Stock views on Bajaj Auto, Unity Infra, CMC

Sharekhan on Bajaj Auto - Target Rs 1695

Sharekhan is bullish on Bajaj Auto and has recommended buy rating on the stock with a target of Rs 1695, in its research report.

"Bajaj Auto recently launched the new Pulsar 135 cc bike to further strengthen its position in the 125+cc segment. The new Pulsar 135 LS, powered with a four-valve DTS-i engine, is competitively priced at Rs51,000 (ex-showroom Delhi) and has a mileage of 68 kilometre per litre (kmpl; as certified by the Automotive Research Association of India), which is good considering the engine capacity of 135cc. With the increase in our volume estimates for the motorcycle segment, our overall volume growth estimates for FY2010 and FY2011 stand revised to 27.2% and 14.2% respectively. In line with this, we have revised upwards our earnings per share (EPS) estimates for FY2010 and FY2011 from Rs108.9 and Rs114.3 earlier to Rs114.8 and Rs127.1 respectively. However, a probable increase in the excise duty in the forthcoming budget and a sharper than expected increase in raw material prices remain the key risk to our estimates."

"At the current market price, the stock is trading at 13.3x its FY2011E earnings of Rs127.1 and enterprise value (EV)/earnings before interest, tax, depreciation and amortisation (EBITDA) of 8.1x. On the back of the upgrade in our earnings estimates, our price target stands revised to Rs1,907 (15x FY2011E EPS) and considering the significant upside from the current market price of Rs 1,695, we upgrade our recommendation to Buy from Hold earlier."


Sharekhan on Unity Infra - Target Rs 569

Sharekhan is bullish on Unity Infraprojects and has recommended buy rating on the stock with a target of Rs 569.

"Unity Infraprojects (Unity) has raised Rs 73 crore by private placement of 14.5 lakh shares with qualified institutional buyers at the price of Rs506 per share. The proceeds from the qualified institutional placement (QIP) is expected to be utilised by the company to partly fund its capital expenditure (capex) and to meet its working capital requirement."

"Given the strong order intake in M9FY2010 and expected lower interest cost, we are upgrading our order book estimates and hence PAT estimates for FY2010 and FY2011 by 5% and 18% respectively. Further the lower than expected earnings dilution will result in our revised EPS getting upgraded by 7% for FY2011. Hence, we are increasing our price target to Rs 569 and maintain our Buy recommendation, as we feel the stock is attractively valued. At current market price of Rs 506, the stock trades at 8.9x and 7.1x its FY2010 and FY2011 diluted earnings respectively."


Fairwealth Securities on CMC - Target Rs 1530

Fairwealth Securities has recommended buy rating on CMC with a target of Rs 1530, in its research report.

“CMC synergistic relationship with TCS, CMC is gearing itself in IT industry. In embedded systems, the Company is seeing growth in US, UK and Europe. In Government segment, the Company is seeing traction in treasury management, HRMS systems for various states, energy sector (APDRP, billing), GST related migration. In private sector, the Company is expecting growth from Insurance and Financial sector (depository product), banks. The Company has a good base in Insurance space with 80% of market. The Company would be focusing on the transportation vertical, in e-Governance space with TCS and in Defense space. In the private space it is looking at cross-selling solutions & services. The Company is seeing new services like video surveillance, identity management and large corporate are going for offshore. The company would be re-looking at its franchisee business in E&T SBU. The Company is seeing growth in corporate training business. The Company is focusing on value added services and cost effective niche solutions as CMC already has a rich portfolio of industry specific assets.”

“Phase I of the SEZ has been completed. Phase II would be completed by June 2011 with a capex of Rs 155 crore over 2 years. The Company won defense contract in Q2FY2010 which will improve margins in future as these contracts are all long term contracts. The average deal size is Rs 5 – 10 crore with engagement of 2-3 years. SI with 41.43% PBIT margin in Q1FY10, we see scope of tremendous growth in this SBU which going forward will improve margins for company. Its Egovernance business has a huge potential for growth. Company expects operating profit margin to grow to 20% in next 6-12 months. Presently its stands at 18%, highest ever for the company,” says Fairwealth Securities research report.