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.