Stock views on Texmaco, Amtek Auto, ICSA

PINC Research on Texmaco - Target Rs 65

PINC Research has maintained its buy rating on Texmaco with a target of Rs 65 in its research report. "Texmaco’s Q3FY09 results were in line with expectations as net sales rose by 3.6% YoY due to the benefit of excise reduction to Rs 1.6 billion. The growth was led by the Heavy Engineering segment (wagons, process and hydromechanical equipment) which grew 13% to Rs 1.8 billion. We maintain our ‘BUY’ recommendation with a 12-month price target of Rs 65," says PINC's research report.


Angel Broking on Amtek Auto - Target Rs 110

Angel Broking has maintained its buy rating on Amtek Auto with a target of Rs 110 in its research report. "For 2QFY2009, Amtek Auto (AAL) reported 24.6% de-growth in Net Sales to Rs 241.3 cr (Rs 319.9 cr). The company reported a substantial 86.3% yoy decline in Net Profit to Rs 5.4 cr (Rs 39.2 cr) for the quarter. We maintain a Buy on the stock with a revised 18-month Target Price of Rs 110, which values the company at 0.5x FY2010E BV (adjusted for FCCB interest impact)," says Angel Broking's research report.


India Capital Markets on ICSA - Target Rs 150

India Capital Markets has maintained its buy rating on ICSA India with a target of Rs 150 in its research report. "ICSA reported a modest sequential top line growth (lowest since Q1 08) of 8.8% to Rs 3.04 billion. Revenue from the infrastructure business increased by nearly 39% while embedded solution dipped by 5%. PAT margins were further dented by increase in interest cost, though the effective decline was over 200 bp after factoring a 200 bp respite in the tax provision."

"The ongoing slowdown in the economy is bound to affect the power distribution utility given the fall in demand across industries. Our revised target price is Rs 150 at which the stock will trade at FY10E P/E of 3x and EV/EBITDA of 2x. We maintain BUY," says India Capital Markets' research report.

Stock Views on Everest Kanto Cylinder, Amtek Auto, Arvind Mills

CITIGROUP on Everest Kanto Cylinder

CITIGROUP remains positive on Everest Kanto Cylinder (EKC) and has recommended a ‘buy’ rating with a price target of Rs 365 due to its highest leverage to the strong growth that city gas in India is likely to witness over the next few years. EKC is the largest domestic manufacturer of high-pressure gas cylinders used for storage of industrial gases and CNG. EKC’s Q1 FY09 net profit of Rs 35 crore was up 57% year-on-year y-o-y) and well above expectations. The 12-month target price of Rs 365 is based on 19x September ’09E consolidated earnings. Key risks include: 1. Exposure to a single supplier; 2. China — a hitherto unexplored market; 3. Competition — low physical barriers to entry have led to some players entering the market in the recent past; 4. Project risk — EKC is implementing significant expansion plans that are subject to time and cost overruns; 5. CPI — integration and execution risks related to the acquisition of CP Industries; 6. Crude prices.

EDELWEISS on Amtek Auto

EDELWEISS has maintained its ‘accumulate’ rating on Amtek Auto and awaits clear signs of margin improvement. The company has been facing resistance to price revisions from its customers. Over the past three years, the standalone capex was Rs 1,500 crore. The company plans to consolidate its operations now, with incremental capex of only Rs 200 crore over the next two years. This is expected to aid improvement in return ratios, going forward. In addition, the company is looking at inorganic growth opportunities abroad to cement its position in the European and American auto markets. This project is valued at Rs 300 crore, of which, Amtek Auto’s equity contribution will be Rs 75 crore. The joint venture is likely to start operations Q4 FY10E onwards, and is expected to improve the company’s margins, going forward. The merger of group companies and subsidiaries is on track, and is likely to be completed by the end of March ’09. Further, the company is likely to house all its overseas subsidiaries in a Netherlands based holding company to streamline the group structure.

MORGAN Stanley on Arvind Mills

MORGAN Stanley has downgraded Arvind to ‘equal-weight’ and reduced the target price to Rs 34 from Rs 85. It believes that multiple macro headwinds are likely to force Arvind into a loss-making company in FY09. A slowdown in end consumer (US and EU) demand for its denim fabrics business is likely to delay the potential recovery in the denim cycle. A sharp rise in input costs such as cotton, power, fuel and chemicals is likely to impact margins. Huge debt and related financing costs are likely to impact net profit. The company’s forward cover for the dollar at Rs 40 for FY09 is likely to cap the potential benefit due to the current depreciation in the rupee. Although the company is adopting stringent cost-control measures, these may not be sufficient to help it earn a profit in FY09. In the current market environment, investors will be unwilling to pay value for its real estate and joint ventures, which can only be monetised in FY12. The positive catalysts are quick monetisation of its large real estate properties and cost control-driven margin expansion.

