Stock views on KEC International, AIA Engineering, City Union Bank

Sushil Finance on City Union Bk, target of Rs 32
Key strengths of the Bank are high margins of +3.0%, one of the lowest opex ratio of 38%,well-capitalized with CAR of 12.5% (supported by very high percentage of Tier-I capital of +10%), High CD Ratio of 69%, strong business growth of +30% over FY07-09, Low AFS portfolio of around 20% and high sustainable ROE of 19% supported by high ROA of 1.4%. Key weakness is very low CASA of 19% and lower NPA coverage ratio of 40%. The stock is currently trading at 1.1x FY10E ABV and 5.3x FY10E Earnings with a sustainable ROE of 19%, Buy, " says Sushil Finance's research report.
Sushil Finance on AIA Engineering; target of Rs 315

AIA has a manufacturing capacity of 165,000 TPA and it had plans to expand another 100,000 TPA capacity, preferably a SEZ, to manufacture high chrome mill internals. AIA would be benefited by both replacement and capex led demand in cement, mining and power utilities across the domestic and international markets. AIA generates 75% of its revenues from replacement demand. At CMP of Rs 240, the stock is available at 11.3x its FY11E EPS of Rs. 21.2 & 2.1x its FY11E ABV. 'Buy' with a target price of Rs 315," says Sushil Finance's research report

Angel Broking on KEC International, target of Rs 477

KEC International (KEC) is a global player in the Power Transmission and Distribution (T&D) network. KEC, which recently enjoyed a good inflow of domestic orders primarily from Power Grid Corporation (PGCIL), is well poised to bag more orders from the domestic markets. Further, KEC derives close to 63% of its revenue from its overseas operations and is expected to clock good growth in this space as well. Thus, KEC is set on a high growth path on the back of healthy order book position, stable Margins (registered in spite of a volatile commodity and currency markets) and diversification into the Railways and Telecom Segments, where the government is set make substantial investments. At Rs 373, the stock is trading at 10.2x FY2010E and 7.8x FY2011E Earnings. We initiate coverage on the stock with a buy recommendation and target price of Rs 477,” says Angel Broking's research report.

Stock views on AIA Engineering, Mcnally Bharat Engineering, KEC International

SKP Securities on Mcnally Bharat Engineering - Target of Rs 103

SKP Securities has maintained its buy rating on Mcnally Bharat Engineering with a target price of Rs 103 in its research report.

"With an order book of Rs 2200 crore which is 2xFY09 revenues and bidding for Rs 4075 crore worth of orders we feel the company is poised to manage healthy growth rates over the next 2-3 years. Though managing the debt component will be a challenge for the compnay we believe falling raw material prices and low interest rates will aid the company in managing its debt prudently. We feel the company will be able to manage to grow at CAGR of 30-35% over the next 24 months on the basis of current order book and expected orders. We maintain a buy on the company with a target price to Rs 103/- in 15 months implying a p/e multiple of 8x FY10 earnings," says SKP Securities' research report.

FinQuest Securities on KEC International - Target of Rs 368

FinQuest Securities has recommended a buy rating on KEC International with a price target of Rs 368, in its report.

"KEC plans to expand its Railway business by entering into areas like tracking, signaling and railway platforms. We expect KEC to report an EPS of Rs 37.7 and Rs 46.3 for FY10 and FY11 respectively. Given the strong pipeline of orders, and earnings growth visibility over the next two years, we believe valuations are attractive. It is currently trading at 6.3x its FY11 EPS. We initiate coverage with a buy rating on the stock with a target price of Rs 368," says FinQuest Securities' report.

Sunidhi Securities on AIA Engineering - Target of Rs 235

Sunidhi Securities & Finance has recommended a buy rating on AIA Engineering with a price target of Rs 235, in its report.

"Although there has been some slowdown witnessed due to global factors, with the Asian hunger for metals growing, mining activity too is expected to go up. Companies have increased their exploration budgets and fresh capacities are coming up in sectors such as steel, aluminum and copper. AIAEL also expects to enter the mining segment where the market potential is 10 times bigger than cement. At the CMP of Rs 190, the share is trading at a P/E of 10.2 on FY09E and 8.4 on FY10E. We recommend buy with a target of Rs 235 in the medium term," says Sunidhi Securities & Finance's research report.

Stock views on Power Grid, AIA Engineering, Emco, KSB Pumps

Hem Securities on Power Grid - Target of Rs 105
Hem Securities has recommended a buy rating on Power Grid Corporation of India with a target of Rs 105 in its research report.

"Power Grid Corporation of India has granted investment approval for implementation of `North East - Northern / Western Inter connector-I' Project at an estimated cost of Rs 111.30 billion with commissioning schedule of 54 months for Part A (related to HVDC) and 48 months for part B and C (related to AC) of the transmission system, from the date of investment approval."

"The net sales for the company gone up by 36.07% to Rs 14774.40 million for the Q3FY09 as against the net sales of Rs 10857.70 million for the Q3FY08. The company posted the EBITDA of Rs 12269.50 million for the Q3FY09 as against the EBITDA of Rs 8881.30 million for the Q3FY08 with the growth rate of 38.15%. We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 105 in the medium term investment horizon (3- 4 months) with an appreciation of 16%," says Hem Securities' research report.


Hem Securities on AIA Engineering - Target of Rs 178

Hem Securities has reiterated its buy rating on AIA Engineering with a target of Rs 178 in its research report.

