverage Ratio 314.92 324.20 323.94 390.66 -
Price to Earnings Ratio 55.22 37.86 39.81 35.89 30.21
Price to Book Value Ratio 74.11 49.14 41.73 36.81 26.19
Valuation
At the current market price of Rs 1178.35, the stock is trading at 30.21x FY2013E earnings estimate. We expect
Colgate Palmolive to outperform due to its market leadership in the oral care category and its focus on
innovation to drive growth. We recommend a Buy on the stock with a price target of Rs 1350. At our price target
the stock will be valued at 34.62x FY2013E earnings.
BMA Wealth Creators Equity Research

9. Model Portfolio Update
IL&FS Transportation Networks Ltd. Target - Rs. 250/-
Target - 55
Investment Rationale
Largest Private sector BOT Road Asset Portfolio: ITNL is the largest
player in road BOT segment in India and has 23 projects worth 11,860 lane
kms under its portfolio. At present, ITNL has 4 annuity projects worth 1,024
lane kms and 6 toll based projects worth 3,326 kms, totaling 4,350 lane kms
under operational phase. All the remaining projects are in different phases of Sector Infrastructure
execution, and are scheduled to be operational between years 2012 - 2014 BSE Code 533177
NSE Code IL&FSTRANS
Diversified surface transport player with pan India presence: ITNL has 23
road projects spread across the length and breadth of the country. The CMP (as on 10.08.12) 164.70
company has bagged projects in difficult areas like J&K, Meghalaya and 52 Wk. High/Low 231.00/142.55
Jharkhand which indicates company’s ability to execute these projects. Sensex/Nifty 17557.70/5320.40
Besides that company is also diversified across other segments like railways Shares outstanding (Cr.) 19.43
(metro), airports, and bus terminals Face Value 10
Market cap (Rs. Cr.) 3200.12
Cash flow profile: ITNL has a good mix of annuity and toll projects, which
positions it well to benefit from any upside in toll collection. At the same time, Daily avg. Volume 79319
the company is able to enjoy stable cash flows from annuity projects. Its Free Float (%) 30%
annuity portfolio is amongst the largest in the country, both in terms of project
size and lane km, lending stability to cash flows
IL&FS Transportation vs. Nifty
Acquisition is EPS accretive: ITNL, through its subsidiary, ITNL
International Pvt Ltd (Singapore based) has acquired a 49% equity stake in
the Chongqing Yuhe Expressway Co (Chongqing Yuhe), China. The stretch
spans across 58kms, of which 27.1kms is tolled at five locations (towards
various exits). For the remaining 31.6kms, the company would receive an
assured subsidy of around $22 million from the Chongqing Municipality with a
minimum 5% increment in annuity every year. Also the company would get
indemnified for any reduction in assured subsidies and any increase in tax
rate from 15% in the next ten years. Thus this project offers significant
revenue and growth visibility in the coming years
Significant order book provides growth visibility: IL&FS Transportation
order backlog stands at Rs 12000 crores which provides significant revenue SHAREHOLDING PATTERN
visibility and growth prospects for the company in FY13E & FY14E. The As on 30th June,2012
company has seen substantial growth in its order book mainly due to the
increase in project awarded by the NHAI and is expected to witness similar Promoters 72.46%
project awards in the coming years FII 3.28%
Financial Snapshot DII 3.61%
Others 20.65%
FY11 FY12 Y-o-Y %
Net Sales 4048.23 5605.62 38.47%
Total Expenditure 2893.91 4140.07 43.06%
Interest 498.06 728.21 46.21%
Profit After Tax 449.74 538.88 19.82%
P/Ex 7.11 5.94 --
EPS 23.15 27.74 38.47%
BMA Wealth Creators Equity Research

10. Model Portfolio Update
IL&FS Transportation Networks Ltd.
Company Background State wise distribution of its capital
projects
IL&FS Transportation Networks Ltd is one of the largest BOT road operators in
India. The company undertakes complete project management from bid 6%
evaluation to designing to O&M post construction. The company has, over the 11% 21%
2%
years, acquired a position of leadership in the roads sector and has expanded
3%
its scope of activities to Ports, Railways and Urban Transport Sectors. It
generates its revenue from annuity receipts, toll collections, operations & 5% 4%
maintenance activities and advisory & project management fees.
