Stock views on Suzlon Energy, KEC International, Mphasis

Anagram Research on Suzlon Energy - Target of Rs 60
Anagram Research has recommended a buy rating on Suzlon Energy with a target price of Rs 60 in its research report.

"In the last 2 years, Suzlon has traded in the range of 16 to 65 times its earnings. Whereas Vestas and Gamesa have traded in the range of 25 to 73 and 24 to 42 respectively. Historically the companies in the wind energy market have traded at high P/E levels primarily due to expected high growth of the industry. Furthermore the recent decline in the stock price of Suzlon presents an excellent opportunity for investment in the company."

"We believe Suzlon will continue to command high P/E on account of better growth prospects, well placed among peers & due to planned backward integration leading to higher margins in the future. We believe most of the bad news has already been factored in the stock price. While the long term story for the Wind Energy sector is intact and Suzlon has done well to survive amongst adversity. We recommend BUY rating on the stock with a target price of Rs 60 in 12 month period," says Anagram's research report.


Bonanza on KEC International - Target of Rs 147

Bonanza has recommended investors to buy KEC International on dips near 105-110 levels, for a target of Rs 147 in its research report.

"A RPG group company KEC is leading tower & transmission line EPC contractor. The Power sector is its main customer. It has order book of Rs 5000 crore, out of which over 70% is from overseas. It is executing orders in 15 countries presently. Given the visibility in earnings the scrip looks a good mid-term investment pick. At CMP, it trades at about 5.5 PE based on FY 09 Estimated EPS of Rs.21.7. Investors can buy on dips near 105-110 levels i.e. 5X PE, for a target of Rs 147 i.e. at PE multiple of 7," says Bonanza's research report.


Emkay Global on Mphasis - Target of Rs 240

Emkay Global Financial Services has maintained its buy rating on Mphasis with a price target of Rs 240 in its research report.

"Mphasis’s strong parentage of HP-EDS has helped it sustain high growth rates in the recent past and we believe that would continue to provide strong support in a tough demand environment. We highlight that Mphasis’s ITO business’s growth is driven by restructuring of EDS’s existing ITO contracts as the new contracts incorporate significant offshore ramp up in Infrastructure outsourcing."

"We highlight that the erstwhile EDS management (prior to the HP takeover) had categorically attributed its improved success rate in new deal wins/renewals to Mphasis’s offshore strength and had indicated that those deals had a substantial offshore component. We believe Mphasis remains the ‘Best Demand’ story in a tough macro environment helped by it’s strong HP-EDS parentage. Maintain BUY with a price target of Rs 240," says Emkay Global Financial Services' research report.

Indiabulls Securities views on Patni Computer Systems, Suzlon Energy, Mphasis

Indiabulls Securities on Patni - Target of Rs 123

Indiabulls Securities Research has maintained its buy rating on Patni Computer Systems with a target price of Rs 123 in its research report.

"Patni Computer System (Patni)’s result for CY08 was in line with our estimates. For Q4 CY08, Patni reported 6.7% qoq growth in net sales to Rs 8.5 billion, largely helped by the sharp depreciation of the rupee vis-à-vis the dollar. However, revenues went down by an expected 3.9% qoq, in USD terms, due to the global slowdown. The EBITDA margin declined 874 bps to 10.9%, owing to a weak operational performance during the quarter. Nonetheless, Patni remains an attractive value pick, considering its low EV/EBITDA. Besides, the Company has a high investment portfolio & cash position, which will work as a strong base for its stock price. Although we have reduced our target price (TP) to Rs 123 from Rs 142, we maintain our Buy rating on the stock," says Indiabulls Securities' research report.


Indiabulls Securities on Suzlon Energy - Target of Rs 53

Indiabulls Securities Research has recommended a buy rating on Suzlon Energy with a target price of Rs 53 in its research report.

"Suzlon Energy Ltd. (SEL) reported a strong operating performance during Q3’09. Net sales for the Company (Wind Group and Hansen) increased 56.2% yoy to Rs 49.5 billion, mainly on account of better sales realisations and increased sales volumes. EBITDA increased 64% to Rs 6.4 billion due to a decline in raw material costs and a 21% yoy increase in the average realisation rate."

"Though our near-term outlook for the Company has weakened because of the prevailing slowdown, we believe that the current market price more than factors the negatives. Based on our valuation, we have arrived at a target price of Rs 53 (assuming an 11.2% WACC and a 5% terminal growth rate). Since our target price provides an upside potential of 36% from the CMP, we give a Buy rating," says Indiabulls Securities' research report.


Motilal Oswal on Mphasis - Target of Rs 200

Motilal Oswal has maintained its buy rating on Mphasis with target price of Rs 200 in its research report.

"Mphasis reported QoQ revenue growth of 9.3% at Rs 9.8 billion v/s our estimate of Rs 9.6 billion for the quarter ended January 2009. The company has changed its financial year to Y/E October, in line with HP’s reporting cycle. EBIT margin at 21.5% was up 260bp QoQ. PAT at Rs 2.1 billion grew 15% QoQ with PAT margin expansion of 100bp QoQ to 21.5%. Forex gains were Rs 30.9 million in 1QFY09 v/s Rs 149 million in 4QFY08. Tax rate at 3.2% was lower than 2.8% in 4QFY08."

"Mphasis has displayed impressive execution since the last few quarters with 1] robust operating margin expansion, 2] improvement in billing rates in an environment of high pricing pressure, 3] improvement in utilization. We believe Mphasis would benefit from its strong parentage (HP and EDS) and presence in offshorable service lines like BPO, infra and application maintenance services in the near future. Maintain Buy, target price of Rs 200," says Motilal Oswal's research report.

Stock views on Power Grid, AIA Engineering, Emco, KSB Pumps

Hem Securities on Power Grid - Target of Rs 105
Hem Securities has recommended a buy rating on Power Grid Corporation of India with a target of Rs 105 in its research report.

"Power Grid Corporation of India has granted investment approval for implementation of `North East - Northern / Western Inter connector-I' Project at an estimated cost of Rs 111.30 billion with commissioning schedule of 54 months for Part A (related to HVDC) and 48 months for part B and C (related to AC) of the transmission system, from the date of investment approval."

"The net sales for the company gone up by 36.07% to Rs 14774.40 million for the Q3FY09 as against the net sales of Rs 10857.70 million for the Q3FY08. The company posted the EBITDA of Rs 12269.50 million for the Q3FY09 as against the EBITDA of Rs 8881.30 million for the Q3FY08 with the growth rate of 38.15%. We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 105 in the medium term investment horizon (3- 4 months) with an appreciation of 16%," says Hem Securities' research report.


Hem Securities on AIA Engineering - Target of Rs 178

Hem Securities has reiterated its buy rating on AIA Engineering with a target of Rs 178 in its research report.

"AIA Engineering Limited has a scalable business model, good growth visibility, high operating margin and limited competition. The company has registered a continuous robust growth rate over past few years. As discussed with the management, the Company has a strong order book position of around INR 415 crores which provides a strong visibility to their revenues. We expect the company to outperform in the future and we reiterate “BUY” on the stock with a target of Rs 178," says Hem Securities' report.


KRChoksey on Emco - Target of Rs 36

KRChoksey has maintained its buy rating on Emco with a target price of Rs 36 in its research report.

"Emco Ltd has received five orders worth Rs 550 crore from the state-run Power Grid Corporation of India Ltd for a 765 kilo volt overhead transmission line. The orders also involve supply of galvanised steel towers. In Q3FY09, company’s witnessed drop of 14.6% & 45.7%(YoY) in net sales & PAT to Rs 207.9 crore & Rs 8.2 crore. The topline declined mainly due to intentional delay in deliveries to industrial clients and issues in sourcing of key components. We maintain our BUY rating on the stock with target price of Rs 36, with an upside potential of 38.5% from current levels," says KRChoksey's research report.


KRChoksey on KSB Pumps - Target of Rs 242

KRChoksey has recommended a buy rating on KSB Pumps with a target price of Rs 242 in its research report.

"In Q4CY08, the company’s sales have increased by 33% on a y -o-y basis to Rs 174.7 crore from Rs 131.8 crore. The growth in sales was on account of rise in the revenues from pumps segment by 47% y-o-y.The growth of the pump industry would be driven by the heavy investments being made in the user industries, such as power and petrochemicals."


"The growth of the pump industry would be driven by the heavy investments being made in the user industries, such as power and petrochemicals. However delay in the expansion plans of user industries and volatility in raw material prices going forward can affect the company’s earnings. We recommend a BUY with a target price of Rs 242, implying an upside potential of 17%. At the target price, the stock would be valued at 5.5x CY09E EPS of Rs 43.4," says KRChoksey's research report.

IIFL views on Nestle, Cipla

IIFL on Cipla - Target of Rs 246

IIFL has maintained its buy rating on Cipla with a price target of Rs 246 in its research report.

"We expect Cipla’s core earnings to register a CAGR of 36% over FY08-11, significantly aided by rupee depreciation and consequent margin expansion, apart from accelerated growth in volumes. Recent capacity expansion through new plants in Indore and Sikkim will contribute to volume growth. Recent industry reports indicate the return of growth momentum in the domestic pharma market, where Cipla has one of the strongest franchises, especially inrespiratory medicine."

"In the long term, it can also benefit from consolidation in the domestic market. Cipla’s unique business model of registering products in other countries and partnering with other companies to market them makes it the best counter-cyclical play in the Indian pharma space. We are raising our FY09-11 earnings estimates by 5-20% and raising our price target to Rs 246 from Rs 215. Maintain BUY rating," says IIFL's research report.


IIFL on Nestle India - Target of Rs 1800

IIFL has recommended a buy rating on Nestle India with a price target of Rs 1800 in its research report.

"Nestle’s earnings growth of 29% in 4QCY08 was significantly ahead of our estimate. Sales growth was broadly in line with estimates at 22%, driven by a robust 25% growth in the domestic FMCG business, while exports declined by 10%. This is the 9th consecutive quarter of strong sales growth. EBITDA margin expanded by 188bps YoY, thanks mainly to a 174bps YoY reduction in ‘other expenses’ as proportion of sales, as operating leverage from sustained rapid growth kicked in."

"Raw-material cost, surprisingly, dropped 45bps YoY owing to a combination of price hikes and other cost optimisation measures, though prices of key inputs like milk, wheat and sugar remained high. We believe Nestle’s presence in high-growth categories, its dominant marketshare and the strong line-up of new products launched in 2008 will help sustain 18-20% growth in CY09 and CY10. Buy, target price of Rs 1800," says IIFL's research report.

