WOW INDIA - DISHMAN PHARMA + INDIA BULLS +GMR INFRA+GARWARE OFF

Broking House - Motilal Oswal Securities
Recommendation - Buy


Increased outsourcing from India helps to increase the customer base. In its Report Dated 17th April 2007, Motilal Oswal Securities (Motilal) has initiated a Buy on Dishman Pharmaceuticals Ltd (Dishman) with a Target Price of Rs 270 from the Current Market Price of Rs 226.

Motilal Oswal (Motilal) states that Dishman Pharmaceuticals & Chemicals Ltd (Dishman) is set to emerge as India''s leading contract manufacturing organization for pharmaceutical intermediates and actives. The company is integrating forward from being a pure chemicals company to the pharmaceuticals business. Besides being value
accretive, this trend allows Dishman to gain improved realizations in select drug segments. Motilal informs that to take this initiative forward, Dishman acquired Carbogen AMCIS AG, (CA), a Swiss research based company with three production facilities in Switzerland for manufacture of high potent, high value products from Solutia Europe.

Motilal informs that Dishman is transitioning from a chemicals supplier to a full fledged CRAMS player. Signing of new CRAMS contracts and the Carbogen-AMCIS (CA) acquisition will enable the company to increase its CRAMS contribution from 53% of sales in FY06 to about 80% by FY08E resulting in a 430bp increase in EBITDA margins
between FY06-09.

Motilal highlights that the CA acquisition has, in one stroke, enhanced Dishman''s capabilities across the complete range of services spanning the CRAMS value chain. Further, this has opened the doorway for access to high potency capabilities and a significant number of new client relationships, besides doubling Dishman''s revenues. CA is expected to grow at a CAGR of about 15-18% in CY07E and CY08E.

Motilal believes that partnerships with large innovators like GSK, Merck, Astra Zeneca, J&J and Novartis imply good long term potential for the CRAMS business, resulting in 25% revenue CAGR (excl. CA) for FY06-09. Motilal estimates Dishman is likely to be one of the key beneficiaries of the increased outsourcing from India, resulting in 32% earnings CAGR over FY07-FY09. The stock is currently valued at
14.6x FY08E and 12.6x FY09E consolidated earnings. RoE is estimated at between 30-34% and RoCE in the 18- 20% range over FY07-FY09. Motilal has initiated coverage with a Buy with a price target of Rs 270 (15x FY09E earnings) implying an upside of 19.5%.

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Broking House - Merrill Lynch
Recommendation - Buy



stronger traction and growth due to Consumer Finance Business In its report dated April 18, 2007 Merrill Lynch (ML) has initiated Buy coverage for Indiabulls Financial Services at CMP of Rs. 489.65 with a price objective (PO) of Rs. 525 to Rs 560

ML mentions that Indiabulls is a leading equity brokerage set up in the mid- 1990s, provides equity and derivative brokerage services to the retail segment, which accounts for 60-65% of the total market volumes in India. ML points out that Indiabulls also provides consumer finance to the lower middle income segments of the society, a high-risk, high-return business. Through another JV, it has also
diversified into real estate and property development.

ML has raised its PO on IFSL to Rs 560 by 7% (from Rs525) owing to much stronger traction and growth prospects on the consumer finance business. As ML has raised the value of the consumer lending business by 35% to Rs 359/shr (at 2.6x FY09E BV) supported by rising ticket size and an expanding product profile as IFSL seeks to move up the income segment. However, ML has simultaneously cut the value of the
brokerage business by 25% to Rs 204/shr (15x FY09E earnings) owing to slower growth v/s earlier.

ML estimates that IFSL''s earnings are expected to rise 3 fold by FY09 driven by a 5 fold rise in consumer finance earnings owing to 6 fold forecast jump in the loan book (and factoring sharp margin compression). Consumer finance ROE to rise to 35% by FY09E. The drag would be from margin finance business which would grow at 20% pa.ML
states that broking earnings expected to grow at CAGR of 50% driven by rising fees and factoring in moderation in brokerage revenues owing to overall market volume moderation.

ML continues to value the brokerage on a P/E basis relative to benchmark market multiples, given the vulnerability and dependence of this business to markets. ML have valued this business in sync with market multiples, valuing it, one year from now, at 15-16x estimated one year forward (FY09) earnings, implying valuation range of US$1.1-1.2bn for the brokerage entity.