11%
ITNL is a pioneer in the road BOT space and has been involved in the
development and operation of roads and highways for the past two decades. 29%
2% 6%
The company has an established track record of having successfully bid,
developed and operated road BOT projects on a commercial basis. The Himachal Pradesh Haryana
J&K Jharkhand
company’s portfolio has witnessed a solid growth in last 10 years where in its Kerala Maharashtra
portfolio has grown from 190 lane kms in 2001 to 11860 lane kms in 2012. Madhya Pradesh Meghalaya
Rajasthan Uttar Pradesh
Andhra Pradesh
Industry Overview Phases of NHDP
PHASE 1:
The infrastructure deficit in the Indian economy presents a substantial need for
Golden Quadrilateral, NS – EW
infrastructure creation. The Government has well understood that the lack of corridor, port connectivity and others
infrastructure is a stumbling block for an unhindered double-digit growth and Length : 7398 kms
has instituted several measures conducive for the growth of this sector. The PHASE II:
XIIth five Year plan (2012-2017) reinforces the Government’s focus on NS – EW corridor and other national
infrastructure creation and upgradation. It envisages a total investment of Rs. highways
41 trillion in the infrastructure segment in order to attain a 10% economic Length : 6647 kms
growth. PHASE III:
Upgrading and four – laning of
The Indian road network comprises expressways, national highways, state national highways
highways, major district roads and rural and other roads. National Highways Length : 12109 kms
are the key constituents of India's road network since they carry 40% of the PHASE IV:
total road traffic although they constitute only 2% of the total road network. Improvement of national highways
Activity in the road space is picking up as a result of increased project award Length : 14799 kms
by the National Highway Authority of India (NHAI). The authority has awarded PHASE V:
projects spread over more than 6,491 km in FY12. This follows from 5,000 Six laning of existing four lane
kms of project awards in FY11. The overall target for FY13 is even higher at highways
8,800 km. In the recently held meeting on infrastructure sector chaired by the Length: 6500 kms
Prime Minister, the target for road sector award was set at 9,500 km in FY13.
PHASE VI:
Expressways
Over the years, the size of projects awarded by the authority has increased, Length : 1000 kms
both in terms of length and project cost. Project award is expected to remain
PHASE VII:
robust over the next few years, given the number of projects in the pipeline. Ring Roads, bypasses, flyovers
We expect momentum in project award to continue, given the government’s Length: 700 kms
ambitious target.
BMA Wealth Creators Equity Research

11. Model Portfolio Update
IL&FS Transportation Networks Ltd.
Investment Concerns Rising Debt Levels
High debt burden: ITNL’s debt-equity stood at 3.8x in FY12. The increase in
debt at consolidated level is mainly on account of drawdown happening from
sanctioned debt in accordance with construction progression. ITNL’s business
model is vulnerable to interest rate fluctuations and any hike in interest rates
could increase the company’s interest costs
Execution risk: Delay in completion of construction of road may result in cost
overrun or may raise requirement of additional finance. Extended construction
period will also cause loss of toll revenues for this extended period, as
construction period is part of total concession period.