IIFL views on IVRCL Infrastructure, Bharti Airtel, Reliance Communications

IIFL on Bharti Airtel - Target of Rs 710
IIFL has upgraded its rating on Bharti Airtel to buy with a target price of Rs 710 in its research report.

"The amended IUC regulations (effective 1 April 2009) will come as a relief for Bharti, despite a MTC (mobile termination charge) cut from Rs 0.3 to Rs 0.2 (in line with our expectations). It could have been worse: the rival lobby had been pushing for an MTC cut to zero, which would have significantly dented Bharti Airtel’s earnings. Besides, a cut to zero would have enabled Reliance Communications, RCOM and other start-up networks to price outgoing cross-network plans far more effectively, and possibly resulted in a congestion in Bharti’s network. On the other hand, the cut does represent a setback to Bharti’s rural expansion economics."
"Mobile-to-fixed termination charge has also been cut from Rs 0.3 to Rs 0.2, and this is favourable to wireless operators. Incoming TC on ILD has been raised only to Rs 0.4 from Rs 0.3, well below our expectation. We estimate that all these TC cuts -after factoring in licence fees, spectrum charges and service tax-will take 3.2% off Bharti’s EPS in FY10ii and FY11ii. We see the termination amendments as the termination of a lengthy period of uncertainty for Bharti. For the present, we see no significant regulatory threats, despite imminent change at the helm in TRAI. RCOM’s gains from this mild move will be limited, whereas Idea Cellular should be relatively unaffected. We upgrade Bharti to BUY with a target price of Rs 710," says IIFL's research report.


IIFL on Reliance Communications - Target of Rs 220

IIFL has recommended a buy rating on Reliance Communications with a target price of Rs 220 in its research report.

"RCOM has upgraded its CDMA network to 3G and launched wireless broadband under the name Reliance Netconnect Broadband Plus. The product will be available in 35 top cities from 17 March in the form of data cards and modems. The company has already placed a Rs 3 billion order with Huawei and ZTE for 1m such USB modems, with 100,000 modems expected to be delivered this week. We believe that this is a significant positive for RCOM and enables it first-mover advantage (with 3G auctions postponed, no operator would be able to match its offerings) and also take better advantage of mobile number portability (MNP), expected later this year. BUY with a target price of Rs 220," says IIFL's research report.


IIFL on IVRCL Infrastructure - Target of Rs 166

IIFL has recommended a buy rating on IVRCL Infrastructure with a target price of Rs 166 in its research report.

"Purandar Lift irrigation scheme project costing Rs 2.5 billion was awarded to IVRCL in 2001 by the Maharashtra government. Construction work continued for about a year before it was stopped owing to funding constraints. CIDCO’s sewage treatment plant at Navi Mumbai, this Rs 180 million project was awarded to Hindustan Dorr-Oliver (HDO) by CIDCO. Based on sequential batch reactor process, the plant has a capacity of 25MLD. The plant has commenced purification with the operations being currently handled by HDO."

"CIDCO Seawoods Estate residential project, construction of 0.39m sq ft space under phase II of the project is in progress. Phase II costs Rs 851 milliom and is on schedule for completion in December 2009. Construction of 0.68m sq ft under phase I is complete. BUY, target price of Rs 166," says IIFL's research report.

Emkay Global views on Lupin, CRISIL, Sintex Industries

Emkay Global on Lupin - Target of Rs 789
Emkay Global Financial Services has recommended a buy rating on Lupin with a price target of Rs 789 in its research report.

"Lupin deserves a re-rating in valuations given its strong presence across the entire pharmaceutical gamut, outperformance of peers and just mid cap valuations. Lupin has attained sizable revenues across markets, pushing it into the league of big pharma companies. We initiate coverage on the stock with a buy rating with a price target of Rs 789," says Emkay Global Financial Services' research report.


Emkay Global on CRISIL - Target of Rs 3650

Emkay Global Financial Services has recommended a buy rating on CRISIL with a price target of Rs 3,650 in its research report.

"CRISIL’s CY08 numbers were in line with our expectations. The operating revenues have grown by 31%yoy to Rs 5.3 billion. The reported net profit at Rs 1.4 billion has grown by 67.7% yoy. However Q4CY08 performance was moderate on account of slower growth in advisory business, Forex losses and one-time expenditure. The reported operating margins contracted by 266bps yoy and 1,630bps sequentially to 27.4% during the quarter on account of higher employee expenses, goodwill write off and Forex loss during the quarter."

"The stock is currently quoting at 9.3x CY09E EPS, The company has declared a total dividend of Rs70 per share (including Rs 35 per share interim) reflecting a dividend yield of 3.3%. We maintain our BUY recommendation with price target of Rs 3650," says Emkay Global Financial Services' report.


Emkay Global on Sintex Industries - Target of Rs 112

Emkay Global Financial Services has maintained its buy rating on Sintex Industries with a target price of Rs 112 in its research report.

"The current economic situation has prompted us to re-visit our earnings estimates for Sintex. We expect stumbling blocks in key business interests including monolithic construction, important growth driver for Sintex. Consequently, we have revised our assumptions for FY08-FY11E and factored-

1) lower revenue CAGR of 68% in the monolithic construction vertical versus earlier CAGR of 93%,

2) 8% revenue CAGR in standalone custom molding vertical versus 30% CAGR earlier,

3) 25% revenue CAGR in standalone prefabs vertical versus 36% CAGR earlier and 4) 29% decline in net profit of subsidiaries versus 64% CAGR earlier. The overall impact on consolidated earnings is 13% (Rs 23.7), -19% (Rs 24.8) and -26% (Rs 29.6) for FY09E, FY10E and FY11E respectively."

"We expect revised earnings CAGR of 23% during FY08-FY11E. At CMP of Rs 88, the stock is trading at a valuation of 3.5x FY10E earnings and 0.5x FY10E book value - attractive valuations for growth business. Thus in light of strong growth prospects, healthy balance sheet, excellent track record and ROIC of 13%, we maintain ‘BUY’ with a revised target price of Rs 112," says Emkay Global Financial Services' research report.

Angel Broking views on Pantaloon Retail, Bosch, Zee News

Angel Broking on Pantaloon Retail - Target of Rs 239

Angel Broking has maintained its buy rating on Pantaloon Retail with a target price of Rs 239 in its research report.

"We are bullish on the long-term growth prospects of the Retail Sector despite the ongoing slowdown in the economy. Our Top Pick PRIL is the largest player in the Indian Retail Sector. We are positive on PRIL as it has been able to maintain its growth (YTD) at a healthy 31% on a Standalone basis and 34% on a consolidated basis despite the slowdown. We believe that PRIL Standalone would be able to meet our FY2009 and FY2010 Net Sales estimates of Rs 6,894 crore and Rs 8,492 crore, respectively. We estimate PRIL Standalone to clock Net Profit of Rs 154.6 crore and Rs 217.8 crore in FY2009 and FY2010, respectively.

On the bourses, the PRIL stock has witnessed significant correction in the past few months and is currently trading at attractive valuations and provides favourable risk-reward for the investors. We have valued PRIL's stake in FCH, HSRIL and Future Bazaar at Rs 33, Rs 13 and Rs 20, respectively. We maintain a Buy on the stock, with SOTP target price of Rs 239, translating into an upside of 73% from current levels," says Angel Broking's research report.


Angel Broking on Bosch - Target of Rs 3600

Angel Broking has maintained its buy rating on Bosch with a target price of Rs 3,600 in its research report.

"For 4QCY2008, Bosch India reported 13.5% yoy growth in Net Sales to Rs 974 crore, which was marginally below our expectation of Rs 994 crore. This came on back of 17% yoy decline in Auto segment while other businesses posted robust 33.1% growth. We maintain a Buy on the stock, with a target price of Rs 3,600 at which level the stock would trade at a P/E of 18x," says Angel Broking's research report.


Angel Broking on Zee News - Target of Rs 37

Angel Broking has recommended a buy rating on Zee News with a target price of Rs 37 in its research report.

"We have valued ZNL on DCF Methodology to capture long-term value creation from the Regional markets and the growing Subscription opportunity, particularly for Broadcasters. Moreover, ZNL's current Earnings and Cash flows do not capture full potential of its new businesses (these are under heavy investment mode), which we believe are likely to substantially bolster Profitability post attaining maturity."

"Assuming WACC of 12.3% and Terminal growth rate of 4%, our target price based on FY2010 estimates works out to Rs 37 at which the stock would trade at a P/E of 14.9x and EV/EBITDA of 8.1x, which is significantly below its historical average P/E band of 25-30x. We initiate coverage on the stock, with a buy recommendation implying potential upside of 28% from current levels," says Angel Broking's research report.

Sharekhan views on Crompton Greaves, ICICI Bank, JP Associates

Sharekhan on Crompton Greaves - Target of Rs 210

Sharekhan has maintained its buy rating on Crompton Greaves with a price target of Rs 210 in its research report.

"The board of Crompton Greaves Ltd (CGL) has decided to buy back the company’s shares and will be meeting on March 24, 2009 to finalise the buy-back exercise. At the current market price, the CGL stock is discounting its FY2010E earnings by 7.4x. In our view, the valuation of the stock is compelling, as it clearly does not capture the growth prospects of the company, and this could have prompted the management to buy back the company’s shares. Furthermore, CGL’s strong balance sheet (a low debt-equity ratio at the consolidated level and net cash position at the stand-alone level) provides the company enough headroom to carry out the process smoothly."

"We believe the domestic power business would be the key revenue driver for the company in the near future (thanks to the increasing spend on power T&D projects in the country). It will also aid CGL to grow its revenues at a compounded annual growth rate of 20.7% over FY2008-10. We maintain our Buy recommendation on the stock with a price target of Rs 210," says Sharekhan's research report.


Sharekhan on ICICI Bank - Target of Rs 505

Sharekhan has maintained its buy rating on ICICI Bank with a price target of Rs 505 in its research report.

"As part of its strategy of focusing on capital preservation and improving asset quality, the bank does not intend to grow its balance sheet aggressively in the coming fiscal. It expects a balance sheet growth in mid single digits for FY2010, with the loan mix likely to shift further away from the retail segment."

"In view of the management, the pressure on the margins is likely to persist till H1FY2010 as the loan mix shifts away from the high yielding retail segment and a larger chunk of the wholesale deposits gets re-priced during the September-December 2009 period, paving the way for some margin expansion during H2FY2010."


Sharekhan on JP Associates - Target of Rs 112

Sharekhan has maintained its hold rating on Jaiprakash Associates with a target price of Rs 112 in its research report.

