Dec 2009 Dec 2010 % growth Net Profit Net sales

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1 QUARTER 3- EARNINGS UPDATE ITC-Q3 RESULTS BEAT MARKET ESTIMATES ITC ltd. has reported a 21.4 per cent growth in net profit during the third quarter against the corresponding period in the previous year. In absolute term it registered a PAT of Rs 1, crore (Rs 1, crore). The net sales stood at Rs 5, crore (Rs 4, crore). The net sales grew by 19 per cent, primarily driven by robust sales of cigarettes, packaged foods, agri and paperboards divisions. Dec 2009 Dec 2010 % growth Net Profit Net sales The agribusiness segment of the company posted a stronger performance during the quarter. On revenue of Rs crore, ITC s agricultural commodity business posted an operating profit of Rs crore, 35.5% higher than corresponding period last year. The performance was underlined by higher soya and coffee trading volumes and improved performance in leaf tobacco exports. The branded packaged foods business clocked an improved performance with sales growing by 24 per cent during the quarter. The hotels industry continues to make gradual recovery from the lows witnessed in and ITC's hotel business leveraged the relatively improved business environment to record a robust performance during the quarter with segment revenues and segment profits growing by 15 per cent and 16 per cent, respectively. The clear leaders within the consumer goods division was packaged foods. It helped ramp up the division sales by around Rs.212 crore over the same period last year to Rs crore. Sales of packaged goods grew 24% during the quarter, driven by robust sales of Sun feast biscuits and Bingo potato chips. This shows ITC has managed to secure its business from being impacted by the food price inflation. The only business that didn t live up to the analyst s expectations was paperboards. Though its revenue was 8% higher at Rs crore, operating profits declined 5% from the same period last year to Rs As per the company s management, the disappointing paperboards division performance was mainly because of inventory depletion caused by the uncertainty over the change in pictorial warnings on cigarette packets.

2 The company s thrust on larger investments towards increasing the scale of the other Businesses (such as non-cigarette FMCG, hotel, and paper, paperboard and packaging Businesses) provide greater visibility of the strong earnings growth in the long run With the economy back on the growth path, and the consumer sentiment improving consequently, the fast moving consumer goods industry looks poised for a happy, healthy and prosperous year ahead. At current market price of Rs.170, the stock trades at 15.9 times its FY10EPS of Rs.10.64, and we expect the company to trade at 16 times its FY2011E EPS of Rs and thus, we maintain a BUY rating for a potential upside of 14-17% and investors entering at this stage with a medium term view can see the stock at levels of Rs TCS Profit jumps 30% on all-round growth The continuing demand for IT services across developed markets coupled with a spike in non-operational income has propelled Tata Consultancy Services to record a 30% rise in Net profit for the quarter ended December31. The company writes software applications and manages back office processes for multinational companies such as GE, Citibank and Ferrari. The company recorded a net profit of Rs.2370 crores as against Rs.1824 crore reported in the year ago period. Revenues for the quarter under review were up by 26.3% to Rs.9663 crore as against Rs.7649 crore corresponding quarter in the previous year. Dec 2009 Dec 2010 % growth Net profit Net sales KEY HIGHLIGHTS Volumes witnessed an impressive growth of 5.7% Q-o-Q in Q3 FY11 despite it being a weaker quarter Pricing increased 1.2% QoQ in Q3 FY11 and it is expected to remain stable in the near term. 35 new clients added and consecutive quarter of highest ever employee gross additions PAT increased 9.2% QoQ to Rs.2370 crores in Q3 FY11 exceeding our expectations primarily due to forex gain and higher other income. EBITDA margin improved marginally in Q3 FY11 to 30% (+11 bps QoQ) The results are better than market expectation, which was around 22 per cent. The growth is driven by the banking, finance, services and insurance (BFSI) segment, and signs of