FY09 FY10 FY11 FY12 FY13E
Sales Revenue 1,225 2,408 4,048 5,606 7,657
Sales Revenue Growth 239% 97% 68% 38% 37%
EBITDA 287 879 1,233 1,589 1,907
EBITDA Margins 23% 36% 30% 28% 25%
Profit Before Tax 78 524 674 785 887
Profit After Tax 29 338 450 539 603
Earnings Per Share 1.72 17.41 23.15 27.74 31.03
FY09 FY10 FY11 FY12 FY13E
Equity 921 1,704 2,274 2,684 3,107
Debt 1,854 3,322 5,467 10,269 12,812
Debt-Equity ratio 2.01 1.95 2.40 3.83 4.12
Number of shares 17.14 19.43 19.43 19.43 19.43
FY09 FY10 FY11 FY12 FY13E
Current Ratio(x) 1.96 2.93 2.39 2.45 2.41
Book Value 53.74 87.69 117.06 138.18 159.93
Interest Coverage Ratio 1.44 2.69 2.33 2.08 2.01
Price to Earnings Ratio 95.76 9.46 7.11 5.94 5.31
Price to Book Value Ratio 3.06 1.88 1.41 1.19 1.03
Valuation
A well-balanced mix of toll and annuity road projects, rich experience of its parent company and a strong order-
book that provides future visibility gives a positive outlook for the company. In the current competitive
environment, IL&FS Transportation is much better placed than other road development players with better
project evaluation methods and IL&FS group background. We place IL&FS Transport in our preferred picks and
assign a Buy rating on ITNL with a target price of Rs. 250 based on 8x FY13E earnings.
BMA Wealth Creators Equity Research

12. Model Portfolio Update
Larsen & Toubro Limited Target - Rs. 1665 /-
Target - 55
Investment Rationale
Increased outlay for infrastructure in 12th Five year Plan: The Indian
Planning Commission, has envisaged a total investment of ~$1 trillion in
infrastructure in its 12th Five Year plan (almost double the investment in 11th
Five Year Plan). L&T is the largest E&C company in India and one of the
largest in the world. Infrastructure contributes nearly 40% of the order book of
Sector Infrastructure Cons.
the company. Given the prospects of increased infrastructure investment in
India in the medium-term, we expect L&T to capitalize on the same BSE Code 500510
NSE Code LT
Order inflow robust at Rs19,594 crore: The order inflow of the company is CMP (as on 10.08.12) 1423.95
robust at Rs19,594 crore. The management believes that the company's 52 Wk. High/Low 1723.00/969.15
performance is on track to achieve its guidance of a 15-20% growth in both Sensex/Nifty 17557.70/5320.40
inflows and revenues in FY13. The current order book stands at Rs.1,53,095
Shares outstanding (Cr.) 61.24
crore. The majority of the orders are received from the private players from the
transportation, building and factory segments. Going forward, the company Face Value 2
expects good traction from the new markets like West Asia and South-East Market cap (Rs. Cr.) 87202.70
Asia Daily avg. Volume 2178634
Free Float (%) 90%
Value Unlocking Going Forward: The L&T board has approved the
restructuring of the company and implementation of the plan is underway. As Larsen & Toubro vs. Nifty
per the plan, the engineering and infrastructure giant will be divided into nine
virtual companies, each of which will have full fledged management team of its
own and will also manage its own profit and loss account. Some of the
companies formed out of L&T will be listed on the bourses before 2015. Each
of them is worth a billion dollars in revenues or has the potential to reach there
soon.
Tight rates hit industrial, construction expenditure; reversal to aid
investments: Sustained rate tightening by the regulator had impacted
industrial capex over the last 6-8 quarters. With a more than 350bps increase
in rates, project investments across manufacturing, mining, power and
construction space have experienced a substantial decline. All three major
sectors like manufacturing, mining and construction saw growth dipping below SHAREHOLDING PATTERN
the 10-year average growth rate. With the rate hike cycle expected to reverse As on 30th June,2012
in the next 12-15 months, industrial and construction capex is set to see an
uptick, leading to a favorable ordering cycle for L&T which gets substantial Promoters --
business from rate sensitive clients. FII 14.07%
Financial Snapshot DII 38.41%
Others 47.52%
FY11 FY12 Y-o-Y %
Net Sales 52043.78 64313.11 23.58%
Total Expenditure 43735.55 54367.77 24.31%
Interest 1931.42 2894.41 49.86%
Profit After Tax 4447.66 4682.29 5.28%
P/Ex 19.49 18.62 --
EPS 73.05 76.46 4.67%
BMA Wealth Creators Equity Research

13. Model Portfolio Update
Larsen & Toubro Limited
Company Background
Larsen & Toubro (L&T) is the country’s largest engineering and construction Order Book Breakup
Company, with a dominant presence in India's infrastructure, power,
hydrocarbon, machinery and railway related projects. The company along with
its group companies provides integrated design, engineering, procurement,
construction and project management services to various sectors.
