Stock views on BANK OF BARODA, INFOSYS TECHNOLOGIES, SINTEX INDUSTRIES

J P MORGAN on SINTEX INDUSTRIES

J P Morgan maintains their Overweight rating on Sintex Industries and increase their price target to 475. Sintex management addressed concerns about the balance sheet and reiterated FY11E guidance of 30% revenue growth and 18-19% EBITDA margins. Balance sheet related concerns partially addressed: 1) Management stated that Sintex will reduce its stake to a minority investor in the oil & gas subsidiary and its cumulative investments over next 4-5 years would be capped at Rs1B. 2) Cash balance in the escrow account for M&A has declined to Rs3.5-4B in Sep-10 from Rs5.29B in Mar-10, which we expect will be utilized for a potential acquisition in the monolithic segment expected in 2HFY11. 3) Working capital would continue to increase on account of rising contribution from the monolithic business. J P Morgan raise their FY11E-FY13EPS estimates by 5%-12%, factoring in higher growth and margins for textiles and custom molding segments. The stock is currently trading at 10.7x FY12E P/E, an 11% discount to its historical average.

RELIGARE SECURITIES on INFOSYS TECHNOLOGIES

Religare Securities maintain their Hold rating on Infosys. Infosys revenues grew 10.6% Q/Q in USD terms driven by 1) 7.2% Q/Q volume growth, 2) onsite pricing improvement of 2.4% qoq and 3) cross currency benefits as growth in Europe exceeded North America. Margins improved by 190 bps, which is a normal trend this quarter led by improvement in gross margins. Overall, EPS at 30.4/share was up 17% Q/Q inline with expectations. The annual guidance implies 4QFY11 US$ growth of 1.4%, below expectations. However Re EPS guidance for 3QFY11 was revised up by only 0.3% due to appreciating rupee. Full year rupee EPS guidance was increased only marginally to 115-117/share largely due to Rupee appreciation. Religare continue to believe that consensus estimates are already too high and rupee appreciation could infact lead to EPS downgrades. Overall a good quarter from Infosys, as expected, driven by robust volumes. While the near term demand momentum remains good, there is limited clarity on the CY11 tech spending and appreciating rupee remains a risk. Further consensus estimates already factor in strong volume momentum in FY12 and that there is limited comfort at current valuations (P/E ) of 24x/20x on FY11E/Fy12E.

BNP PARIBAS on BANK OF BARODA

BNP Paribus downgrade Bank of Baroda to HOLD from BUY as it has surpassed thier previous price target. Their loan-growth estimate is 23% for FY11 and 20% for FY12. BNP believe loan growth will be driven by 26% growth in retail loans and 27% growth in corporate loans. BNP is factoring in loan loss provisions of 50bps in FY11 and 40bps for FY12. BNP recent price target upgrade has been to 850 from 775 on July 2, 2010. The stock has returned 78% YTD compared to 43% from the Bankex and 17% for the broader market. BNP believe there is no further significant rerating catalysts for the stock in the near term and recommend investors to book profits. The target price is based on a three-stage residual income model, which includes the following assumptions: risk-free rate of 8% equity risk premium of 6%, beta of 1.1, terminal growth of 4% and terminal COE of 10%. At targer price, the stock is valued at 1.8x FY12E adjusted BV for FY12E adjusted ROE of 23%.