Stock views on Hindustan Construction Company, Yes Bank

FinQuest on Yes Bank - Target Rs 315

 

FinQuest Research is bullish on Yes Bank and has recommended buy rating on the stock with a target of Rs 315, in its research report.

"Yes Bank's results were in line with our estimates as net profits grew 75% YoY to INR 1.4 billion, led by strong growth in the core income (63% YoY). Advances during the quarter grew by 79% YoY while deposits grew by 66% YoY. Margins expanded to 3.2%, a 10 bps higher than Q3FY10. Asset quality showed marked improvement as restructured assets declined to INR 800 million whereas GNPA and NNPA reduced to 0.27% and 0.06% respectively."

"We expect earnings to grow at a CAGR of 30% over FY10-FY12 led by 40% CAGR growth in  the net interest income. Further, the bank will sustain NIMs at ~3% and ROE's at 18-20% in long term. Management has declared a dividend of 15% for FY10 (first time in the banks history) which further strengthens confidence on the bank's performance. We maintain our DDM based target price of INR 315 (2.5x FY12 ABV) and BUY recommendation."

 

 

Karvy on HCC - Target Rs 166

 

Karvy Stock Broking is bullish on Hindustan Construction Company, HCC and has recommended buy rating on the stock with a target of Rs 166.

"For the quarter ending March' 10, we expect the company's result would be moderate due to slower execution of projects in Andhra Pradesh projects. We expect net sales would grow by 21.9% to Rs. 11.9bn in Q4FY10 from Rs. 9.79bn in Q4FY09. EBIDTA would go up by 6.3% to Rs. 1.6bn and EBIDTA margin would be lower by 200bps due to expected decline in contribution from hydropower segment in revenue mix. We expect PAT would decrease by 17.2% to Rs. 425mn due to decline in operational profit. During the quarter the company has got order worth Rs 33.5bn and has order book position of Rs 157bn as on December '09, which works out to 5.3x of FY09 revenue which is providing strong revenue visibility for next 4 years. We believe strong order book would drive the revenue at CAGR of 22% in next two years. "

"We have downward revised our earning estimate for FY11 by 9% to factor the slow execution in Andhra Pradesh projects. At the current market price of Rs. 131, the stock is trading at PER multiple of 27.1x, EV/EBIDTA multiple of 9.4x. We have valued the core business of the company at PER multiple of 15x which contributes Rs 95 to our target price. Real estate business valued on the basis of DCF of developed value and raw land at 40% discount. Lavasa project contributes Rs 38 and Vikhroli IT Park Rs 19 to our target price. Our P/BV valuation method for the two BOT projects results into a value of Rs 8/share. We rate the company as a BUY with revise price target of Rs.166 from Rs 171 based on our SOTP valuation," says Karvy Stock Broking research report.