Motilal Oswal views on Bajaj Auto, Grasim Industries, GAIL

Bajaj Auto - Target Rs 905

Motilal Oswal has maintained its buy rating on Bajaj Auto with a target of Rs 905 in its October 24, 2008 research report. "Revenues grew 8% to Rs 25.5 billion. Lower depreciation (by 33%) and lower tax rate (at 30.5% of PBT v/s 33.4% in 2QFY08) boosted recurring PAT to Rs 2.27 billion (5% de-growth). We are upgrading our earnings estimates by 12% to Rs 62.5 for FY09 and by 10.8% to Rs 72 for FY10 to factor in savings from the VRS at the Akrudi plant and savings in raw material cost. The stock trades at 7.4x FY09E and 6.4x FY10E EPS. We maintain Buy, target of Rs 905," says Motilal Oswal's research report.

Grasim Industries - target Rs 1725

Motilal Oswal has maintained its buy rating on Grasim Industries with a target of Rs 1725 in its October 23, 2008 research report. "Revenues grew 8.4% YoY to Rs 26.8 billion, driven by 17% growth in cement revenues and 45% growth in sponge iron revenues. However, higher other income and lower tax provisioning restricted PAT decline at 16% to R 4.2 billion."

"We are revising our earnings estimates downwards by 7.8% (to Rs 250) for FY09 and by 21.8% (to Rs 202) for FY10 to factor in higher cost push in cement and sponge iron, lower VSF demand and pricing, and change in cement pricing assumption. The stock is valued at 4.7x FY09E consolidated EPS, and EBITDA of 3.4x FY09E EV and USD 46/ton. We maintain Buy with a target price of Rs 1,725 (SOTP-based)," says Motilal Oswal's research report.

GAIL - Target Rs 372

Motilal Oswal has maintained its buy rating on GAIL India with a target of Rs 372 in its October 24, 2008 research report. "It reported PAT at Rs 10.2 billion, up 79% YoY from Rs 5.7 billion and 14% QoQ from Rs 8.9 billion. We remain positive on GAIL in view of increase in gas transmission volumes going forward. We expect GAIL’s transmission volumes to increase by 55% in FY10 to 130mmscmd."

"We are cutting our FY09 and FY10 EPS estimates by 4% to factor in the reduction in our LPG price assumption based on recent sharp correction in crude prices. We have also reduced FY10 gas volumes to 130mmscmd to account for delay in commencement of RIL’s gas production to 4QFY09. Our FY09 estimates could see a boost if subsidy burden is reduced due to fall in oil prices. The stock trades at 7.5x FY09E EPS. Our target price is Rs 372 per share. We reiterate Buy," says Motilal Oswal's research report.