3 revival in the US economy. TCS outperformed its peer Infosys Technologies, which reported about 14 per cent growth in its quarterly numbers, announced on January 13. TCS has outperformed market expectations in terms of operating revenues and profit after tax. The jump has come due to rise in other income, which includes forex gain during the quarter. The company is very aggressive in its approach and is delivering good quarterly numbers sequentially. After the slowdown, demand is returning to the Indian IT firms, which have been posting good numbers in the last 3-4 quarters. We expect company to do well in coming quarters. Stock is trading at a PE multiple of 26. Going forward we expect company to grow its EPS by 18-20%. Every dip should be taken as an opportunity to buy the stock. SRF s PAT at Rs.171 crore- a growth of 350% SRF is a leader in refrigerants, engineering plastics and industrial yarns in India. The company also manufactures polyester films and fluoro specialties. Besides India, SRF has a presence in Dubai, South Africa and Thailand SRF's net profit for the quarter ended December 31, 2010 galloped 355% and stood at Rs crore against Rs crore for the quarter ended December 31, Total income of the company stood at Rs for the third quarter ended December 31, compared to Rs crore in the same period last fiscal. The company has reported net sales / income from operations of Rs crore for the quarter ended December 31, 2010 against Rs crore for the quarter ended December 31, The EPS of the company stood at Rs for the quarter ended December 31, 2010 as compared to Rs 6.21 for the quarter ended December 31, KEY HIGHLIGHTS Q3 FY revenue at Rs.844 crore- 72% growth Q3 FY PBT at Rs.237 crore- 355% growth 9Month PAT at Rs.347 crore- 74% growth 9Month revenue at Rs.2211 crore-46% growth The improvement in SRF s financial performance is attributable to the improved performance in most businesses. Riding on the robust demand, SRF s Packaging Films Business recorded an operating profit (EBIT) of Rs. 146 crore during third quarter of the current financial year as against Rs. 6 crore over Corresponding Quarter Last Year. The segment revenue of the company s Packaging Films Business also increased by 285 per cent to Rs. 278 crore during the period. SRF s other two key businesses, Chemicals and Technical Textiles also posted an increase in segment revenue of 87% and 18% respectively during the period. The operating profit (EBIT) of the Chemicals Business and Technical Textiles were recorded at Rs. 73 crore and Rs. 41 crore respectively as

4 against Rs. 11 crore and Rs. 48 crore recorded by the two businesses the same period last year. Reflecting on the results, the company hopes to maintain the trend in the remaining part of the current financial year. Stock is trading at a PE multiple of 3.8. Recent fall in the market presents good opportunity to invest into the stock, as going forward we expect stock to catch up its earnings and rise from current levels. BIOCON Q3 net up 24% Biotechnology firm Biocon quarterly profit rose by a fourth, aided by strong sales of its biopharmaceutical drugs and profit in research services, lifting its shares over 3 per cent. Riding on sound growth in branded formulations and statins, Bangalore-headquartered biopharmaceutical company, Biocon Ltd, has registered a net profit of Rs 101 crore in the third quarter of the current financial year, a rise of 24 per cent compared to the same period of the last financial year. While the company s total income rose by 15 per cent to Rs 738 crore, against Rs 642 crore posted in the year-ago period, its operating profit saw a significant rise of 34 per cent to Rs 178 crore during the same period. Biocon has delivered the highest-ever net profit this quarter and has crossed the Rs 100-crore mark. The operating margin has also increased to 24 per cent, reflecting the improved quality of earnings, Biocon Chairman and Managing Director Kiran Mazumdar- Shaw said. She also added that this would enable the company to invest in advancing research programmes and expanding manufacturing and marketing partnerships in the future. During the third quarter, the income from the company s biophamaceutical business rose by 15 per cent to Rs 649 crore, compared to Rs 566 crore last year. There is strong growth in sales of immunosuppressants, statins and other branded formulations segment, Shaw said. The six verticals in branded formulations diabetology, oncotherapeutics, nephrology, cardiology, dermatology and comprehensive care have posted a 32 per cent growth in the first nine months period of the current financial year. The company s contract research business also witnessed traction during October- December period. Earnings from contract research grew by 14 per cent to Rs 79 crore during this period, compared with Rs 69 crore in the corresponding period last year. Both Syngene and Clinigene have shown significant traction in the business growth due to new offerings like value added services and more partnership based work, she said. However, Biocon's German subsidiary, AxiCorp has witnessed slow growth due to the regulatory imposition by the German government. The German government asked the

5 drugmakers to provide a 16 per cent rebate over the next three years, Biocon said in a statement. The product revamp will hurt the company in the March quarter as well, it added. Biocon had recently entered into an agreement with US-based pharmaceutical company Pfizer to market its four bio-similar products in the insulin space --- Recombinant Human Insulin, Glargine, Aspart and Lispro --- in the global market, for which the company will receive around $350 million (Rs 1600 crore) as licensing and marketing fees. With more U.S FDA clearance and its recent agreement with Pfizer, will benefit its bottom line. We expect stock to rise from current levels. CFS FINANCIAL SERVICES RESEARCH DESK