Considered as the bellwether of the Indian engineering sector, L&T is
renowned for its strong execution capabilities and professional management.
The company’s proven track record of nearly six decades in executing
complex and diverse projects has helped to establish a very strong brand
image. With a customer base spanning across 30 countries, the company has
significantly increased its global footprint, along with a notable presence in the
Middle East.
Revenue & PAT Trend
The company is present in multiple operating segments such as Engineering &
Construction (E&C), Electrical & Electronics (E&E), Machinery & Industrial
Products (MIP) and others. The E&C division of L&T undertakes engineering
design and construction of buildings, factories, infrastructure, industrial and
power transmission & distribution, while the E&E segment is engaged in
manufacturing of electrical standard products, systems and equipment. The
MIP division of L&T is focused on manufacturing industrial valves, construction
and hydraulic equipment, machinery for mining, paper and rubber processing
industry. Through its subsidiaries like L&T Finance, L&T Infrastructure Finance
and L&T Infotech, L&T has also diversified into financial services and the
IT/ITeS sector.
Industry Overview
Engineering and Construction industry forms the backbone of any economy as
it is intensely linked with many other core sectors. The Indian engineering
sector, is the largest segment of the Indian industry and also the largest
foreign exchange earner for the country.
The various core sectors of the country, in particular, Power, Transportation
Infrastructure, Hydrocarbon, Fertiliser, Defence, etc, faced multiple challenges
in FY12 due to policy delays. Consequently the commitments on capital
expenditure and fresh investments were deferred, impacting the growth in
the order inflow of the industry during 2011-2012.
Despite the prevailing economic uncertainties, the year 2012-2013 holds
prospects of gradual build-up in the growth momentum of the Indian economy.
Infrastructure development assumes prominence in the Government's budget
proposals for the year 2012-2013. Thus the near term prospects look bright for
the sector with a revival in the Indian Economy.
BMA Wealth Creators Equity Research

14. Model Portfolio Update
Larsen & Toubro Limited
Investment Concerns
Policy inaction: Many projects in sectors like ports, airports, defence and
fertilizers are at various stages of regulatory approval, which would be followed
by financial closure. A significant delay in granting necessary approvals would
postpone the order pipeline. Also, a sizeable portion of revenues of the
company is derived from power sector, which is facing fuel crisis, SEBs issues,
environmental issues, etc. This might defer new projects and execution of the
existing ones.
Further deterioration in macro environment may lead to a subdued order
book: A suppressed macro environment, both domestically and globally, may
lead to a slowdown in order awards, which, in turn, would hammer the revenue
visibility going forward
FY09 FY10 FY11 FY12 FY13E
Sales Revenue 40,377 43,833 52,044 64,313 73,960
Sales Revenue Growth 38% 9% 19% 24% 15%
EBITDA 6,440 9,152 8,922 9,656 10,621
EBITDA Margins 15.95% 20.88% 17.14% 15.01% 14.75%
Profit Before Tax 5,184 7,481 6,800 6,974 7,630
Profit After Tax 3,758 5,442 4,448 4,682 5,097
Earnings Per Share 64.16 90.37 73.05 76.46 83.23
FY09 FY10 FY11 FY12 FY13E
Equity 13,988 20,991 25,051 29,387 33,546
Debt 20,370 24,607 24,841 36,156 37,602
Debt-Equity ratio 1.46 1.17 0.99 1.23 1.12
Number of shares 58.57 60.22 60.885 61.24 61.24
FY09 FY10 FY11 FY12 FY13E
Current Ratio(x) 1.18 1.21 1.12 1.07 1.12
Book Value 238.82 348.58 411.44 479.86 547.78
Interest Coverage Ratio 9.03 8.24 8.38 9.22 9.53
Price to Earnings Ratio 22.19 15.76 19.49 18.62 17.11
Price to Book Value Ratio 5.96 4.09 3.46 2.97 2.60
Valuation
L&T has continuously evolved to effectively benefit from emerging trends and opportunities. The company has
acquired higher adaptability, enabling it to seize macro opportunities and wither volatility better than its peers.
