Stock views on ITC, Maruti Suzuki, HEG

Emkay on HEG - Target Rs 458

 

Emkay has maintained a buy rating on HEG, with price target of Rs 458, in its report

"HEG holds 29% stake in Bhilwara Energy (BEL), which has 86MW hydro power plant operational under 51% subsidiary Malana Power (MPL). MPL is also under the process of implementing additional 192MW hydro power plant, which is expected to be operational by Mar-Apr '10. BEL has plans to set up additional 2,000MW hydro power plants in next 10-15 years. BEL has accepted termsheet from IFC for private placement and is also mulling for IPO to fund the equity contribution for the upcoming projects. At the CMP of Rs 336, HEG is trading at 6.2x FY11E EPS of Rs54.2 and at 5.5x FY12E EPS of Rs 61. On EV/EBITDA basis, the stock is trading at 4.5x FY11E EV/EBITDA and at 4x FY12E EV/EBITDA; while on P/B basis the stock is trading at 1.5x FY11E book value and at 1.2x FY12E book value. We are valuing HEG's core business at 7.5x FY12E EPS of Rs 61. We maintain BUY on the stock with target price of Rs 458 (Previous target Rs 325). We are not considering the value of HEG's 29% stake in BEL," says Emkay report.

Hem Securities on Maruti - Target Rs 1700

m Securities has come out with a research report on Maruti Suzuki. The research firm has recommended to buy the stock with a medium term price target of Rs 1700.

The report says, "The company has posted robust growth in its bottom line during Q3FY10. It has witnessed an upward movement both in its topline and bottomline. We hold a positive outlook towards the auto sector in the near-to-medium term on the back of low penetration, increasing per capita income and easy availability of funds. While competition is increasing for Maruti, we believe that with its competitively priced strong product portfolio and wide distribution and service networks, the company should be able defend its market share."

"Presently the company is running at a P/E multiple of 18.5x to its TTM (standalone trailing twelve months) EPS of Rs 72.14. We recommend to buy the stock with a medium term price target of Rs 1700, which is 27% up from the current level of Rs 1335.25," according to Hem Securities.

Motilal Oswal on ITC - Target Rs 300

 

Motilal Oswal has come out with a research report on ITC. The research firm has maintained buy rating on the stock with a target price of Rs 300.

The report says, "ITC's stock price is unchanged over last two quarters (despite strong earnings growth) due to fears of a double digit excise duty increase in the forthcoming Budget. Besides, more states are likely to raise VAT on cigarettes to 20%. Cigarettes contribute 42% to ITC's sales and 87% to its EBIT. We are factoring in a 5% increase in excise and 6% volume growth for FY10-12."

"We note that ITC's cigarette EBIT rose 16.4% CAGR over the past four years and 14.8% CAGR over the past two years when volumes declined. Although lower volume impacted sentiment, strong pricing power enabled ITC to maintain healthy EBIT growth. We note that the ITC stock has given negative returns (after the Budget) only once in the past six years. The stock trades at 16.5x FY12E EPS. Maintain Buy with a target price of Rs 300," according to Motilal Oswal report.