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Stockselect Performance Review

1 July 2011

We know that our quarterly review of past recommendations is one of the most eagerly awaited updates amongst our subscribers. Every quarter we therefore make it a point to review our estimates keeping the long term picture in mind. This quarter, as is the case with the first quarter of every fiscal, we carried out the most in depth reviews after going through the management discussions in recently published annual reports. Also the review this quarter carries our views from the perspective of estimated financials for the financial year 2013-14 (FY14) as against FY13 estimates taken over the past 3 quarters. To give you a head up on the variables that govern our long term projections - the lingering inflation, stickiness of high commodity prices, high interest rates and global economic instability - have the biggest influence. However, we have taken a cautious note of companies that can tide over the margin and growth pressures. Whether or not India heads into a period of temporary recession, we believe that some companies will continue to create value for shareholders. Going forward we see the consumption story (especially cars and homes) taking a backseat for the time being. Companies may also delay their capex plans in light of higher borrowing costs. This could dampen the GDP growth prospects for the near term. However, we agree with the RBI that it is necessary to sacrifice short term growth in order to tackle the inflationary monster effectively. Despite the fact that most of the negatives for Indian companies are for the near term, the Sensex has been one of the worst performers among major emerging markets in 2011. But, the worst is still not behind us. While a strong monsoon should help ease food inflation, the recent diesel hike will increase the costs of transporting agricultural produce. This is expected to further stoke the price rises, and may cause RBI to step in once again. Reduced duties on crude oil and petrol products are expected to result in a revenue loss for the government. Plus with the volatile stock market, it looks like the government's divestment target will not be met for this fiscal. Its ambitious plans for reducing the country's fiscal deficit may once again remain on paper. Globally the debt crisis in the US and Greece remain the biggest dampeners on market sentiments. At over 18,000 levels the benchmark BSE-Sensex is currently slightly higher than the level it was at the end of FY10. But, this level is nearly double the close of FY09. While markets may continue to remain volatile for most part of the coming fiscal, it is the ebbs that can help us to pick up stocks at reasonable valuations. We are optimistic about the long term prospects of the Indian economy. However, we wouldn't be surprised to see some negative surprises in terms of corporate earnings, and inflation. Therefore we advise investors to buy into only those companies which have stable

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managements, pricing power, and ability to tide over margin pressures, at attractive bargains. With that we present you a review of our Stock Select recommendations. This time onwards, we will be reviewing all our 'unique' (we will not be repeating the companies) StockSelect recommendations that still have open positions. By open positions we mean recommendations that have yet to complete the tenure of 2.5 years or have yet to meet the target price. In 2010, a good portion of our recommendations were Sells. The main reason why we asked you to avoid adding or holding them in your portfolio was because these stocks were trading at unsustainable valuations. Advising caution, we thus asked you to book profits at those high levels. More than three fourth of our Sell recommendations made in 2010 managed to correct by over 10% so far. Some of our 'Sell' recommendations last year, which turned out to be very successful were on stocks like BHEL, Voltas, Ashok Leyland, SBI etc, which saw a correction of around 15% or more. Worth mentioning that the correction in 2011 offered us the opportunity to recommend 'Buys' on some of these where 'valuation' was the only issue. Rest assured, we will continue to advise you once the prices of other stocks under our coverage are trading at more reasonable valuations. Here is a review of all our Stock Select recommendations which are still open (i.e. the target price has not been met as yet) Stock Select recommendation review (All unique open positions as on June 27th 2011)
Company Hero Honda L&T HPCL Aventis Pharma Dr. Reddy's IDFC Tata Motors GE Shipping Tata Steel IDBI Bank Piramal Healthcare Corporation Bank Wipro Power Fin Corp Axis Bank BHEL Union Bank Biocon Limited NTPC HDFC Bajaj Auto TCS Date View Price on reco. (Rs) Target price Current price * Change# Current View 30-Jan-10 20-Mar-10 10-Apr-10 11-Jun-10 Buy Sell Sell Sell 1,565 1,620 309 1,840 1,480 180 772 303 630 159 518 790 425 340 1,327 2,210 329 409 197 640 1,312 1,187 2,030 NA NA NA 2,100 250 1,100 450 811 210 675 1,025 NA 455 1,910 2,930 445 515 260 NA 1,750 1,490 1,852 1,786 415 2,053 1,505 128 977 280 588 133 378 521 422 184 1,305 1,967 314 356 182 674 1,381 1,151 18% Under Review 10% Sell 34% Under Review 12% Under Review 2% Under Review -29% 27% -8% -7% -17% -27% -34% -1% -46% -2% -11% -5% -13% -8% 5% 5% -3% Buy Sell Hold Buy Buy Buy Buy Sell Buy Buy Buy Hold Buy Hold Sell Hold Hold

25-Jun-10 Hold 2-Jul-10 Hold 9-Jul-10 20-Aug-10 Buy Buy

24-Sep-10 Hold 1-Oct-10 Hold 8-Oct-10 Hold 4-Nov-10 Hold 12-Nov-10 26-Nov-10 Sell Buy 19-Nov-10 Hold 3-Dec-10 Hold 17-Dec-10 Hold 24-Dec-10 Hold 7-Jan-11 Hold 14-Jan-11 21-Jan-11 Sell Buy

28-Jan-11 Hold

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PNB Glenmark Pharma Oriental Bank Voltas ING Vysya Ashok Leyland Essel Propack Maruti Suzuki Infosys Gail Power Grid Corp. Indraprastha Gas Bank of Baroda Bharti Airtel Cipla Limited Tata Power Gujarat Gas UltraTech Cement HDFC Bank

4-Feb-11 11-Feb-11 18-Feb-11 18-Feb-11 4-Mar-11 18-Mar-11 25-Mar-11 1-Apr-11

Buy Buy Buy Buy Buy Buy Buy Buy

1,063 284 330 158 316 52 43 1,183 3,218 470 105 321 874 367 248 318 1,250 380 967 2,381

1,560 380 545 225 465 65 69 1,535 4,150 577 135 415 1,290 600 355 416 1,775 NA NA 3,060

1,064 317 335 159 337 49 47 1,153 2,868 457 109 373 885 396 258 331 1,288 393 959 2,416

0% 12% 2% 1% 7% -6% 9% -3% -11% -3% 4% 16% 1% 8% 4% 4% 3% 3% -1% 1%

Buy Hold Buy Buy Buy Buy Buy Buy Buy Hold Hold Hold Buy Buy Buy Hold Hold Sell Sell Hold

11-Mar-11 Hold

8-Apr-11 Hold 15-Apr-11 Hold 21-Apr-11 6-May-11 13-May-11 Buy Buy Buy Buy

Crompton Greaves 20-May-11

27-May-11 Hold 3-Jun-11 Hold 10-Jun-11 17-Jun-11 Sell Sell

24-Jun-11 Hold

* Current price as on June 27, 2011 NA - Not applicable Note: Click on the company name to view its latest update

# Calculated by dividing current price by recommended price

Also, our recommendations that met their target prices during 1QFY12 (April - June 2011) are as follows:
Company Reco Date View Price on record date Target price (Rs) % Gain/ Loss# Target met on Novartis Grasim 22-May-10 4-Jun-10 Hold Buy 594 1,780 810 2,557 36.4% 43.7% 13-Jun-11 4-Apr-11

# Calculated by dividing current price as on 27th June 2011 by recommended price

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