With the global downturn in the recent past, the company has taken several measures to accelerate its growth
momentum. The stock currently trades at 18.62 times its FY12 earnings. We expect the company to deliver a
superior performance and assign a price target of Rs. 1665 based on 20x FY13E earnings.
BMA Wealth Creators Equity Research

15. Model Portfolio Update
Ingersoll-Rand (India) Limited Target - Rs. 575/-
Target - 55
Investment Rationale
Capacity Expansion: The Air Solutions provider, IRL has planned to invest
$100 million (over Rs 450 crore) in the next three years to set up a new plant,
increase its existing capacities and expand its reach in India. The company is
setting up a new plant in Chennai in south India at an approximate cost of
around Rs 100 crore. It has also forayed into the Cold Chain Consultancy KEY MARKET DATA
segment in August 2011. This Cold market size is estimated to be around Rs Sector Non Electric Equip.
800 crore and is growing at the rate of 20-22%. Further, it would invest around BSE Code 500210
Rs 50 crore in the next two to three years at its existing Narola plant in
NSE Code INGERRAND
Ahmedabad. This additional capex in Narola plant will be for newer and higher
range of compressors. The company is also planning to set up new CMP(as on 10.08.12) 455.50
manufacturing unit in Chennai with the CAPEX of $22 million and it is 52 Wk. High/Low 548.8/354.05
expected to become operational by Q1-FY14. This would be INGR’s third Sensex/Nifty 17557.70/5320.40
manufacturing unit after Naroda (Gujarat) and Sahibabad (Uttar Pradesh).
Shares outstanding (Cr.) 31.57
Other than this, it is running two technology centers in Bangalore and
Chennai. Thus, with the support of technology of the parent company, IRL Face Value 10
(India) will be ready to manufacture and supply every range and capacity of Market cap (Rs. Cr.) 1441.33
compressors. Daily avg. Volume 7753.7
Boosting Quarter: In Q1FY13, the company has posted an EPS of Rs 7.18. Free Float (%) 29.94
This has been a big jump from the previous quarter EPS of 6.57, as the new
factory production has started. Next year, with 100% capacity coming into
Ingersoll Rand vs. Nifty
operation, IRL is expected to clock a topline of Rs 690-700 crore and a
bottom-line of Rs 92-99 crore.
Zero Debt & Strong Cash-flow: IRL’s debt book stands clear with zero debt.
Further, the company had cash and bank balance of Rs 450.61 crore as on
June 2012. This translates into cash per share of Rs 143. The company is
expected to utilize this cash by way of acquisition and/or distribution to the
shareholders in the form of dividend/buyback. Further, it will also act as
additional benefit and would support the company in times of hardening
interest rates.
Regular Dividend Model: IRL has a continuous track-record of regular
dividend since last 21 years. Moreover since last nine years, the company has
maintained a rate of 60% dividend on face value of Rs10. Thus, along with the
capital appreciation and growth benefit, the investor stands to gain the regular SHAREHOLDING PATTERN
dividend benefit. This makes the company, a further safe bet for investment.
As on 30th June, 2012
Financial Snapshot Promoters 74.00%
FIIs 2.87%
FY11 FY12 Y-o-Y % DIIs 4.34%
Net Sales 492.74 592.02 20.15%
Public 18.79%
Total Expenditure 440.54 534.08 21.23%
Interest 0.54 0.47 -12.96%
Profit After Tax 68.62 82.76 20.61%
P/Ex 21.95 20.41 -
EPS 20.75 22.32 7.57%
BMA Wealth Creators Equity Research

16. Model Portfolio Update
Ingersoll-Rand (India) Limited
Company Background Business Segment
Ingersoll-Rand (India) Limited engages in the manufacture and sale of
compressors in India and internationally. It offers reciprocating compressors, Ingersoll-Rand's Main focus area is
centrifugal compressors, system components, and air conditioner bus Air Solution Segment
packages. The company’s products are primarily used in the automotive,
metals, cement, textiles, and pharmaceutical sectors. It also offers contract
manufacturing services to its associate companies. Main Products of the company
are Air Compressors and
Ingersoll-Rand (India), a 74% subsidiary of Ingersoll Rand Company, U.S., has Stationary Generators
its presence in India since 1921. The company established its first
manufacturing plant in India in 1965 and became a public limited company in
1977. Its manufacturing facilities in Ahmedabad are ISO 9001:2008 certified
and those Sahibabad ISO 9001:2000, ISO 14001:2004 & OHSAS 18001:2007 Company Performance
certified.
