Karvy Stock Broking views on Everest Kanto Cylinder, Great Offshore

Everest Kanto Cylinder - Target of Rs 215

Karvy Stock Broking has maintained its buy rating on Everest Kanto Cylinder with a target of Rs 215 in its November 26, 2008 research report. "EKC recently announced that they would be setting up a 50:50 JV with M/s. Tomasetto Achilles group, Argentina for carrying on the business of assembling / manufacturing of CNG kits. Currently demand supply scenario for CNG cylinders is favorable. Since CNG is a cleaner fuel, use of CNG as an alternative fuel would continue to receive government support globally. With CNG infrastructure expected to improve in many countries including India and China, demand for CNG cylinders would continue to increase. We expect the company to report robust CAGR earnings growth of 43% over FY08-FY10. So even though we are downgrading our price target, we continue to maintain our BUY rating on the stock," says Karvy's research report.

Great Offshore - Target of Rs 400

Karvy Stock Broking has maintained its buy rating on Great Offshore with a target price of Rs 400 in its November 27, 2008 research report. "At current market price the stock is trading at 3.8xFY10 and 3.2xFY11 earnings of Rs 67 and Rs 80.1 respectively. The stock is trading at 3xFY10 and 2.4xFY11 on EV/ EBIDTA. We have not factored the upside from acquisition of two companies (KEI) and RSOS which could provide further upside to our valuation. We have assumed convertible bonds as debt (Conversion price of Rs 875 per share), if bonds get converted the equity dilution (2.64 million shares) would decline our earnings and price target by 9%. We have valued the company on earnings multiple considering strong revenue visibility due to long term contracts. We have valued the company at 5x FY11 earnings to capture the impact of the upcoming assets. We maintain BUY with target price of Rs 400," says Karvy's research report.