Stock views on Nava Bharat Ventures, Godawari Power and Ispat, Deccan Chronicle

Sushil Finance on Nava Bharat Ventures - Target Rs 517

Sushil Finance is bullish on Nava Bharat Ventures and has recommended buy rating on the stock with a target of Rs 517, in its research report.

“Nava Bharat Ventures, NBVL is an evolving Power utility, with 237 MW of operational capacity (including 9 MW bagasse based power plant). It has strategically aligned itself to downsize its Ferro alloys business which is highly cyclical in nature. The Company sells most of its power on merchant basis and has potential to generate and sustain strong ROE with the future projects like coal & manganese mining and foray into real estate. One of the major risks to our assumption would be downward pressure on the merchant rates which could hamper its margins."

"However, with the economy on the revival mode aided by rise in industrial production and persisting power deficit scenario, the merchant tariffs are expected to be stay in the range of Rs. 5 – 7 for next few years. NBVL has a strong balance sheet with very low leverage. With strong operational cash flows it is in a strong position to fund its future projects. At CMP of Rs.379, the stock is trading 1.5x FY11E BVPS & 1.2x FY12E BVPS and PE of 6.9x FY11E and 5.8x FY12E . We believe that it is at a significant discount to its intrinsic value & thus we initiate coverage with a BUY rating on the Company with a target price of Rs.517 (based on 1.7x its FY12E BVPS of Rs. 304.2),” says Sushil Finance research report.


Angel Broking on Deccan Chronicle - Target Rs 216

Angel Broking is bullish on Deccan Chronicle and has recommended buy rating on the chat with a target of Rs 216, in its research report.

“In our note dated September 22, 2009 (Deccan Chronicle: Charged up for second innings), we had outlined our positive stance on Deccan's IPL team stating, 'We remain optimistic on IPL's money-making prospects and any news flow on the stake sale front will trigger a re-rating in the DCHL stock'. Further, we had stated that, 'The next IPL team auction in 2011 is expected to set a benchmark post which DCHL might reconsider its position to dilute stake'. With IPL's recent announcement of auction (slated for January 19, 2010) of two new franchises for the 2011 edition at a base price of US$ 225 million, we believe that the floor is set for DCHL's stock to get re-rated. In our 2QFY2010 result note, we had valued DCHL on a consolidated basis at 12x FY2011E EPS of Rs 12.4 and arrived at a target price of Rs 149. Post this development and roll-over to FY2012E, we upgrade Deccan Chronicle Holdings, DCHL to a Buy, with a revised target price of Rs 216," says Angel Broking research report.

Emkay Global Financial Services on Godawari Power - Target of Rs 261

Emkay Global Financial Services has recommended a buy rating on Godawari Power and Ispat, with price target of Rs 261, in its report dated December 17, 2009. The stock closed at Rs 182.15
"Godawari Power and Ispat has embarked upon backward integration program with 0.6mtpa pelletization plant, 14mt captive iron ore mines and setting up additional 20MW captive power plant. The pellet plant is expected to be operational by Dec ’09 end helping GPIL to increase sponge iron capacity utilization and also to increase the topline and bottomline with the surplus pellet sales in the market. GPIL had already commenced Ari Dongri (Chhattisgarh) iron ore mine, having reserves of 7mt", says Emkay.

The report also says, "The company is also under the process of commencing Borai Tibbu (Chhattisgarh) iron ore mine, having reserves of 7mt, in next 3-4 months. This will lead to significant reduction in cost of production, generating savings of around Rs 2,000/t of sponge iron. Additonal 20MW captive power plant, which will be operational by Dec ’09, will be available for selling in merchant market, generating incremental margins. GPIL is expected to report earning CAGR of 60% for the period FY09-FY11E."

"Overall, the recent management meeting further supported our positive view on the stock, which is being supplimented by the current attractive valuations. At the CMP of Rs 170, the stock is trading at 13.8x FY10E EPS of Rs 12.3 and at 3x FY11E EPS of Rs 56.1. On EV/EBITDA basis, the stock is trading at 7.4x FY10E EV/EBITDA and at 2.9x FY11E EV/EBITDA; while on P/B basis, the stock is trading at 1x FY10E book value and at 0.8x FY11E book value. We maintain BUY on the stock with revised target price of Rs 261 (4x FY11E EV/EBITDA)," says Emkay Global Financial Services report.