"We have revised our estimates downward to factor in the delay in the commissioning of cement capacity and the delay in the execution of real estate projects. We continue to value the company using the SOTP valuation methodology and value the stock at Rs 112. We have taken into account the delay in the commissioning of cement capacity in our valuation. Hence, we maintain our Hold recommendation on the stock," says Sharekhan's report.

Sharekhan views on KSB Pumps, Indian Hotels, Bharti Airtel

Sharekhan on KSB Pumps
Sharekhan has maintained its buy rating on KSB Pumps in its research report.

"KSB Pumps has reported a strong top line growth of 31.4% to Rs175.4 crore for Q4CY2008. However, its margins declined on both year-on-year (y-o-y) and sequential bases on account of a change in the product mix and a greater contribution of the project business in the earlier quarters. KSB Pumps is likely to spend about Rs 200 crore over the next four years to raise its capacities. Looking at its almost debt-free status, funding of the same is not likely to be an issue, though we would try to get an update from the management regarding any changes in its capex plans. We maintain our Buy recommendation on the stock while we put the price target of the stock under review," says Sharekhan's research report.


Sharekhan on Indian Hotels - Target of Rs 82

Sharekhan has maintained its buy rating on Indian Hotels Company with a price target of Rs 82 in its research report.


"A significant slowdown in business and leisure travel has led the occupancies of the hotel industry to fall from 75% to 58% year on year (yoy) and the average room rate (ARR) decline by 17% yoy in January 2009. As for the hotel industry, we believe the occupancies and ARRs of Indian Hotels Company will also remain under pressure in Q4FY2009 and FY2010,
however the addition of new room inventory should help drive growth in FY2010. We maintain our buy recommendation on the stock with our price target of Rs 82," says Sharekhan's report.


Sharekhan on Bharti Airtel - Target of Rs 789

Sharekhan has maintained its buy rating on Bharti Airtel with a price target of Rs 789 in its research report.

"As per media reports, American Tower Corporation (ATC) is all set to acquire India-based independent tower company, Xcel Telecom. The deal, if it materialises, can give us certain indications of the ruling valuation of the domestic tower company and be used as a yardstick to value Bharti Airtel’s tower business."

"If we use the Rs 0.52 crore per tower valuation of Xcel Telecom to value the 61,355 towers of Bharti Infratel as on December 2008, the value for Bharti Airtel works out to Rs 31,814 crore and that for Bharti Airtel’s 92% stake in its tower subsidiary works out to Rs 154.2 per share. This is much ahead of the value of Rs 112 per share taken by us in our price target for the stock based on the discounted cash flow method. We maintain our Buy recommendation on the stock with a price target of Rs 789 per share," says Sharekhan's research report.

Karvy Stock Broking views on Axis Bank, Nitin Fire Protection, Ipca Laboratories

Karvy Stock Broking on Axis Bank - Target of Rs 629

Karvy Stock Broking has maintained its buy rating on Axis Bank with a target price of Rs 629 in its research report.

"We have revised our Axis Bank earning estimates after a visit to the bank's senior management; we expect that the bank's credit growth would moderate to 31.5% (Y/Y) to Rs 1,146 billion from our earlier credit book estimate of Rs 1,226 billion in FY10. Net interest margin is estimated to shrink by 30 bps to 2.57% in FY10.The bank's core fee income growth momentum is expected to come down to 28% (Y/Y) in FY10 from 70% in FY08 and 50% in 9MFY09. The bank's management did not provide with any guidance or estimates on non-performing assets front; we expect 152% (Y/Y) rise in gross NPA in FY10 to Rs 21.5 billion and increased credit cost to 1.3% in FY10 from 0.71% in FY08 and 1.1% 9MFY09."

"We increase our earning estimates for FY09 by 5.0% to Rs 17.7 billion and reduce for FY10 by 9.6% to Rs 15.5 billion and reduce our target price by 29% to Rs 629 per share.We estimate the bank to record RoAE of 18.8% and 14.4% in FY09 and FY10 respectively. We re-iterate our BUY rating on the stock with a target price of Rs 629 at 2.2x adjusted book value FY10," says Karvy Stock Broking's research report.


Karvy Stock Broking on Nitin Fire Protection

Karvy Stock Broking has changed its recommendation on Nitin Fire Protection Industries from buy to outperformer with a price target of Rs 160 in its research report.


"In the fire protection and security business, the demand has been negatively impacted due to slowdown in construction activity - both commercial and residential. Of the various contracts awarded to the company, Nitin Fire has not been able to execute few of them because of the client's decision to slowdown or hold that particular project. Accordingly that would lead to difficult 4QFY09 for the company."

"We expect the company's earnings to grow by 32% during FY10E primarily on back of better capacity utilization of the company's Vizag plant. However due to slowdown in the construction activity and corporate capex plans; we expect the company's fire protection and industrial cylinder segment would be hampered in FY10E. On back of lowering of our EPS estimates and lowering of PE multiple to reflect the current market valuation, we are reducing our price target by 33% to Rs 160 and change our recommendation from BUY to Outperformer," says Karvy Stock Broking's research report.


Karvy on Ipca Laboratories - Target of Rs 500

Karvy Stock Broking has maintained its buy rating on Ipca Laboratories with a price target of Rs 500 in its research report.


"The company's domestic formulations business which accounts for 40% of FY 2008 revenues should grow by 10% in FY 2009. The low growth has been on account of the tender business of Rs 600 million in FY2008 which is marginal in the current year. The overall branded revenues are Rs 1800 million as against Rs 1200 million in the previous year. The export API revenues should do around Rs 2500 million as against Rs 1940 million in the previous year. We maintain BUY on the stock with a price target of Rs 500 based on 7.1x FY 2010E," says Karvy Stock Broking's research report.

Karvy views on Tata Steel, Kalpataru Power, Indraprastha Gas

Karvy on Tata Steel - Target of Rs 270
Karvy Stock Broking has maintained its buy rating on Tata Steel with price target of Rs 270 in its research report.

"Tata Steel's Corus and other subsidiaries have reported EBIDTA of Rs 28.6 billion during Q3FY2009, which is 26% and 65% lower on YoY and QoQ respectively. Though the numbers are better than consensus estimates, the higher than expected EBITDA was mainly on account of undisclosed amount of hedging gains. EBITDA margins fell 350 bps YoY to 8.6%."
"We are revising our earnings estimate for FY2009 and FY2010. Earlier, we had factored in a 10% fall in steel prices and a 15% fall in raw material prices over FY2009 price level. Our revised estimates take into account a 25% fall in steel price a 20% fall in raw material price. As a result, our APAT estimate for FY2010 comes to Rs 48 billion, which is 30% lower than the previous estimate. Accordingly, our revised price target for the stock comes to Rs 270. We maintain our BUY rating," says Karvy Stock Broking's research report.


Karvy on Kalpataru Power - Target of Rs 284

Karvy Stock Broking has upgraded its rating on Kalpataru Power Transmission from market performer to buy with a price target of Rs 284 in its research report.

"Kalpataru Power Transmission (KPTL) announced on 4th March 2009, that the company has bagged orders worth Rs 3.73 billion from Power Grid Corporation of India (PGCIL) for supplying power transmission equipment in India. This is followed by a large order worth USD 250 million (Rs 12 billion) from Ministry of Energy and Water, Kuwait during January 2009. Including the new order from PGCIL, total order book of KPTL (standalone) is Rs 48 billion (including L1) with an average execution period of 22 months. The latest project secured from PGCIL is expected to commence from March 2009 and scheduled to be completed within 27 months. Hence, we expect partial revenue to be booked in FY10 and remaining in FY11."
"We maintain our revenue and earnings estimates and retain our price target of Rs 284, based on 4.5x FY10 earnings. However, owing to recent price correction, we upgrade our rating from Market performer to BUY," says Karvy Stock Broking's research report.


Karvy on Indraprastha Gas - Target of Rs 155

Karvy Stock Broking has maintained its buy rating on Indraprastha Gas with a target price of Rs 155 in its research report.


"IGL's Q3FY2009 results were depressed due to the provision of Rs 175 million made for a disputed demand from the gas supplier, which might have adversely affected the stock price performance. However, the future growth prospects for IGL appears bright driven by increased conversion of private four-wheelers to CNG, acceleration in the conversion of light commercial vehicles (LCVs) to CNG and a sustained growth in piped natural gas (PNG) customers.

At current levels, the stock quotes at a P/E of 6.7x FY2010E EPS of Rs 15.1 and 2.8x EV/EBIDTA of FY2010E. We continue to value the stock based on one year forward EV/EBIDTA multiple of 5x with target price of Rs 155. We believe that the 5x multiple captures the concerns over the sustainability of margins," says Karvy Stock Broking's research report.

Stock views on Sintex, FAG Bearing, Tech Mahindra, Bank of Baroda

HDFC Securities on BOB - Target Rs 336

HDFC Securities has maintained its buy rating on Bank of Baroda with a price target of Rs 336, in its research report." Bank of Baroda (BOB) reported strong PAT growth of 41.4% YoY to Rs 7.1 billion on the back of strong operating performance. PAT was up on the back of NII growth of 46.6% YoY as well as very good treasury performance. Bank of Baroda has improved its NII performance where it has been laggard in last few quarters. It was done by reducing reliance on bulk deposits as well as expanding yield on advances. We maintain our BUY recommendation and price target of Rs 336," says HDFC Securities' report.


Reliance Money on Tech Mahindra - Target Rs 292


Reliance Money has maintained its buy rating on Tech Mahindra with a target of Rs 292 in its research report. "Tech Mahindra (TML) reported disappointing sequential performance with revenues in USD term declining by 14% qoq to USD 231.9 million. Net profit for the quarter declined by 5% qoq to Rs 2228 million (Excluding tax write back of Rs 673 million in Q2FY09). Weak industry environment coupled with expectations of weak results have led to a significant correction in TML shares prices in the last three months, down by 65% from a high of Rs 631 in October 2008. We maintain BUY on TML with a target price of Rs 292, at our target price the stock will be valued at 4X FY10E," says Reliance Money's research report.


Angel Broking on FAG Bearing - Target Rs 350

Angel Broking is bullish on FAG Bearing and has recommended buy rating on the stock with a target of Rs 350, in its report. "FAG Bearings’ prospects are derived from demand arising in the Capital Goods and Automobile industry. We believe industry valuations are likely to remain subdued in the near term due to overall slowdown in the sector. The company posted CAGR of 14% and around 30% in Revenue and Profit over the last five years, respectively. Going ahead, over CY2008-10E, we conservatively model, volumes to record a CAGR of 7-8%, which will drive around 9-10% growth in Revenues and around 10% growth in Net Profit in the mentioned period. We believe Revenue growth will be largely driven by higher contribution from new products."

