Stock views on Ratnamani Metals, Tata Tea, Cummins India Limited

Bonanza on Cummins - Target Rs 300

Bonanza has recommended long term investors to stay invested in Cummins. Fresh entries can be made only on dips, near Rs 230 level for a target of Rs 300.

"Cummins India Limited (CIL) is a 51 percent subsidiary of Cummins Inc. USA, the world’s largest independent diesel engine designer and manufacturer above 200 HP. CIL is India’s leading manufacturer of diesel engines with a range from 15 hp to 2365 hp, serving the Power Generation, Industrial and Automotive Markets. In Engine segment exports that were about Rs 1300 Crore in FY 09 can fall to Rs.900-1000Crore in FY10. About 30%-35% to growth is expected in domestic business, as there is robust demand for power, railways (largely from new Metro stations coming up at metro cities), reality and construction, increased oil exploration, defense, marine, ports etc. Turnaround in Commercial Vehicles, to also boost sales of Cummins."


Sharekhan on Tata Tea - Target Rs 939

Sharekhan has maintained its buy rating on Tata Tea with a target price of Rs 939 in its research report.

"We believe with a net cash of Rs 755 crore (and a gross cash of Rs 2,963 crore as on March 31, 2009), the company is in good position to build organic as well as inorganic growth in the coming years. We broadly maintain our estimates for FY2010 and introduce FY2011 estimates through this note. At the current market price, the stock is trading at attractive valuations of 11.8x its FY2010E earnings of Rs 64.5 and 10.2x its FY2011E earnings of Rs 75.0 compared to some of the large-cap FMCG stocks. We maintain our Buy recommendation on the stock with the revised price target of Rs 939 (as we roll over our price target at 12.5x its FY2011E earnings)," says Sharekhan's research report.


Sharekhan on Ratnamani Metals - Target Rs 118

Sharekhan has maintained its buy rating on Ratnamani Metals and Tubes with a target price of Rs 118 in its research report.

" We have revised downwards our EPS estimates for FY2010 and FY2011to Rs 19.8 and Rs 23.7 mainly on account of
(1) Lowering volume growth;
(2) Lower realisations; and
(3) A lower OPM.

The business environment for RMTL is challenging given the slowing capital expenditure in oil & gas sector, the key user industry for the company’s products. However, the company also has specialty products in its portfolio of offering, which are consumed in high-growth sectors like power. We feel, RMTL should be able to report a CAGR of 14.3% and 10.5% in its revenues and profit respectively over FY2009-11E. The key risk to our call would be a significantly lower order inflow going forward. However, at the current market price the stock is trading at an attractive valuation of 3.3x its FY2011 earnings. We maintain Buy rating on the stock with a price target of Rs 118 (5x FY2011E)," says Sharekhan's research report.