Stock views on Mphasis, DLF, LIC Housing

ULJK Securities on Mphasis - Target Rs 353

ULJK Securities has recommended a buy rating on Mphasis with price target of Rs 353, in its report.

"The stock discounts the FY2010E and FY2011E earnings at 13(x) and 10.27(x) respectively. We believe that the company could benefit from the acquisition and could improve its business and financial margins. We value the company at Rs 353 per share. This price is discounting the FY2010E earnings at 17.32(x) times," says ULJK Securities' report.

IIFL on DLF - Target of Rs 488

"DLF intends to generate over Rs 35 billion via asset sales in FY10. Asset sales and receipts from DAL will sharply reduce debt in FY10. Debt reduction could be further aided if DE Shaw decides to remain invested in DAL. In such a scenario, if DLF promoters inject the entire proceeds from their stake sale in DLF into DAL, DLF’s receivables from the latter will be extinguished by end-FY10. Simultaneously, land bank rationalisation has cut land-related liabilities to only Rs 2.5 billion. We expect DLF’s borrowings to fall by Rs 80 billion by end-FY10ii, reducing interest expenses by Rs 10 billion per annum. We expect DLF to increase new launches on the back of improved liquidity. To factor in higher volumes, we have upgraded our FY10 revenue and PAT estimates by 54% and 92%. DLF is likely to register operating cash flows in excess of Rs 20 billion in FY10, enough to cover interest expenses. DLF remains our top pick in the sector."Buy" price target of Rs 488," says IIFL's research report.

IIFL on LIC Housing - Target of Rs 666

"With 8% share of the Indian housing mortgage pie, LIC Housing Finance (LIC HF) looks poised for a marketoutperforming 17-18% growth in loan book. Gross NPLs, at 1.07%, have seen a transformational 330 bps improvement since FY05, thanks to a holistic business restructuring exercise. A largely floating (96%) asset base leads to stable margins. Mainly a wholesale borrower, it is further advantaged by its priority sector status and strong parentage (LIC). Valuations, at 1.7xFY10ii P/B, are fair rather than expensive, given 24% RoE. The company plans to raise Rs 5 billion through a QIP. Our 12-month target price of Rs 666 for the stock is based on 1.7xFY11ii P/B and indicates a 23% upside from current levels. We initiate coverage with 'BUY'," says IIFL's research report.