ML makes us aware that IFSL''s 4QFY07 earnings were about 33% ahead of the estimates owing to strong fee revenues from insurance distribution and strong upsurge in consumer lending. Broking was somewhat disappointing.
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Broking House - Kotak securities
Recommendation - Buy



Commonwealth Games likely to support for target? In its report dated 4th April. Kotak Institutional Equities Research (Kotak) has recommend "Buy" on GMR Infrastructure (GMRI) at its CMP of Rs 340 with Target of Rs 465.

Kotak states that GMR Infrastructure (GMRI) is a developer of infrastructure projects across the airport, road and power sectors. Its current portfolio includes two airports (Delhi and Hyderabad, with 950 acres real estate), six road projects (both annuity and toll, 422 kms) and three operating power projects (810 MW). The infrastructure space offers a US$30 bn opportunity for private developers over the
next five years-we believe GMRI is well placed to ride this opportunity.

Kotak mentions that GMRI outbid its competitors to win the Delhi and Hyderabad airport concessions, spotting immense growth and value-generation potential in airports. GMRI captures the frenetic pace of air traffic growth as well as upsides from non-traditional revenue streams and adjoining real estate by developing these airports as ''Aerotropolises''. Optimal financial structuring lowers GMRI''s
risk profile and maximizes shareholder value, says Kotak.

Kotak highlights that the SOTP-based target price includes assets individually valued according to DCF, the best barometer of life-cycle cash flows. Around 83% of the value comes from airports, while the road and power portfolios contribute 8% and 7%, respectively. As a bulk of the value resides in projects under implementation that have yet to generate returns, a multiple-based valuation approach would be
inappropriate according to Kodak. As an early bird, Kotak believes that GMRI can capture growth and value creation potential in this space to generate above-sector returns. With this Kotak recommend "Buy" with a target price of Rs 465.

Kotak points out that GMRI''s mandate to get the airports ready before the Commonwealth Games in India in September 2010 mitigates Kotak worries on pre-construction and construction-related risks. Kotak is troubled though by the possibility that the yet-to-be-formed airport regulator could balk on significant tariff increases, contrary to provisions of existing agreements.
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Broking House - Emkay Research
Recommendation - Buy



Aggressive fleet expansion and demand for higher spec vessels to be key growth drivers. In its report dated 16th April, 2007 Emkay Research (Emkay) initiates
a Buy coverage on Garware Offshore Services Ltd. (GOSL) earlier known as Garware Shipping Corporation Ltd at its current price of Rs. 239 with a target price of Rs. 286.

Emkay Research (Emkay) mentions that Garware Offshore Services Ltd. (GOSL) was earlier known as Garware Shipping Corporation Ltd. which commenced business with general cargo vessels and exited from the shipping business in 1998 to diversify into the much more lucrative business of offshore supply vessels. GOSL is currently enjoying benefits of high charter rates as well as growing demand for offshore
vessels.

Emkay highlights that with oil price soaring to record high levels and global oil production spare capacity at a three decade low, global Exploration & Production (E&P) majors have lined up aggressive exploration plans to secure oil reserves. Emkay further states that through 2006-10 more than $260 billion will be spent on offshore
drilling alone and this compares well with an estimated $193 billion spent on drilling over the past five years.
Emkay states that driven by strong exploration activity, the day rates for offshore support vessels have soared to new highs. Emkay also throws light that many operators are becoming increasingly concerned with long-term availability of offshore support vessels and the fact that shipyards are booked till CY2009, the offshore services market is expected to remain buoyant at least till CY2009.

Emkay mentions that in order to capitalize on the boom time GOSL''s has chalked out an aggressive fleet expansion programme wherein its current fleet of 6 vessels would more than double to 13 vessels by the end of CY2009. Emkay quotes that the total capital expenditure for these seven vessels is a huge $150 mn as compared to the market value of $ 60 mn for its current fleet. With the acquisitions GOSL''s asset
profile would undergo a massive change with high spec deepwater vessels.

With addition of seven vessels and firm charter rates, Emkay expects GOSL''s revenues to grow at a CAGR of 64% over CY06-09E and its earnings to grow at a CAGR of 55% over CY06- 09E with EPS of Rs30.9 in CY2009. Emkay further says that at CMP of Rs239 the stock is trading at attractive valuations of 11.8x its CY2008 earnings and 7.7x CY2009 earnings. Emkay believes GOSL offers a very attractive long term play
on India''s E&P thrust as the country tries to achieve its hydrocarbon self sufficiency. Emkay initiate coverage on GOSL with a ''Buy'' rating and a price target of Rs286 based on DCF and 9.3X its CY2009 earnings.