Stock Views on HEG, Bharati Shipyard, Phillips Carbon, Mercator Lines

SKP Securities on HEG - Target Rs 319

SKP Securities has maintained its buy rating on HEG with a target price of Rs 319 in its October 31, 2008 research report. "Net sales were up 14.61% for Q2FY09 at Rs 295.39 crores. At the current level of Rs 135.25 and excluding the investment value ,HEGL is trading at 2.74 x FY09E earnings and 1.74 x FY10E earnings of Rs. 35.90 and Rs 56.58 respectively. We have valued the core business of the company at 5 x FY10E earnings, taking value of the stock to Rs 282.91 per share. The value of the company is further increased by Rs 37 per share by discounting HEGL's investment value in Bhilwara Energy Ltd. by 50%. We maintain our BUY recommendation on the stock with a target price of Rs 319 per share, upside potential of 137%," says SKP Securities' research report.

Angel on Bharati Shipyard - Target of Rs 179

Angel Broking has recommended buy rating on the Bharati Shipyard with a target price of Rs 179 in its October 29, 2008 report.“Bharati is one of the leading companies in the Shipbuilding space in India. It has a healthy Order-book position and expects to augment it on getting more clarity on the possible delivery schedules that it can provide clients. The company is also ramping up its production capacity. The company envisages no problem in augmenting its Order book as it caters to the niche segment of off-shore vessels where demand continues to be strong on account of the attractive crude oil prices. Also, the company does not expect any order cancellations to happen as its charges all its customers 20% advance at the time of booking the order, and shipbuilding being a long drawn process involving 2-3 years, buyers have to make bookings with a long-term prospective.”

“We are downgrading our diluted EPS estimate for FY2010E to Rs44.7 (Rs49.4) on the back of expected increase in labour and other operating costs. We are downgrading our FY2010E Target PE multiple to 4x (7x previously) revised 18-month Target Price of Rs 179 (previously 12-month Target Price of Rs 346). However, at current levels, Bharati is trading at an attractive PE of 1.5x FY2010E Earnings and 0.2x FY2010E P/BV. We maintain a Buy in the stock,” says Angel's research report.

Angel on Phillips Carbon - Target Rs 134

Angel Broking has recommended a buy rating on the Phillips Carbon Black with a target price of Rs 134 in its October 29, 2008 report. “India’s economic growth is expected to slow down in FY2009 to 8% as the RBI keeps a tight Monetary Policy and the government initiates a slew of measures to rein in inflation ahead of Parliamentary elections next year. Interest rates have also spiked substantially, which would impact the Interest rate-sensitive sectors including the Auto sector. Invariably, the Tyre industry would also get affected. But, around 60% of the Tyre demand is from the Replacement segment, which cushions companies like PCBL which are directly dependent on the Tyre industry growth rate.”

“There would continue to be huge demand from the Tyre Replacement segment due to the huge vehicle population getting added over the years, and because of PCBL’s market leadership position it would stand to benefit. We expect PCBL to record CAGR of 21.2% in Top-line over FY2008-10, while Bottom-line would grow at a CAGR of 3.1% in the mentioned period. At the CMP, the stock is trading at 2.2x FY2009E and 1.7x FY2010E Earnings and 3.4x FY2010E EV/EBITDA. We maintain a Buy on the stock, with a revised Target Price of Rs134 (Rs219). We revise the Target P/E multiple downwards to 4x FY2010E in line with the valuation contraction in broader indices,” says Angel's research report.

Networth on Mercator Lines - Target Rs 147-160

Networth Stock Broking has maintained its buy rating on Mercator Lines with a target price range of Rs 147-160 in its October 31, 2008 research report. "Net sales for Q2FY09 have increased by 75.9% to Rs 6493 million against Rs 3690.9 million in Q2FY08. Coal mining Operation contributed 5.7% to this growth. Mercator lines has sold 129000 MT of coal in Q2FY09."

"Going forward we believe MLL to post an EPS of Rs 15 in FY09 and Rs 24.6 in FY10. Apart from this the coal mining operations in Indonesia have began which started contributing to the earnings. At a CMP of Rs 33.55, the stock is trading at P/E of 2.4x and P/BV of 0.89x its FY08 earnings. We have valued the stock at 6x- 6.5x its FY10E consolidated earnings and so our target price range is Rs 147-160. We maintain our ‘BUY’ recommendation on the stock," says Networth's research report.