Stock views on Indraprastha Gas, Geodesic, Gujarat Industries Power

RR Financial on GIPCL - Target Rs 160

RR Financial Consultants is bullish on Gujarat Industries Power, GIPCL and has recommended buy rating on the stock with a target of Rs 160, in its research report.

"At the current market price Gujarat Industries Power Co is trading at discount of 2011E PE multiple. We recommend BUY rating on the stock with a target price of Rs 160 (32% upside) in 12 month with DCF valuation .The mid cap stock had performed very well for the past one month . We remain positive on the domestic Power industry as we expect it to grow in line with the country’s GDP growth. India’s peak power demand in excess of 11%, gives substantial opportunity to players like GIPCL. The company’s expansion plans are also on track, which we believe will help it continue on growth path ahead. The Gujarat Industries Power Company Ltd has the advantage of the backing of the Govt. of Gujarat (GOG) while at the same time full functional freedom is given to it.," says Bonanza research report.


Bonanza on Geodesic - Target Rs 130

Bonanza research has recommended accumulate rating on Geodesic with a target of Rs 130, in its research report.

"Geodesic Ltd has a niche product line. The company has reported near 100% CAGR in top line and bottom-lines over the past five years. The company has increased its top line by acquiring companies and increasing its portfolio of products. It has also ear marked FCCB funds for more such acquisition abroad that would further fuel its top line and bottom-line. The company has announced that it would soon acquire a social networking company and the deal is in finalization stage. Company is also planning to set up a small facility for manufacturing Simputer in Roorkee. Company has worked on many e-governance pilot projects and hopes to bag orders from the government for the same. Company has been focusing on developing economies such as China and Latin America as new target markets with good growth potential. Company also plans to increase the dividend payout in the coming years."

"However, the company management has stated that pricing pressure for its products exists. We have estimated that company would report a growth of nearly 11% in its top line but pricing would continue to drag the bottom line for FY10. We expect the company to report growth in bottom-line FY11, fueled by new product launch and additional acquisitions. At current market price of Rs95 the company is trading at a forward earning multiple of 4.17x for Consolidated EPS of 22.79 in FY10. We recommend investors to accumulate the stock at Rs 100 for a target of Rs 130 in twelve months time. However, due to market volatility a downside of 10-15% cannot be ruled out from the recommended range," says Bonanza research report.

Hem Securities on Indraprastha Gas - Target Rs 240

Hem Securities has recommended buy rating on Indraprastha Gas with a target of Rs 240, in its research report.

“With forthcoming Commonwealth Games 2010 and ambitious plan to expand company’s CNG Station coverage, greater focus by Delhi Government on reduction of pollution, robust capex plans through internal accruals and business opportunities from business expansion in NCT and CGD operations will drive the growth momentum in coming future. Further, the compnay expects to touch turnover of Rs.1250- Rs.1300 crores in the coming year. In wake of such growth, Indraprastha Gas Ltd. seems to be extremely attractive investment opportunity.”

“Presently, Indraprastha Gas is trading at Rs 183 which is at 14.85 times to its earnings and 3.75 times to its book value of Rs 48.82. Since the stock offers good opportunity, we initiate a ‘BUY’ signal on the stock with a target price of Rs 240 in medium to long term investment horizon expecting an appreciation of about 31% from the current level of Rs 183,”says Hem Securities research report.

Stock Views on Piramal Healthcare, Gujarat Industries Power

Angel on Piramal Healthcare - Target of Rs 340

Angel Broking has maintained its buy rating on Piramal Healthcare with a target price of Rs 340 in its research report.

"Piramal Healthcare (PHL) has announced that it would be discontinuing its Pharma Solution operations at the low-Margin Huddersfield facility in UK. We believe given the near-term hiccups in the CRAMS space it is a prudent decision taken by the company to control costs. However, Revenue from the existing contracts at Huddersfield that would be shifted to the other facilities would take some time to kick in as the validation and stability studies are still proceeding."

"Over the long term, we expect the Pharma Solution business to drive the company's growth on the back of robust product pipeline with twenty-seven Innovators' products at Phase III (as of 1HFY2009), of which two are at advanced stages with a likely launch by FY2011. However for FY2010E, we have factored in a de-growth of 7% for the Pharma solution business and have not taken any EBITDA Margin expansion resulting into an upside risk if the company improves its EBITDA margin on account of restructuring. We maintain a 'Buy' on the stock, with a target price of Rs 340," says Angel's research report.

Bonanza on Gujarat Industries Power - Target of Rs 54

Bonanza has recommended a buy rating on Gujarat Industries Power Co. with a price target of Rs 54 in its research report.