Ingersoll Rand’s products are known in the market for their quality and
reliability. With strong sales presence in over 15 locations across the country
and with an all wide national distributor network, the company is a dominant
player in its business of providing solutions for infrastructure development,
industry and climate control.
Worldwide, Ingersoll Rand Corporation is moving from a product-centric
approach towards a solutions-centric approach. It is no longer an engineering
company offering world-class products but one that provides customers with
solutions based on these products. In India, Ingersoll Rand is working in three
key areas of productivity by leveraging its local manufacturing operations in
Ahmedabad and Sahibabad, innovating through its engineering R&D centers Industry Performance
in Bangalore and Chennai, and growing through the expanded footprint in the
country.
Besides compressors, Ingersoll Rand offers the widest range and technologies
for air treatment and filtration solutions, storage solutions and energy savings
controls solutions as well as energy saving compressed air modular piping and
distribution solutions for increasing the overall efficiency of the entire system,
besides reducing maintenance costs and downtime.
These products growth is fuelled by the increased demand in domestic
consumption as well as exports. Ingersoll Rand is well positioned to leverage
the opportunities.
BMA Wealth Creators Equity Research

17. Model Portfolio Update
Ingersoll-Rand (India) Limited
Investment Concerns Stabilization & Growth
Lack of Diversification: IRL’s excessive concentration in the Air solutions
providing segment, results in lack of diversification. This makes the company’s
growth highly dependent on a single product.
High Degree of Competition: Market for Air solution products continues to be
highly competitive.
Rising Material Cost: Escalation in raw material cost and other inputs can
lead to reduced profitability.
FY09 FY10 FY11 FY12 FY13E
Sales Revenue 373.90 356.55 492.74 592.02 693.20
Sales Revenue Growth -23% 5% 38% 20% 17%
EBITDA 107.06 79.15 106.43 128.75 69.90
EBITDA Margins 28.63% 22.20% 21.61% 21.75% 10.08%
Profit Before Tax 102.73 73.15 101.15 123.24 142.30
Profit After Tax 67.2 47.7 68.62 82.76 95.50
Earnings Per Share 20.27 14.01 20.75 22.32 30.30
FY09 FY10 FY11 FY12 FY13E
Equity 747.39 772.67 819.24 813.95 900.45
Debt 0 0 0 0 0
Debt-Equity ratio - - - - -
Number of shares 3.157 3.157 3.157 3.157 3.157
FY09 FY10 FY11 FY12 FY13E
Current Ratio(x) 6.63 6.87 6.72 6.81 6.80
Book Value 236.74 244.75 259.5 257.82 267.42
Interest Coverage Ratio 605.29 40.54 188.31 263.21 110.95
Price to Earnings Ratio 22.47 32.51 21.95 20.41 15.03
Price to Book Value Ratio 1.92 1.86 1.76 1.77 1.70
Valuation
At the current market price of Rs 455.50, the stock is trading at a P/E of 15.03x FY13E earnings estimate. With
economies of scale, new product launches and technological innovations, the top-line’s growth is expected to be
translated into bottom-line's growth, going forward. Currently, the company does not have any debt on its books
and we expect it to use internal accruals to fund its ongoing expansion. We recommend a Buy on the stock with a
price target of Rs 575 based on 19x FY13E earnings.
BMA Wealth Creators Equity Research

18. Model Portfolio Update
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