"We bank on the company’s strong fundamentals of consistently recording high RoE and RoCE. Further, its debt free status would help it post better Bottom-line growth amidst a high Interest Rates regime. At the CMP of Rs 261, the stock is quoting at 4.5x CY2009E Earnings, which is much lower than its historical P/E of around 14x. We maintain a Buy on the stock, with a Target Price of Rs 350 owing to its debt free status and strong Balance Sheet, which would act as a cushion in overall industrial slowdown," says Angel Broking's research report.


IIFL on Sintex India - Target Rs 123

IIFL has recommended an add rating on Sintex India with a target of Rs 123, in its report. "Key raw-material costs are down 40% from their peak and 15% from YTDFY09 average levels in January 2009. We believe a compensating volume growth in FY10 will be difficult, given that OEMs account for 45% of Sintex’s FY09ii revenues. Non-auto OEMs remain vulnerable in the current slowdown as the company lost a US$10m contract in the wind energy segment at Wausaukee. Though aerospace and defence businesses continue to be strong, the company mentioned pricing pressures in the wind energy and medical imaging businesses. We expect Sintex’s revenues and PAT to decline 4% and 13.7% YoY respectively in FY10ii. We downgrade the stock to ADD with a target price of Rs 123/share, at 0.8x FY10ii BV," says IIFL's research report.

KRChoksey on Tata Steel, Gujarat State Petronet, Patel Engineering

KRChoksey on Tata Steel - Target Rs 280


KRChoksey has maintained its buy rating on Tata Steel with a target price of Rs 280, in its research report. "Tata steel has recorded decline in sales by 3.9% in Q3FY09 to Rs 4,735.6 crore compared to Rs 4,928.2 Crore in Q3FY08. Top line has declined due to fall in the volumes by 13.8% YoY. PAT was mainly impacted due to increase in the raw material cost. Raw material cost has increased at Rs 1,611.2 crore from Rs 902.3 crore. Various measures have been taken by government to protect steel industry from cheap imports from china and other countries. These measures will help the steel producers in the medium term. However, the major concern will come from Corus operations. We maintain a BUY recommendation on stock with a target price of Rs 280," says KRChoksey's report.


KRChoksey on GSPL - Target Rs 36

KRChoksey has maintained its buy rating on Gujarat State Petronet (GSPL) with a target of Rs 36 in its research report. "GSPL reported net sales of Rs 110.6 crore, up 6.2% y-o-y & -1.0% q-o-q. PAT was down 9.7% y-o-y and 2.6% q-o-q due to lower operating p rofit and other income. We maintain a BUY on the stock with target price of Rs 36, giving an upside potential of 20%. At the target price the stock would be valued at 4.2x its FY10E CEPS of Rs 7.1, and 1.5x P/BV," says KRChoksey's research report.


KRChoksey on Patel Engineering - Target Rs 182

KRChoksey is bullish on Patel Engineering and has recommended buy rating on the stock with a target price of Rs 182, in its report. We anticipate company to report a healthy growth in Q4 it is generally the strongest quarter. However going forward in FY10 we expect company’s sales to remain muted due to slowdown in order inflow and delays in project execution owing to liquidity crunch. On the margin front we expect the company to sustain the current margins mainly due to fall in raw material prices. However, we expect the net profit margins to improve marginally from H2FY10, due to reduction in cost of debt."

"At the CMP of Rs145 the stock is trading at a 5.2x its TTM EPS of Rs 28 and 4.3x its FY10 EPS of Rs.33.9. Due to lack of clarity on the execution of real estate projects we have valued PEL’s land bank at cost of Rs 200 crore, which gives us a value of Rs 33.3per share. We recommend a BUY on the stock with a target price of Rs 182. At the target price of 182, the stock will be trading at 5.4x FY010E EPS," says KRChoksey research report.

KRChoksey on Indraprastha Gas, ICICI Bank, Dishman Pharma

KRChoksey on ICICI Bank - Target Rs 608

KRChoksey has recommended a buy rating on ICICI Bank with target price of Rs 608, in its research report. "The Bank registered 0.4% y-o-y growth in Q3FY09 in its Net Interest Income of Rs 1,990.5 crore as against Rs 1,982.2 crore in Q3FY08. Interest earned declined by 1.2% y-o-y to Rs 7,836.1 crore, while interest expended decrease by 1.8% y-o-y to Rs 5,845.7 crore. We recommend a BUY on the stock with a 12 month target price of Rs 608, giving an upside potential of 63% from current level," says KRChoksey's research report.


KRChoksey on Dishman Pharma - Target Rs 209

KRChoksey has maintained its buy rating on Dishman Pharmaceuticals & Chemicals with a target price of Rs 209, in its research report. "In Q3FY09, the company’s sales have increased by 36.5% on a Y-o-Y basis to Rs 282.0 crore driven by strong performance from MM segment, US subsidiary Carbogen Amcis and also from the consolidation of Solvay Vitamin business. The net profit of the company increased by 23.5% Y-o-Y to Rs 39.7 crore. We maintained BUY rating to the stock with a target price of Rs 209, implying an upside potential of 78.3%," says KRChoksey's research report.


KRChoksey on Indraprastha Gas - Target Rs 130


KRChoksey has maintained its buy rating on Indraprastha Gas with a target price of Rs 130, in its research report. "Revenue was in-line with our estimate and increased by 20.1% y-o-y and 2.0% q-o-q to Rs 219.4 crore owing to higher CNG & PNG volumes which were increased by impressive 18% y-o-y and 31% y-o-y respectively. Operating margin declined significantly to 31.2% as IGL had provided Rs 17.5 crore towards excess gas drawn from GAIL in Q2FY09 & Q3FY09. We have maintained a BUY on the stock with target price of Rs 130," says KRChoksey's research report.

LKP Shares on Kennametal, Godrej Consumer, Dhampur Sugar Mills

LKP Shares on Kennametal - Target Rs 225

LKP Shares has recommended a buy rating on Kennametal India (KIL) with a target of Rs 225, in its research report. " Kennametal India Ltd (KIL) being the largest player in the listed space derives 80% of its annual revenues from the Hard Metal and Products space and 20% from Machine Tools. The business continues to be India Centric with exports accounting for only 5% of its revenues.First half of the current fiscal witnessed a 4% drop in revenues at Rs 1795 mn and PBT dropping 16% to Rs 310 million (Rs 370 mn) led by margin compression in the hard metal division."


"Despite the projected de-growth in earnings this fiscal and the fact that KIL would likely report an EPS of Rs 20 during FY'09, given the resilience of the company arising out of the support of its parent and competitive strengths relative to its peers within the industry we believe that KIL trading at 7xFY'09E earnings can be accumulated with a one-year price target of Rs 225. BUY" says LKP Shares' research report.


LKP Shares on Godrej Consumer - Target Rs 165

LKP Shares has recommend a buy rating on Godrej Consumer Products with a price target of Rs 165, in its research report. "Godrej Consumer Products Ltd had enjoyed double digit volume growth in a benign cost environment during the period FY' 05-FY' 07 and post its overseas brand acquisitions and the subsequent integration issues and impact of leverage on consolidation it witnessed a deviation from the linear trend in earnings growth due to rising input costs in its soaps business."


"We believe that the company could explore international acquisitions in the hair care segment going forward. Q3 witnessed robust volume growth of 19% in soaps when industry growth was 5% and as price increases are ruled out for some time we do see volume growth in soaps converging towards value growth which was 20% for GCPL in the first nine months of the current fiscal. We recommend a BUY on the stock with a one-year price target of Rs 165," says LKP Shares' research report


LKP Shares on Dhampur Sugar Mills - Target Rs 45

LKP Shares is bullish on Dhampur Sugar Mills and has recommended a buy rating on the stock with a target of Rs 45, in its research report. “We recommend a BUY on Dhampur Sugar Mills Ltd - DSM based on improved prospects for the sugar business on account of buoyancy in sugar prices arising due to low production in India, increased traction from the co-generation business and savings in interests costs due to swapping of high cost loans (total debt of Rs 6 billion) with low cost loans from the sugar development fund.”

“With a stock of 1.35 lac tons at the end of Q1-FY'09 we expect DSM to crush up to a maximum of 2.8 million tons this fiscal by operating for 115 days. DSM sells refined sugar under the brand - Dhampure. Q1-FY'09 witnessed sugar realizations of Rs17.9 per kg as compared to Rs14.3 per kg in the same period last fiscal and after accounting for the notional foreign exchange loss of Rs 50mn, DSM posted a net profit of Rs137mn for the quarter and expanded power capacities now at 145mw with an exportable surplus of 80mw contributed to the earnings during the quarter. We expect DSM to post a net profit of Rs 300mn this fiscal and Rs 550 million next fiscal after accounting for foreign exchange losses and the stock trading at 3xFY'10E earnings can be accumulated by investors with a one-year price target of Rs 45. We recommend a BUY,” says LKP Shares' research report.

Angel Broking views on Patel Engineering, IVRCL Infrastructure,

Angel Broking on Patel Engineering - Target Rs 231

Angel Broking has maintained its buy rating on Patel Engineering with a revised target price of Rs 231, in its research report. " Patel Engineering (PE) registered steady growth in 3QFY2009. Consolidated Sales of the company were in line with our expectations increasing 31% yoy to Rs 495 crore (Rs 379 crore) on the back of a strong order book of Rs 7,100 crore. For 9MFY2009, Top-line growth was a tad better at 32% to Rs 1,495 crore (Rs 1,133 crore). PE has a robust order book of Rs 7,100crore (3.0x FY2009E Revenues). We maintain a Buy on the stock, with a revised target price of Rs 231," says Angel Broking's research report.


Angel Broking on IVRCL Infrastructure - Target Rs 204

Angel Broking has maintained its buy rating on IVRCL Infrastructure with a target price of Rs 204, in its research report. " IVRCL Infrastructure Projects reported 20.7% yoy growth in top-line to Rs 1,190 crore (Rs 986 cr) for 3QFY2009, which was tad below our estimate of Rs 1,201 crore. Net Profit Margin declined to 3.9% (6.5%) resulting in 27% de-growth in Net Profit to Rs 46.5 crore (Rs 64.1cr). IVRCL has a very strong order book of Rs 14,300 crore, (excluding orders worth Rs 1,700 crore of L1 stage).We maintain a Buy on the stock, with a SOTP target price of Rs 204," says Angel Broking's research report.