Angel Broking views on Jain Irrigation, Finolex, Tata Steel, Tanla Solutions, Amtek Auto

Buy Amtek Auto, target of Rs 300

Angel Broking has maintained its buy rating on Amtek Auto with a target price of Rs 300 in its July 31, 2008 research report. "For 4QFY2008, Amtek Auto (AAL) reported 2.1% growth in Net Sales to Rs 318.2 crore marginally better than our expectation of Rs 315 crore. Higher EOI of Rs 30.5 crore (profit on sale of Amtek India shares of Rs 53 crore and provision on account of loss on revalidation of outstanding forex loan Rs 23 crore) helped to restrict the fall in Bottom-line. AAL reported 17.6% yoy jump in Net Profit to Rs 75 crore (Rs 63.8 crore) on account of which NPM improved by 406bp yoy."

"We maintain a Buy on the stock, with a Target Price of Rs 300. We await further details of the merger of Amtek Auto and its subsidiaries. Hence, our numbers (Standalone and Consolidated) do not include effects of the merger. We will revisit our numbers on getting more details about the merger," says Angel's research report.

Buy Tanla Solutions, target of Rs 292

Angel Broking has maintained its buy rating on Tanla Solutions with a revised 12-month target price of Rs 292 in its July 15, 2008 research report. "Tanla Solutions recorded an impressive 16.2% qoq and an excellent 86.5% yoy growth in Top-line in 1QFY2009. In 1QFY2009, Tanla took several strategic initiatives to grow this business. It acquired Openbit, a Finland-based leading provider of global on-device payments for mobile applications. This company recorded Revenues of USD 15.9 million and EBITDA of USD 0.8 million for CY2007."

"At the CMP of Rs 206, the stock is trading at 7.1x FY2010E EPS. We believe these valuations are attractive, given the strong growth expected in EPS over the next few years. However, on account of the current poor market conditions, we have reduced our target P/E multiple for the stock from 12x to 10x. Consequently, we maintain a Buy on the stock, with a revised 12-month target price of Rs 292 (Rs 339)," says Angel's research report.

Buy Tata Steel, target of Rs 875

Angel Broking has maintained its buy rating on Tata Steel with a target price of Rs 875 in its August 1, 2008 research report. "In 1QFY2009, Tata Steel posted a yoy Standalone Topline growth of 47% to Rs 6,165 crore (Rs 4,198 crore), exceeding our expectations. Despite the hefty Topline growth, Net Profit increased by 22% yoy to Rs 1,488 crore (Rs 1,222 crore) during the quarter."

"At the CMP of Rs 681, Tata Steel is trading at a P/E of 6.0x and EV/EBIDTA of 4.1x FY2010E consolidated Earnings. We believe that the stock is quoting at attractive valuations considering Tata Steel being the most integrated player and Corus has been able to pass on the cost push to customers due to the strong prices in the European markets. We maintain a Buy on the stock, with a Target Price of Rs 875," says Angel's research report.

Buy Finolex Ind with target of Rs 80

Angel Broking has maintained a buy rating on Finolex Industries with a price target of Rs 80 in its August 1, 2008 research report."Finolex Industries registered a top-line growth of 73.2% yoy during 1QFY2009 to Rs 484.5 cr (Rs 279.7 cr) mainly driven by higher volumes and hike in product prices (which were hiked over last year on the back of an increase in raw material prices). Revenues, on a qoq basis, however declined on account of the additional discounts offered on the products by the company to counter competition and boost volumes."

"We maintain our FY2010E EV/EBITDA multiple for the stock at 5x. But, we are pruning our EBITDA estimate for FY2010E to Rs 194 cr (Rs 213 cr), which is primarily due to the reduction in our OPM estimates. We continue to include the value of the 14.5% stake held by the company in Finolex Cables at 25% discount to the current market value of that stock and estimated value of the Pune land, which the company plans to sell at Rs 400 cr. We maintain a buy on the stock, with a revised SOTP target price of Rs 80." Accroding to Angel Broking report.

Buy Jain Irrigation with target of Rs 679

Angel Broking has maintained a buy rating on Jain Irrigation with a price target of Rs 679 in its August 4, 2008 research report."Jain Irrigation (JISL) reported very good set of numbers for 1QFY2009 with revenues spurting 44.9% yoy to Rs 474.3 cr (Rs 327.4 cr) backed by healthy growth in Micro Irrigation (MI), PVC Pipes and Fruit Processing segments. The company has delivered a stellar performance for 1QFY2009 backed by volume growth in majority of its segments as well as higher realisations. Operational performance remained robust with OPMs expansions owing to successful passing on of the high raw material costs to consumers. The stock is currently trading at 13.0x FY2010E FDEPS of Rs 39.9 cr. We maintain a buy on the stock, with a target price of Rs 679." Accroding to Angel broking report.