Stock Views on TCS, Bharti Airtel, HDFC, IOC

Anand Rathi on TCS - Target of Rs 650

Anand Rathi Securities has recommended a buy rating on Tata Consultancy Services, TCS with a target price of Rs 650 in its November 17, 2008 research report. "TCS added 51 clients (gross) in 2QFY09, taking total active clients to 920. 1H09 saw TCS close 16 deals vis-à-vis 14 deals in 1H08. It is currently in pursuit of 20 deals. Its share of revenue from fixed-price projects is the highest of its peers (43.9% of TTM revenue). Efficient execution of these projects, along with decreasing share of domestic business, augurs well for TCS’ profitability. TCS trades at 8.8x FY09 and 9.9x FY10 estimated earnings."

"We rate it a Buy with a target price of Rs 650 at a target PE multiple of 10x its one-year forward earnings. At our target price, it would trade at 7.4x EV/EBITDA our one-year forward estimates. Our DCF valuations for TCS assume an 8.5% risk-free rate, a 6% risk premium and a 3% terminal growth rate. The DCF-based fair value, after taking estimated growth till FY10 and 10% growth during FY10-15, is Rs 645," says Anand Rathi's research report.

IIFL on Bharti Airtel, Idea Cellular

IIFL has recommended to buy Bharti Airtel with a target of Rs 877 and Idea Cellular with a target of Rs 72, add Reliance Communications (RCOM) with a target of Rs 360, sell Tata Communications with a target of Rs 335 and MTNL with a target of Rs 85.

IIFL's report on Telecom sector:

As expected the 3G & BWA auctions information memo carries some unexpected twists it permits foreign companies to bid within the 74% FDI ceiling and simultaneously permits incumbents to own 26% in another bidding entity creating the possibility that foreign companies and incumbents may associate through this route. No separate 3G spectrum charges will be levied but 2G spectrum charges will apply on 2G and 3G revenues creating a possible incentive for incumbent GSM operators to liberate and return excess 2G spectrum by migrating traffic to 3G and thus lowering spectrum charges. The 3G auctions will be for the 2100MHz band and for fewer blocks than expected and will commence on 16th January 2009. The government is expected to wrap up the entire process by February 2009. The document is very detailed and professionally organised which indicates the governments desire to ensure timely completion of the entire process.

Sharekhan on HDFC - Target of Rs 2805

Sharekhan has maintained its buy rating on Housing Development Finance Corporation (HDFC) with a target price of Rs 2805 in its research report. "We believe, HDFC is among the better-diversified players in the Indian financial services space with leadership position in mortgage market and strong presence in other financial services (life insurance, asset management and banking). Operationally, HDFC’s fund mobilisation abilities and operational efficiency should help maintain healthy earnings momentum in a tough operating environment. We maintain our Buy recommendation on the stock with a price target of Rs 2,805," says Sharekhan's research report.


Indiabulls Securities on IOC - Target of Rs 479


Indiabulls Securities Research has upgraded its rating on Indian Oil Corporation (IOC) to buy with a target price of Rs 479 in its research report. "With global oil prices at their peak in Q2’09, Indian Oil Corporation Limited (IOC) reported a net loss of Rs 70.5 billion as it was unable to pass the full effect of the price increase because of government controls. We have revised our estimates to incorporate the effect of the recent fall in the crude prices and the depreciating rupee. Based on our relative valuation, we have arrived at a target price of Rs 479, which provides an upside potential of 17%. Thus, we have upgraded our rating on the stock to Buy," says Indiabulls Securities' research report.