Angel Broking on GAIL - Target Rs 239

Angel Broking has maintained its buy rating on GAIL with a target price of Rs 239, in its research report. "For 3QFY2009, GAIL reported 35.2% yoy increase in revenues to Rs 5,812crore (Rs 4,298 crore), which was below our expectation of Rs 6,364crore. Overall revenue growth was affected by the yoy decline in revenues from LPG & Liquid Hydrocarbon segment as the subsidy burden shared by the company in this quarter was a whopping Rs 646 crore. Petrochemical volumes surged 60.5% yoy to 1,30,000 tonnes (81,000 tonnes) during the quarter on account of de-stocking, while soft international petrochemical prices led to average realisations dipping by 28.2% yoy to Rs 47,154/tonne (Rs 65,679/tonne). We remain positive on GAIL. We maintain a Buy on the stock, with an SOTP target price of Rs 239," says Angel Broking's research report.

Stock views on Jaiprakash Associates, Jubilant Organosys, Bharat Electronics

Bonanza on Jaiprakash Associates - Target Rs 96

Bonanza has recommended a buy rating on Jaiprakash Associates with a target of Rs 96 in its research report. "The company's net sales were at Rs 1380.6 crore versus Rs 942.88 crore. Its other income was at Rs 66.5 crore versus Rs 58.7 crore. Its operating profit was at Rs 306.2 crore versus Rs 265.91 crore. Its OPM % was at 22.18% versus 28.2%. We recommend investors to buy on the counter with a target of Rs 96 in the medium term," says Bonanza's research report.


Emkay Global on Jubilant Organosys - Target Rs 187

Emkay Global Financial Services has maintained its buy rating on Jubilant Organosys with a target price of Rs 187 in its research report. "Jubilant Organosys Q3FY09 revenue was up by 42% to Rs 9.1 billion, in line with our expectations. Robust growth in revenues is driven 54% growth in Pharma and Life science (P&LS) on the back of 81.6% and 49.6% growth in DDDS and CRAMS segment. We maintain BUY with a target price of Rs 187," says Emkay Global Financial Services' research report.


Indiabulls Securities on Bharat Electronics - Target Rs 994

Indiabulls Securities Research has downgraded its rating on Bharat Electronics (BEL) from buy to hold with a target price of Rs 994 in its research report. "Bharat Electronics Limited (BEL)’s Q3’09 revenue moved up a meager 1.8% yoy to Rs. 6.84 billion, compared with a 10.1% yoy growth in the last quarter. Given the slow execution rate in 9M’09, we have reduced our revenue target for FY09 from 8.4% to 6.8%. However, we have upwardly revised our revenue target post FY10 as we believe the current concerns relating to the domestic security should significantly increase the demand for defence and security equipments. Consequently, we have increased our target price from Rs. 816 in our last report to Rs. 994, based on the DCF valuation and assuming a 16.2% WACC and a 5% terminal growth rate. Therefore, we have downgraded our rating from Buy to Hold," says Indiabulls Securities' research report.

Stock views on Pennar Industries, Corporation Bank, Lupin

Karvy Stock Broking on Pennar Industries - Target Rs 33


Karvy Stock Broking has maintained its buy rating on Pennar Industries with a target price of Rs 33 in its research report. "Pennar Industries Ltd (PIL) reported net sales of Rs 1509 million, 6% growth (YoY) and 12% de-growth (QoQ) in Q3FY08. This is 6% lower than our estimates. YoY growth of 6% is primarily driven by higher realisation over last year. EBITDA during Q3FY09 improved by 12% (YoY) and 3% (QoQ). This is 15% higher than our estimates. PBT grew by 17% (YoY) due to lower interest cost by 3% and higher other income by 20%. We retain our target price of PIL at Rs 33 and continue to rate it a BUY," says Karvy's research report


Emkay Global on Corporation Bank - Target Rs 240

Emkay Global Financial Services has maintained its buy rating on Corporation Bank with a price target of Rs 240 in its research report. "Corporation Bank’s (Corp Bank) Q3FY09 results were ahead of our expectations driven by better NII growth and higher other income. The NII has grown by 43.2% yoy to Rs 4.8 billion driven by 30.4% yoy growth in advances and 37 bps expansion in NIM’s. The other income has shown a jump of 85%yoy mainly driven by higher treasury and Forex income. Non interest income has grown by a strong 85.0% yoy to Rs 2.8 billion during the quarter. The same was mainly driven by higher treasury and Forex income. The core fee income has grown by 12.6% yoy. We maintain BUY rating on the stock with a price target of Rs 240," says Emkay Global Financial Services' research report.


Karvy Stock Broking on Lupin - Target Rs 850

Karvy Stock Broking has maintained its buy rating on Lupin with a target price of Rs 850 in its research report. "Lupin's recent acquisitions are a clear signal to focus on diversified revenues streams from different markets and create stability in revenues and earnings over the next couple of years. With formulations contributing 70 % of the revenues and the bias being towards India and regulated markets, the company appears on a strong wicket with focus on niche products in regulated markets. We maintain BUY on the stock with a price target of Rs 850," says Karvy's research report.

Stock views on Transformers & Rectifiers, State Bank of India, Voltas

India Capital Markets on Transformers & Rectifiers - Target Rs 160


India Capital Markets has recommended a buy rating on Transformers and Rectifiers (India) with a target price of Rs 160 in its research report. "TRIL’s revenues from furnace transformers have risen from Rs 205 million during fiscal 2005 to Rs 450 million during fiscal 2008. The Company has registered a top line growth of 41.65% y-o-y. The Company has also been able to achieve a growth of 26.25% at the net profit level. With the metal prices coming down we expect the net profit margin to stabilize around 9%-10% in the coming years. We recommend BUY with a target price of Rs 160 based on a P/E multiple of 4x its FY 10 earnings. We believe the company offers decent opportunity to play on the India T&D sector story," says India Capital Markets' research report.


Sharekhan on State Bank of India - Target Rs 1516

Sharekhan has maintained its buy rating on State Bank of India, SBI with a price target of Rs 1,516 in its research report. "During the year-to-date period in FY2009, the SBI has witnessed a strong 40%+ growth in its core fee income. This could be attributed to the strong credit growth coupled with better product offering to its clients due to technological advancement. SBI is confident of maintaining this high growth momentum in its core fee income in the quarters to come. The bank has restructured around Rs 2,000 crore worth of loans during the current year till date period. We maintain our Buy recommendation on the stock with a price target of Rs 1,516," says Sharekhan's research report.


PINC Research on Voltas - Target Rs 55

PINC Research has recommended a buy rating on Voltas with a price target of Rs 55 in its research report. "Voltas Ltd has a high cash generating business model. Cash from operation has been positive in the last three years. Cash & Bank balances and current investments were Rs 3 billion & Rs 2.3 billion respectively at the end of FY08. Robust order book for MEP/HVAC segment with significant presence in Middle East market coupled with diversified business model, Voltas has the potential to post revenues at a CAGR of 21% for the next two years. Hence, we recommend a ‘BUY’ with a price target of Rs 55 on a 12 month investment perspective," says PINC's research report.

Stock views on Corporation Bank, Orchid Chemicals, Aventis Pharma

Sunidhi Securities on Corporation Bank - Target Rs 195

Sunidhi Securities & Finance has recommended a buy rating on Corporation Bank with a target price of Rs 195 in its research report. "During Q3FY09, total income has gone up by 50 per cent to Rs 1906 crore whereas net profit has gone up 34 per cent to Rs 256 crore. Net margin however, declined form 15% to 12.7%. During the nine months ended December 2008, net profit surged 19% to Rs 632 crore. NP margin stood at 12.7% against 14% in the previous nine months ended December 2007. At CMP, the share is trading at a P/BV of 0.5 (FY09), P/E of 2.8x on FY09E and 2.5x on FY10E. We recommend BUY on the stock with a price target of Rs 195 in the medium term," says Sunidhi Securities & Finance's research report.


Angel Broking on Orchid Chemicals - Target Rs 128

Angel Broking has maintained its buy rating on Orchid Chemicals and Pharmaceuticals with a target price of Rs 128 in its research report. "Orchid Chemicals & Pharmaceuticals (Orchid) will raise overseas debt to retire the USD 175 million (Rs 858 crore) foreign currency convertible bonds (FCCBs). A resolution passed by the company’s Board recently allowed it to raise up to Rs 1,500 crore, for which shareholder approval is expected to be sought soon."


"The company’s FCCBs are currently being traded at a significant discount and are set to mature in February 2012 at a strike price of Rs348 for conversion to Equity. The current yield-to-maturity is 7.25%. This move takes advantage of the recent liberalised norms that permit companies to use proceeds from overseas debt to retire FCCBs. The company did not confirm about the price at which the bonds would be bought back. We maintain a Buy on the stock, with a target price of Rs 128," says Angel's research report.


Angel Broking on Aventis Pharma - Target Rs 1,027

Angel Broking has maintained its buy rating on Aventis Pharma with a revised target price of Rs 1,027 in its research report. "For 4QCY2008, the company posted net sales of Rs 269.9 crore registering a yoy growth of 32.3% on the back of strong traction in both the domestic and export segments. Robust growth in sales, rise in OPM and higher other income led to 67.8% increase in Net Profit to Rs 45.3 crore during the quarter. For CY2008, the company posted 15.1% yoy growth in Net Profit to Rs 166.2 crore on the back of Sales growth. We maintain a Buy on the stock, with a revised target price of Rs 1,027," says Angel Broking's research report.

Stock views on Sunil Hitech Engineers, Suzlon, GSK Pharma

Angel Broking on Sunil Hitech - Target Rs 11

Angel Broking has a buy recommendation on Sunil Hitech with target price of Rs 111 in its research report.

"Sunil Hitech Engineers (SHEL), enjoys a strong order book position of Rs 1,298 crore or 4x its FY2008 revenue. This strong order book position provides high revenue visibility for the company over the next two years. Over FY2008-10E, we expect SHEL's net revenue to clock a CAGR of 45% on a robust order book size of Rs 1,298 crore. We expect the company's operating profits to post a CAGR of 37% to Rs 92.4 crore during the mentioned period. Going ahead, we expect the company to post 23% CAGR in net profit on the back of better operational performance and decline in Interest rates. We initiate coverage on the stock, with a Buy recommendation and Target Price of Rs 111, implying an upside of around 76% from current levels," says Angel Broking's research report.

