Stock Views on Hindustan Zinc, Everest Kanto Cylinder, Paper Products

Karvy on Hindustan Zinc - Target of Rs 830

Karvy Stock Broking has maintained its buy rating on Hindustan Zinc with a target price of Rs 830 in its research report. "Hindustan Zinc (HZL) has finally got a succor in the form of restoration of customs duty on import of zinc. Zinc imports will now attract five per cent customs duty. As the total surplus zinc in warehouses of London Metal Exchange (LME) had increased to a whopping 250,000 tonnes, the domestic industry was apprehensive of cheap arrivals in India."

"We have already reduced our sales realization estimate for HZL. Even if we take the current realization in our estimates for FY2010E i.e. Rs 70,100 / tonne and factor in lower corporate tax rate of 14% due to the tax benefits for the export oriented unit, the company would still report an EPS of Rs 74. Adjusted for the cash and cash equivalents of Rs 280 per share, the stock is trading at only 2x of its core EPS i.e. EPS excluding other income for FY2010E. We maintain our BUY rating on the stock with target price of Rs 830," says Karvy's research report.

SKP Securities on Everest Kanto - Target of Rs 180

SKP Securities has recommended a buy rating on Everest Kanto Cylinder (EKC) with a target of Rs 180 in its research report. "EKC has planned a capacity expansion of 2,05,000 cylinders including the capacity for 5000 jumbo cylinders, industrial cylinders at Gandhidham with an estimated capital expenditure of Rs 650 million. EKC has made an aggressive capital expenditure plan in China, through EKC Industries (Tianjin) Co. Ltd, the company’s wholly owned subsidiary in China."

"At the current market price of Rs 140, the stock is trading at a P/E of 10.47x and 8.57x of FY09E and FY10E earnings of Rs 13.37 and Rs 16.34 respectively. We recommend BUY rating on the stock with a target price of Rs 180/- (28% upside) in 15 months implying a P/E multiple of 11x of FY10E earnings," says SKP Securities' research report.

LKP Shares on Paper Products - Target of Rs 40

LKP Shares has recommended a buy rating on Paper Products (PPL) with a target of Rs 40 in its research report. "PPL would end CY’08 with a muted performance due to the forex loss and we expect the company to bounce back next fiscal and given the fact that PPL has a comfortable debt equity of 0.3x and is generating strong free cash flows we believe that the current market price offers a good investment opportunity at a price to book of 0.7 with a dividend yield of 6.7%. We recommend a BUY on PPL with a one-year price target of Rs 40," says LKP Shares' research report.