"AIA Engineering Limited has a scalable business model, good growth visibility, high operating margin and limited competition. The company has registered a continuous robust growth rate over past few years. As discussed with the management, the Company has a strong order book position of around INR 415 crores which provides a strong visibility to their revenues. We expect the company to outperform in the future and we reiterate “BUY” on the stock with a target of Rs 178," says Hem Securities' report.


KRChoksey on Emco - Target of Rs 36

KRChoksey has maintained its buy rating on Emco with a target price of Rs 36 in its research report.

"Emco Ltd has received five orders worth Rs 550 crore from the state-run Power Grid Corporation of India Ltd for a 765 kilo volt overhead transmission line. The orders also involve supply of galvanised steel towers. In Q3FY09, company’s witnessed drop of 14.6% & 45.7%(YoY) in net sales & PAT to Rs 207.9 crore & Rs 8.2 crore. The topline declined mainly due to intentional delay in deliveries to industrial clients and issues in sourcing of key components. We maintain our BUY rating on the stock with target price of Rs 36, with an upside potential of 38.5% from current levels," says KRChoksey's research report.


KRChoksey on KSB Pumps - Target of Rs 242

KRChoksey has recommended a buy rating on KSB Pumps with a target price of Rs 242 in its research report.

"In Q4CY08, the company’s sales have increased by 33% on a y -o-y basis to Rs 174.7 crore from Rs 131.8 crore. The growth in sales was on account of rise in the revenues from pumps segment by 47% y-o-y.The growth of the pump industry would be driven by the heavy investments being made in the user industries, such as power and petrochemicals."


"The growth of the pump industry would be driven by the heavy investments being made in the user industries, such as power and petrochemicals. However delay in the expansion plans of user industries and volatility in raw material prices going forward can affect the company’s earnings. We recommend a BUY with a target price of Rs 242, implying an upside potential of 17%. At the target price, the stock would be valued at 5.5x CY09E EPS of Rs 43.4," says KRChoksey's research report.

Stock View on AIA Engineering, Container Corp, Kamat Hotels, Bajaj Hindustan

KOTAK Securities on AIA Engineering - TARGET PRICE: RS 1,870

KOTAK Securities has maintained its “buy” recommendation on the stock saying the stock is attractively valued at current levels, in the context of its growth prospects. The brokerage says that despite sharp increases in raw material prices and sharp rupee-dollar movements the company has been able to effectively maintain its operating margins, as it has been able to pass on price hikes. “Going forward, the management is confident of maintaining the margins in the 23-25% range. We maintain our earnings estimates for AIA and expect it to report an EPS (earnings par share) of Rs 98.1 in FY09E (estimated),” the Kotak Securities note to clients said. “The current market price, said the Kotak note, discounts FY09E earnings at 16.1, which we believe is attractive considering the growth prospects for the company going forward due to capacity expansion and strong demand for the products of the company,” the note added.

ENAM Securities on Container Corp - TARGET PRICE: RS 1,035

ENAM Securities has maintained its “outperformer” rating on the stock. Enam believes that despite improving visibility on earnings (19% CAGR over FY07-09E) and sustainability of RoE (return on equities) at around 25%, the stock trades at a 12% discount to the Sensex valuation. “Compared with global peers, admittedly with high barriers to entry, Container Corporation trades at 40% discount,” the Enam note said to its clients. According to Enam, growth in India’s export-import trade and investment in rail, road and ports infrastructure would drive growth for the company. “Steep increase in rail haulage charges had dampened volume growth in the past three years. Current pricing environment remains stable, with IR to hike haulage charges twice a year,” said the note. The brokerage expects Container Corporation EXIM throughput to revert back to long average of 14% per annum. “Lower flat discounts and increase in tariff are expected to drive 244 bps expansion in EBIT margin over the next two years,” the note added.

Sharekhan on Kamat Hotels

SHAREKHANhas initiated coverage on Kamat Hotels and has advised investors to maintain a cautious view on the stock. Though the stock is attractively priced, the inability of the hotel group to fund its expansion plans is a key potential risk to the earnings estimate for FY10, the research note said. “The company’s revenues are heavily dependent on two properties — The Orchid and VITS — in Mumbai. These two properties are like to face stiff competition with incremental supply of rooms from Sahara Star. We believe, the occupancy rate of these properties may remain suppressed due to economic slowdown,” the Sharekhan report added. According to Sharekhan, the hotel group’s growth would be driven by a 37% rise in its room inventory to 773 rooms by FY10. Also, an increase in properties under management contracts will contribute to the topline growth.

MORGAN Stanley on Bajaj Hindustan - TARGET PRICE: RS 240

MORGAN Stanley has assigned an “overweight rating” on Bajaj Hindustan, as it expect the company to do well in coming months. As the largest domestic sugar producer, Bajaj Hindustan seems well positioned to benefit from the favourable domestic sugar outlook, the brokerage said in a report. “As our expectation of a tighter sugar balance unfolds, investors may start discounting the higher sugar and ethanol realisations. BJH has increased crushing and distillery capacity more than three times in three years and seems poised to drive revenue growth in a constructive pricing environment,” said the Morgan note to clients. Aggressive government intervention to control sugar prices and cane cost could be one of the risk factors, according to Morgan. “We expect a sharp rally in Bajaj Hindustan’s stock price as the company reaps the benefits of aggressive capacity expansion in a constructive sugar pricing environment. We estimate the stock has more than a 25% chance of a price move (up or down) of more than 25% in a month, based on a quantitative assessment of historical data,” the note added.