IIFL on Suzlon - Target Rs 50

IIFL has maintained its add rating on Suzlon with a target price of Rs 50 in its research report. "REPower (73.71% owned by Suzlon) has won the largest contract in the offshore wind energy space so far a Euro 2 billion framework contract from RWE Innogy. This contract reinforces REPower’s strength in the offshore market and enhances visibility for its offshore business. However, with installation of its machines scheduled to commence from CY11, we expect no material impact of this contract in the short term, ADD, target of Rs 50," says IIFL's research report

IIFL on GSK Pharma - Target Rs 1265

IIFL has maintained its add rating on Glaxo Smithkline Pharma with a price target to Rs 1265 in its research report. "Glaxo’s 4QCY08 results were marginally below our expectations, mainly on lower EBIDTA margin, which declined 175 bps YoY and 869 bps QoQ to 28.4%. Revenues came in line with our expectation at Rs 3,685 million, up 8.7% YoY but down 19.4% QoQ (the December quarter has been historically weak for Glaxo). For the full year CY08, revenues grew 10.1% on like-to-like basis and adjusted net profit grew 12.1%. We believe that new product launches under patent protection will help Glaxo maintain its growth rates in the foreseeable future.

Glaxo has a lean asset base, with most of manufacturing being outsourced. Hence, the company also stands to gain from falling prices of intermediates and APIs. This, we believe, will help the company maintain its EBITDA margin at CY08 levels, even in the event of a slowdown in the domestic market. We maintain our ADD recommendation and raise our price target to Rs 1265," says IIFL's research report.

Stock views on KEC International, Nagarjuna Construction, Gujarat State Petronet

LKP Shares on Gujarat State Petronet - Target Rs 42

LKP Shares has recommended a buy rating on Gujarat State Petronet (GSPL) with a price target of Rs 42 in its research report.

"GSPL reported net sales of Rs 110.6 crore, up 6.2% year on year (YoY). Its operating profit of Rs 101.6 crore was up by 4.6% YoY," LKP said in its report.

"Higher staff and O&M expenses reduced the profit margin by 128 bps. Net profit growth of 10% YoY for Q309 was driven by good realizations, a growth of 51% YoY. Fixed capacity utilization charges — take-or-pay clause — were triggered on some of the contracts in this quarter, which led to increase in realizations."

"As per the priority set out by the new gas utilization policy, other sectors have been listed out prior to Refineries in the order of gas supply. This, we believe, shall lead to further delay of gas flowing from GSPL’s network to RIL’s refinery at Jamnagar to Q3’10. Also, many contracts are renewed at the higher tariff price starting January 1’09, which shall bolster the revenue earnings of the company. We recommend a BUY on the stock with a price target of Rs 42 for a medium term horizon," the research report said.


Angel Broking on Nagarjuna Construction - Target Rs 96


Angel Broking has maintained its buy rating on Nagarjuna Construction Co. with a target price of Rs 96 in its research report.

"The Government of Andhra Pradesh has cancelled order worth Rs 1,000 crore awarded to Nagarjuna Construction Company (NCC). The cancelled order was for Andhra Pradesh International Centre project, a multi-utility complex at the AP Bhavan premises in New Delhi and was proposed to be taken up through the PPP mode on a Build-Operate-Transfer basis. The work order scope envisaged to set up an international convention centre, guesthouse, residential quarters, hostel and dormitory facilities for government use, and service apartments on 19.84 acres at AP Bhavan. The order was canceled citing failure to execute the development agreement (DA) as well as licence agreement (LA) even after expiry of the 75-day deadline. NCC consortium also failed to submit performance security of Rs 100 crore before the execution of DA and LA."


"The consortium was also required to pay Rs 25 crore towards project development expenses but had paid only Rs 5 crore even after timeline extension by 60 days. As per the order agreement the developer was required to pay an annual minimum guarantee amount of Rs 45 crore during the first 10 years from commercial operation, Rs 60 crore during the next 10 years and Rs 75 crore during the last 10 years of the 30-year licence period. The order cancellation takes the outstanding order book of NCC to Rs 12,131crore which is 3.5x its FY2008 revenues. We maintain a Buy on the stock with a target price of Rs 96," says Angel Broking's research report.

IIFL on KEC International - Target Rs 160

IIFL has recommended an add rating on KEC International with a price target of Rs 160 in its research report.

"In our recent meeting with KEC International, management said it expects the company to achieve stable revenue growth in FY10 on the back of the current order book and likely order inflows from Middle East and Africa. However, increasing competition-especially in the domestic market-could play spoilsport for both new project wins and EBITDA margins. We estimate FY10-11 EBITDA margins at 9%, against management expectation of 10%."

"The company would continue to have forex gains/losses on mobilisation advances for international projects, as these are not hedged. Management hinted at a possible change in accounting policy for amortisation of reserves created due to the merger of RPG Transmission and NITEL in FY08. This change would result in 9M FY09 profits being lower by Rs 90 million. We incorporate this accounting change in our current estimates resulting FY09-10ii earnings estimates being lower by 8%. Add, price target of Rs 160," says IIFL's research report.

Stock views on Neyveli Lignite Corporation, Dwarikesh Sugar, Lanco Infratech

Indiabulls Sec on Neyveli Lignite- Target Rs 100
Indiabulls Securities Research has maintained its buy rating on Neyveli Lignite Corporation with a target price of Rs 100 in its research report.

"Neyveli Lignite Corporation Ltd. (NLC) posted a 9.7% yoy increase in the net profit in Q3’09. This was partially driven by the finalisation of the FY04–09 power tariffs for TPS-I, resulting in an additional revenue of Rs 1.7 billion during the quarter. We maintain our target price of Rs 100, based on our DCF valuation. Since our target price implies a 38% potential upside from the CMP, we maintain our Buy rating," says Indiabulls Securities' research report

LKP Shares on Dwarikesh Sugar - Target Rs 75

LKP Shares has recommended a buy rating on Dwarikesh Sugar Industries with a price target of Rs 75 in its research report.

"DSIL is a fully integrated sugar complex with a capacity of 21,500 TCD in sugar at its three manufacturing facilities located at Dwarikesh Nagar-DN at Bijnor, Dwarikesh Puram-DP at Bijnor and Dwarikesh Dham-DD at Bareilly. The DD unit commenced production last fiscal and the steep fall in sugar prices last fiscal coincided with DSIL execution of the ultra modern DD plant along with the incremental power capacity and the combined effect led to a loss of Rs 250 million last fiscal."

"The Rs 6 billion debt on its books created substantial financial strain as the revenue side had not begun reflecting while the cost side reflected itself fully. Q1-FY’09 has witnessed a smart profitability from the co-generation unit with EBIT of Rs 150 million and the sugar operations have also turned positive with EBIT of Rs 54 million. BUY, with a one-year price target of Rs 75," says LKP Shares' research report.

Angel Broking on Lanco Infratech - Target Rs 279

Angel Broking has maintained its buy rating on Lanco Infratech with a target price of Rs 279 in its research report.

"Lanco Infratech (Lanco) has emerged as the lowest bidder for the 1,600MW Dhopave coastal power plant located in the Ratnagiri district of Maharashtra. The bidding process for the power plant started in November 2006 and a shortlist of six major private power players was released in August 2007. Lanco expects to get the letter of intent (LOI) soon after which it will take over the land and a special purpose vehicle (SPV) will be formed for the project. The company has planned to approach domestic banks for funding and aims to have Debt/Equity ratio at 70:30."

"Total cost of setting up the power plant will be approximately Rs 8,500 crore and will include construction of a jetty for imported coal, which is expected to cost Rs 500 crore. Although the project is required to be completed within 54 months, the company hopes to complete the project within 48 months from zero date, ahead of the target date. Lanco will develop the project on build, own and operate (BOO) basis and the state generation company, MahaGenco will purchase the power for the procurer, Mahavitaran, the power distribution arm of the Maharashtra government. We maintain a Buy on Lanco, with a target price of Rs 279," says Angel Broking's research report.

Stock views on Power Grid, Seamec, Piramal Healthcare

Indiabulls Sec on Power Grid - Target Rs 120

Indiabulls Securities Research has maintained its buy rating on Power Grid Corporation of India with a target price of Rs 120 in its research report.

"PowerGrid’s net sales were up 34.4% yoy to Rs 14.8 billion in Q3’09, mainly due to a higher transmission income. Transmission revenues increased on account of the commissioning of assets worth Rs 87.5 billion since Q3’08 and the recognition of Rs 1.9 billion of Foreign Exchange Rate Variation (FERV) loss as recoverable transmission income. Our enthusiasm in Power Grid Corporation of India Ltd. (PGCIL)’s stock has been lighted up by the encouraging tariff determination norms issued by the CERC for FY10–14. As a result, we have increased our target price for PGCIL’s stock from Rs 110 to Rs 120 and maintain our Buy rating," says Indiabulls Securities' research report.

Emkay Global on Seamec - Target Rs 73


Emkay Global Financial Services has maintained its buy rating on Seamec with a price target of Rs 73 in its research report.

"Seamec has reported net profit Rs 547 million in Q4CY2008 which is sharply above our expectation on account of higher than expected utilisation of fleet during the quarter. Revenues for the quarter stood at Rs 1044 million registering a growth of 369% yoy as Seamec had all of its four vessels full operational during the quarter as compared to just two vessels operating partially in Q4CY2007. Driven by full utilisation of fleet, higher day rate for Seamec Princess and currency appreciation, EBITDA for the quarter stood at Rs 612 million as compared to loss in Q4CY2007. As per management guidance all of its vessels will be fully available for operation in CY2009."

"Consequently on expected full utilisation of fleet and currency appreciation we are upgrading our earnings estimates for CY2009 by 20% to Rs 24.3 per share. At current levels the stock is trading at undemanding valuations of 2X its CY2009 earnings and P/B of 0.4X. The company has a market cap of USD 34 million and it is already sitting on committed contracts worth 40 million dollars. We maintain our BUY recommendation with a revised price target of Rs 73," says Emkay Global Financial Services' report.


Motilal Oswal on Piramal Healthcare - Target Rs 290

Motilal Oswal has maintained its buy rating on Piramal Healthcare with a target price of Rs 290 in its research report.

"Piramal Healthcare’s 3QFY09 performance was below estimates, with topline growth of 13.1% to Rs 8.3 billion v/s estimate of Rs 8.65 billion, EBITDA margin at 18.8% v/s estimate of 20% and PAT decline of 23% to Rs 599 million v/s estimate of Rs 976 million. We estimate that adjusted for NCE hive-off, PAT has de-grown by 39% for 3QFY09. We reiterate Buy with a target price of Rs 290 (12x FY10E EPS), an upside of 58%," says Motilal Oswal's research report.

Stock views on Jain Irrigation, Ranbaxy, Jubilant Organosys

Karvy on Jubilant Organosys - Target Rs 165

Karvy Stock Broking has maintained its buy rating on Jubilant Organosys with a price target of Rs 165 in its research report.


"Jubilant Organosys Limited (Jubilant) has given clarification (announcement dt.26.02.09) on both FCCBs (Foreign Currency Convertible Bonds) buyback resource funding and discount rate on USD 11.1 million FCCB issue that was bought back earlier. Jubilant has repurchased its FCCB issue worth USD 59.4 million, of which USD 3 million from second issue worth USD 75 million and USD 56.4 million from third issue worth USD 200 million."

"The company has converted total USD 57.04 million, of which, USD 34.7 from first issue worth USD 35 million and USD 22.34 million from second issue worth USD 75 million. We are upgrading our price target by 3.13% to Rs 165 maintaining our PE multiple constant at 6.8x based on FY10E diluted EPS at Rs 24.4. We continue to rate the stock as a "BUY," says Karvy Stock Broking's research report.

Angel Broking on Ranbaxy Laboratories - Target Rs 277

Angel Broking has maintained its buy rating on Ranbaxy Laboratories with target price of Rs 277 in its research report.

"The USFDA has invoked Application Integrity Policy (AIP) on Ranbaxy's Paonta Sahib facility citing that the company has falsified data and results in approved and pending ANDA filed from the facility. Prior on September 16, 2008, the USFDA had issued two warning letters and instituted an Import Alert barring entry of all finished drug products and active pharmaceutical ingredients (API) from Ranbaxy's Dewas, Paonta Sahib facilities due to violation of US current Good Manufacturing Practices requirements."


"The Ranbaxy stock has slipped by 18% post announcement of the USFDA action. We maintain a Buy on the stock, with a Target Price of Rs 277 wherein the Core business is valued at Rs 178 giving it a fair P/E of 16x CY2009E Core Earnings of Rs 11.1, Rs 24 for the Non-Core Income and NPV Rs 75 is ascribed to the FTF opportunities available to the company," says Angel Broking's research report.


IIFL on Jain Irrigation - Target Rs 377

IIFL has recommended a buy rating on Jain Irrigation with target price of Rs 377 in its research report.

"Our recent meeting with JISL’s management indicated that:
(a) the company has scaled back its capex estimates to Rs 1.5 billion annually from Rs 2 billion earlier; and
b) the company’s leverage levels (debt/equity) should decline over the next couple of years, following the company’s scaling back of capex and improvement in working capital conditions.

Furthermore, despite 60% of JISL’s long-term debt being denominated in forex, the rupee’s depreciation does not pose the threat of an imminent cash loss, since most of this is repayable during FY11-13.

The company is in talks with IFC to raise longterm funds of USD 30 million, of which USD 15 million could be in the form of equity (implying dilution of 2.8% at CMP). This should cushion the company’s debt/equity, taking peak net debt/equity to 0.9x. We remain bullish on growth in the micro-irrigation segment and expect 25% earnings CAGR for the company during FY09-11ii. Buy, target price of Rs 377," says IIFL's research report.

Stock views on Mphasis, Reliance Industries, GVK Power & Infrastructure

IIFL on GVK Power - Target Rs 23.9

IIFL has recommended a buy rating on GVK Power & Infrastructure with target price of Rs 23.9 in research report.

"The government has approved levy of a development fee (ADF) at Mumbai airport on an ad-hoc basis for a period of 48 months. The ADF considerably eases the fund crunch faced by the Mumbai airport and obviates the need for JV partners of Mumbai International Airport Limited (MIAL) to bring in additional equity. This is a major relief. Continuity of the ADF is contingent on review of land deals after six months. The levy adds Rs 3 per share to GVK’s SoTP as the government order has allowed real estate monetisation till Rs 10 billion before the levy is reviewed. Our assumptions of real estate monetisation in the initial phase are lower than the ceiling. Adjusting for a Re 1 per share potential hit due to VRS liability, we reckon there is an upside of 10% to GVK’s SOTP, Buy, target of Rs 23.9," says IIFL's research report.

Emkay Global on Mphasis - Target Rs 240

Emkay Global Financial Services has maintained its buy rating on Mphasis with a price target of Rs 240 in its research report.

"Mphasis reported superlative Q1FY09 results with revenues at Rs 9777 million (+9.3% QoQ, + 58.1% YoY) and operating profits (EBIT) at Rs 2106 million (+24.4% QoQ, +246.6% YoY). Operating margins remained steady at October month levels at 26.5%. Net profits at Rs 2100 million (+14.7% QoQ, +271.1% YoY) beat estimates boosted further by lower tax rates. Net employee addition remained in line at 1,193 (with apps HC up by 638 employees sequentially). Our confidence on Mphasis as the best demand story in the mid cap IT services space continues to get reinforced with enviable performance over the past 3 quarters now.

Our view gets vindicated with Mphasis being the 2nd best out performer in the IT services universe over the last 12 months (Mphasis has outperformed broader markets by 45%, next only to Infy on a LTM basis, refer section below). Although we increase our FY09 earnings estimates by 25% currently, we will review them shortly post discussions with co management as we believe there is significant upgrade to current estimates. Maintain BUY with a price target of Rs 240," says Emkay Global Financial Services' research report.

CLSA on RIL - Target Rs 1550

Following the Reliance Industries (RIL) and Reliance Petroleum (RPL) merger, CLSA (Credit Lyonnais Securities Asia) has said they will keep a buy on RIL post swap ratio and that they have a target of Rs 1,550 per share. The firm also said that RPL merger will not change RIL EBITDA profile.

The broking firm sees a free cash flow of USD 4.5–5 billion for RIL over the next two years while it sees 0.4–1.4% EPS accretion for RIL post the RPL merger.

Stock views on Nestle, Sun Pharma, Glaxo smithkline Pharmaceuticals, Castrol, BOC India, Godrej Consumer Products, Hindustan Unilever, Hero Honda

CADILA HEALTHCARE


Cadila Healthcare, one of the five largest drug makers in India, may have been the top performer (64.51%) during the bear run, but analysts are cautious on this low volume stock at current market valuation. They believe though the stock is a safe bet in the current environment, and has good domestic business, technically it looks weak below Rs 225.


HERO HONDA MOTORS


In the last nine months, two-wheeler maker Hero Honda has outperformed market expectations with volume growth of 11.1% year-on-year, against a flat growth of 1.9% for the rest of the two wheeler industry. The key reason for the over-achievement has been the company’s strong rural franchise, lower input costs, and lower discount offerings. In fact, the share of volumes from rural India has gone up from 40% a year ago to more than 50% at present. Though concerns remain over — less correlation to broader markets, falling interest rates and raw material cost — a major section of brokers are bullish on the scrip. What makes the stock attractive is the company’s significantly reduced dependence on financing with only 15% of the vehicles sold on finance. This protects the company against the current tight credit cycle.


HINDUSTAN UNILEVER


India’s leading fast moving consumer goods company, Hindustan Unilever (HUL) is expected to benefit from the sharp drop in commodity prices this year. HUL has been formidable in this space in the last nine months. The company, in fact, recorded its fastest growth in 10 years, growing volumes despite aggressive price increases. Currently, rural areas contribute 45% of HUL’s sales, which analysts feel will remain a strong growth driver in FY10. Although the stock is a defensive bet and has limited upside, analysts are positive on the business. The operating margin for the company is expected to improve in the quarters ahead as the benefits of lower material prices kick in. Even though the pace is expected to decelerate, HUL’s revenue will grow 15.6% y-o-y in the current financial year.


GODREJ CONSUMER PRODUCTS


Analysts count on Godrej Consumer Products to ride on its strong brand image in new markets following its acquisition of five companies in the hair care and personal care space. The sharp fall in palm oil prices, a key raw material in soap manufacturing, coupled with price hikes at the start of the year, believe analysts, will lead to margin expansion. A strong balance sheet is expected to enable organic as well as inorganic growth. The stock has low volumes, but looks technically strong.


BOC INDIA

BOC India, the arm of BOC Group, the second largest industrial gases company in the world, has recently won a 15-year gas supply contract from SAIL. The company plans to invest around Rs 500 crore in a new air separation plant and ancillary equipment to meet the growing demand for liquid products in eastern India. The stock, one of the star performers during last year, lies low on the wish list of analysts. Falling global demand of the product coupled with low volumes doesn’t make it a winning stock. Further, it looks technically weak and we will suggest investors to sell at every rally.


CASTROL INDIA


One of the best dividend paying stock, Castrol India has good numbers to boast of due to high volumes and improved price realisations. Analysts are neutral on this oil lubricant firm, though it can turn out to be a dark horse in 2009. The company’s sound business model and stable financials make it an attractive long term investment. Strong brand equity of Castrol products has enabled it to churn out good cash flows year after year. Even amid a decline in the automobile sector, analysts say the company’s lubricants will have a large potential market to tap.



GLAXOSMITHKLINE PHARMACEUTICALS


Analysts have a favourable recommendation for Glaxo smithkline Pharmaceuticals, which is one of the fastest growing players in this segment over the past few years. Better cost-effectiveness over the years have reflected in the company’s improved net profit margins. The margins have increased from 16.5% in 2003 to 25.3% in 2007. The pharma company has clocked a 10% growth in revenues at Rs 473.9 crore for the September 2008 quarter, as compared with Rs 428.7 crore in the previous corresponding quarter. Aggressive product launches this year, sitting on huge cash amount on books, strong domestic presence and attractive valuations makes it a company to watch out for.



SUN PHARMACEUTICAL INDUSTRIES


Sun Pharma has one of the low-risk business models among the Indian peers with a strong presence in central nervous system, pain management, ophthalmology, cardiovascular and respiratory segments. It is one of the fastest-growing companies in the domestic pharmaceutical market. Having facilities approved by the United States Food and Drug Agency for controlled substances in regulated markets, analysts feel the company has an edge in the niche controlled substances market. The high margin, strong earnings growth, low risk revenue model and strong balance sheet make it a good defensive bet. With no significant forex hedges, Sun is likely to reap major benefits of the sharp depreciation of the rupee against the US dollar.



NESTLE INDIA


Changing consumer preferences from unpacked/ unbranded foods to branded packaged foods is expected to provide the $70 bn Indian food processing industry a robust growth opportunity. According to analysts, Nestle, with its strong presence in milk and milk-based products, beverages, prepared dishes, chocolates and confectionery and baby foods segment, is the best play as it garners more than 90% of its revenues from domestic business. Nestle has a strong product portfolio with some of the best-known brands globally, such as Nescafe, Maggi, KitKat, Polo and Milo, which are amongst the top 50 brands in India. The company will also benefit from the sharp drop in commodity prices. The operating margin of the company is expected to improve in FY10 as benefits of lower raw material prices set in.

Stock views on Infosys Technologies, Simplex Infrastructures

PINC Research on SIMPLEX INFRA
PINC Research has initiated coverage on Simplex Infrastructures (SIL) with a ‘buy’ rating. According to PINC, SIL has exhibited a strong growth metrics over the past five years. The company’s revenues have grown at a compounded annual growth rate of roughly 45% over FY04-08, while its net profits have grown around 75% during the same period. “We believe the company having garnered proficiency in technical know-how and execution skills across diverse sectors, is presently in the midst of a steep growth trajectory. Further, a robust & diversified order book of approximately Rs 20,700 crore (2.5 times FY09 estimated revenues) provides earnings visibility over the next 18-20 months,” Pinc Research said in its report. The broking house believes that the SIL stock is largely undervalued and doesn’t capture the fair value of its extensive execution capabilities and new business initiatives.


JP Morgan on INFOSYS TECHNOLOGIES

JP Morgan has assigned an ‘overweight’ rating to Infosys Technologies, following its third quarter numbers, which the brooking house has termed as ‘decent’. The Bungler-based company’s FY09 guidance was largely unchanged in rupee and constant currency terms but reduced by 1-2% in US dollar terms due to currency movements. The broking house said the software bellwether’s Q4FY09 (January-April) guidance was weak as expected with US dollar revenue growth of -4-0% quarter-on-quarter and EPS decline of 2%. “We believe that Infosys results are largely in line with expectations. While business might remain weak near term, offshoring trend remains on track in our view and we expect acceleration in H22009 as IT budgets get closed,” the report said. The outfit remains fundamentally positive on Infosys, given offshoring trend, strong execution track record and high corporate governance standards.

Stock views on Excel Crop Care, Bank of India, HDFC, Rolta

BNP Paribas on ROLTA

BNP Paribas Securities has maintained its ‘buy’ rating on Rolta and price target of Rs 220, after its acquisition of Piocon, a move that is expected to generate revenues of $100 million over the next three to four years. “While the deal size itself is small and is unlikely to have an immediate material financial impact on Rolta, we are impressed by the company’s current strategic direction,” the foreign bank said in a report. “We remain positive on Rolta because the company stands out within its peer group with its niche market leadership, defensive-end market exposure, and high-revenue visibility,” it added.


Kotak Securities on HDFC

Kotak Securities’ private client research has downgraded HDFC to ‘accumulate’ from buy while trimming its price target to Rs 1,908 from Rs 2,061 earlier, citing the recent slowdown in housing loan demand. “We also believe that HDFC’s disbursement growth is likely to slow down during H2FY09 and FY10 moreover due to present unfavourable macro-economic conditions,” the broking house said in a note, after meeting the management. “Of late, retail demand for real estate that has slowed down significantly is largely on the back of a combined ef-fect of high real estate prices and higher interest rate. This has impacted the real estate affordability for retail consumers. Correction in property prices would be essential to boost real estate demand going forward,” it added.


India Infoline on BANK OF INDIA

India Infoline has upgraded Bank of India’s rating to ‘add’, citing higher earnings visibility and relative stability in turbulent times. “Bank of India is confident of maintaining high-quality earnings growth with a strong focus on key operating ratios. BoI expects loan growth of 24% in FY09, driven by strong demand for rupee funds by domestic corporates,” the broking outfit said. “The cut in deposit rates, along with a BPLR cut, should enable it to keep its net interest margins intact. Its AFS investment portfolio would benefit from falling bond yields, and we expect its fee income to grow in sync with loan growth,” it added.


LKP Shares on EXCEL CROP CARE


LKP Shares has rated Excel Crop Care a ‘buy’, with a 12-month price target of Rs 180. “We expect ECCL to grow its revenues and profits at a CAGR (compounded annual growth rate) of 43% and 26% over FY07-09 and the stock trading at 3 times FY09E (estimated) earnings, with a dividend yield of 6% is a good bet in the agrochemical space,” the broking house said in a client note. “We believe that the farm loan waiver would raise the farmers’ ability to purchase agrochemicals, which coupled with growing food needs and expectations of higher productivity from crops would push the demand for agrochemicals in India,” it added.

Stock Views on Shree Cement, Tata Motors, Larsen & Toubro, Reliance Power

BNP Paribas on RELIANCE POWER

BNP Paribas has reiterated its ‘reduce’ rating on Reliance Power while lowering its price target from the earlier Rs 136 to Rs 105, as it feels that the company does not have any operating income and there is a likelihood of some projects getting delayed. “The company currently has no operating income and only generates interest on the cash it raised in its IPO last year,” says a report. BNP Paribas also feels that Reliance Power’s Sasan and Chitrangi projects could get delayed, as Tata Power has filed a petition in the Delhi High Court. It estimates an upside of Rs 15 per share to the target price, if RPL’s gas dispute with RIL is resolved at $5.20/ mmbtu. “We also estimate an upside of Rs 37 per share, if RPL is able to execute both Sasan and Chitrangi projects,” it adds.

Motilal Oswal on LARSEN & TOUBRO

Motilal Oswal has maintained a ‘neutral’ rating on Larsen & Toubro while lowering its capex guidance for the company. It feels that going forward, there are increased possibilities of execution delays. “Standalone capex guidance for FY09 has been reduced to Rs 15 billion now, from earlier Rs 20 billion,” says a report. “During 1HFY09, the capex stood at Rs 8 billion, indicating that 2HFY09 capex has been cut sharply,” it added. The brokerage also feels that while there have been no meaningful delays till date, there is a probability of execution challenges for segments like metals/minerals (8-9% of order book), airports (9-11%+) and real estate (6%). It expects L&T to report consolidated EPS of Rs 52.6 per share for FY09 (up 34% Y-o-Y), Rs 57.4 per share in FY10 (up 9% Y-o-Y) and Rs 60.8 per share in FY11 (up 6% Y-o-Y).

HDFC Securities on TATA MOTORS

HDFC Securities has maintained its ‘sell’ rating on Tata Motors due to various factors, including demand slowdown, lack of credit financing and failure of the company’s rights issue. “The demand is slowing down drastically. Lack of credit financing, coupled with high interest rates are forcing customers to postpone purchases hitting among others Tata Motors,” says a report. To align production with demand, the company had temporarily shut down its Jamshedpur, Pune and Lucknow plants, it adds. The brokerage also feels that the failure of the rights issue has reflected badly on Tata Motor’s credibility and ability to raise money on its own. We believe the JLR acquisition will continue to be an overhang on Tata Motors’ stock, it says. The profitability of Tata Motor’s subsidiaries in Q2 FY09 was also very disappointing, it notes

India Infoline on SHREE CEMENT

India Infoline has retained its ‘add’ rating on Shree Cement with a target price of Rs 587 on expectations of higher volume and lower decline in cement prices. “The company has nine mtpa cement production capacity and plans to increase it to 10 mtpa by mid-FY10,” says a report. The company also plans to set up a 35MW WHR-based and around 40MW petcoke-fired power plant, it adds. The company, according to the report, recorded strong volume growth (>30% Y-o-Y) in the quarter ended December 2008 that enabled it to offer bigger discounts than its peers. The company is expanding its cement capacity by adding another line (Unit VII) at Ras — scheduled to start production by mid-FY10, says the report. The company is trading at EV/tonne of $41 and does not reflect the company’s

Stock views on Tata Power, ICICI Bank, Siemens India,

MERILL Lynch on RELIANCE INDUSTRIES

MERILL Lynch has cut its price objective on Reliance Industries (RIL) by 15% from Rs 1,825 to Rs 1,555 based on sum of the parts valuation. However, it continues to retain its ‘buy’ on the stock. The brokerage says that the cut is due to cut in the value of its refining business and value of its investment in RPL. The former has been cut by 56% to Rs 168 per share and the latter by 39% to Rs 137 per share. “We have steeply cut Singapore complex refining margins forecast for financial year (FY) 2010 and 2011 (expected). Consequently, refining margins of Reliance Industries (RIL) and refining subsidiary Reliance Petroleum (RPL), too, have been steeply cut,” the report said. The cut is relatively modest assuming a weaker rupee, it adds. RIL’s presence in E&P and petrochemicals also helped dilute impact of refining margin cut on RIL. The report says that the key risks include failure in the retail business, and changes in government policies like withdrawal of the tax holiday which may have a direct impact on the business, cash flow and profit, among other things.


Enam Securities on SIEMENS INDIA

Enam Securities has put an ‘underperformer’ on Siemens India on lower-than-expected results and poor performance by its subsidiaries. The brokerage says that Siemens’ continuing engineering businesses — power, industry and transportation are showing signs of slowing. The IT business is unlikely to create value for the shareholders. “We are revising our earnings estimates downward by 31% to Rs 18.5 to account for slowing business traction. We downgrade the stock to sector underperformer,” the report says. It adds that the management of the company has hinted at delays in contract finalisation and contract renegotiations at lower prices by customers due to the decline in commodity prices. The management believes that the power division will be a key growth driver, driven by strong growth in domestic market and huge opportunity in the Middle East. “Going forward, the management would be focusing on the quality and profitability of order rather than size and volume of the project,” says the report.


BNP Paribas Securities on ICICI BANK


BNP Paribas Securities has maintained its ‘buy’ rating on ICICI Banks on account of bank’s strategy of consciously slowing down on growth in riskier categories. The brokerage house says, “Our analysis of incremental advances — broken into mortgage, non-collateralised retail and corporate loans — vis-`-vis the incremental gross nonperforming loans (NPLs) additions indicates that bank’s strategy of consciously slowing down on growth in riskier categories has started yielding results.” It expects a slowdown in rate of growth of non-collateralised NPLs over the next two quarters, although in absolute terms, incremental NPLs will continue in the Rs 3-4-billion-perquarter range as at present. The brokerage says that the bank trades at one time its financial year 2010 (expected) book value at its target price of Rs 620. “We use a three-stage residual income valuation to arrive at our core bank target price of Rs 475 and a sum-of-the-parts approach to arrive at Rs 145 per share for subsidiaries. Our aggregate target price for ICICI Bank is Rs 620.”


Indiabulls on TATA POWER


Indiabulls has upgraded its rating on private power sector major Tata Power from ‘hold’ to ‘buy’. The brokerage is upbeat about the company’s future on the back of its upcoming projects. It believes that the existing power generation and distribution businesses and stable revenue-generating subsidiaries provide stability to the company. “Based on our SOTP valuation, we have arrived at a target price of Rs 872. It says that stock price has corrected sharply since our last quarterly report, and it is undervalued at the current market price. It, however, adds that the company may find it difficult to finance its other expansion plans. But due to its experienced management team, it is expected to tide over the current crisis. It adds that any delay in completion of the Maithon and Mundra power projects would adversely affect company’s rating