"Gujarat Industries Power Co., GIPCL is a small Gujarat Govt.PSU with capacity of 557 MW presently, to be expanded to 807 MW by Q2 FY10. There is long term visibility in Power sector in India. Country is likely to remain power deficit for next few years. Company is likely to show fall in bottom line in FY09, compared to FY08, however, once the new capacity starts in next 4months, a sharp jump in results can be seen in FY10."

"Currently, it is trading at very attractive Market cap/Sales ratio of 0.6 times. The company is expanding its capacity by 50% in next 4 months, which gives good potential for future performance. Presently, it is at an attractive dividend yield of 6%. "Buy", price target of Rs 54," says Bonanza's research report.

Emkay Global on Piramal Healthcare - Target of Rs 261

Emkay Global Financial Services has recommended a buy rating on Piramal Healthcare with a target price of Rs 261 in its research report.

"In a bid to improve operating performance of its Pharma Solution (CMG) business, Piramal Healthcare is re-aligning its CMG assets by closing down its Huddersfield facility. Company will take one time hit of Sterling pound 10.1mn in FY09 itself. Company will be shifting these contracts to Digwal (India) and Morpeth (UK) facilities. Management has indicated that this restructuring will enable them to improve the operating margins of its Pharma Solution business by 6 to 8 ppt from FY10E itself.

"We view the restructuring of its Pharma Solution business as long term positive for the company. We have revised our revenue and earning estimates downward because of these restructuring. We have downward our revenue estimates by 11% and 11% and earnings estimates by 9% and 8% for FY10E and FY11E respectively. On the back of downward revision in earnings, our target price has been revised downward by 13% to Rs 261, Buy," says Emkay Global Financial Services' research report.

Religare Views on Axis Bank, Divis Labs, Deepak Fertilizers, PSL, Gujarat Industries Power

Buy Gujarat Industries Power Co, Target Rs 123

Religare Research has maintained its buy rating on Gujarat Industries Power Company with a target price of Rs 123 in its August 6, 2008 research report. "The company's revenue at Rs 2,624.5 million was above our estimate by 31.4% due to higher fuel prices for its gas based power plants at Baroda. The higher fuel cost being a pass-through increased the revenue by 22% YoY. The EBITDA of the company at Rs 554.5 million was down 21.4% YoY mainly due to the additional O&M expenditure incurred during the planned annual shutdown of its 250MW lignite based plant at Surat. The net profit of the company was also below our expectation by 8% at Rs 224.9 million, showing a negative growth of 40.5% YoY due to additional O&M expenditure and lower other income."

"We are revising our estimates to incorporate the higher fuel cost which is a pass-through and the delay in commissioning for its SLPP II project. The stock is currently trading at 1x its FY09 and FY10 book value, a considerable discount to its peers. We have revised our DCF assumptions for the risk-free rates to 9.3% from the earlier 8.4% to reflect the current interest rate scenario. Based on the weighted average of the DCF and P/BV methods, we arrive at the target price of 112 down from our earlier target price 123 maintaining our Buy recommendation," says Religare's research report.


Buy PSL, Target of Rs 500

Religare Research has maintained its buy rating on PSL with a target price of Rs 500 in its July 16, 2008 research report."Net sales increased by 59% YoY to Rs 6.5 billion on the back of strong volume growth (+32.8%) and Rs 600 million of additional revenue contribution from the sale of pipe manufacturing mill to the US subsidiary. EBITDA increased by 46.2% YoY and 24% QoQ to Rs 594 million. EBITDA margins expanded by 180bps QoQ to 9.1%. Adjusted PAT increased by 52% YoY and 41.1% QoQ to Rs 260 million. Adj. PAT margins expanded by 120 bps QoQ to 4%."

"At the CMP of 310, the stock trades at 9.0x FY09E diluted earnings. We maintain our Buy recommendation on the stock target of Rs 500," says Religare's research report.

Buy Deepak Fertilizers, target of Rs 183

Religare has maintained its buy rating on Deepak Fertilizers and Petrochemicals Corp with a price target of Rs 183 in its June 10, 2008 research report. "The company is expanding its diluted nitric acid capacity to 1,350MT/day from 900MT/day by June 2009 with a total investment of Rs 1.1 billion. This is expected to elevate its market share from 48% to 58%, while boosting the production of nitro phosphates and ammonium nitrate. The company has started to procure."

"0.2–0.3mmscmd of LNG from GAIL through its Dahej-Uran pipeline, which is expected to increase plant capacity utilisation. It also expects gas supply from the Reliance KG-basin to commence shortly. This apart, Ishanya will lend an added dimension to profitability. We maintain our Buy recommendation on the stock with a price target of Rs 183," says Religare's research report.

Buy Divis Labs, target of Rs 1833

Religare has maintained its buy rating on Divis Laboratories with a target price of Rs 1833 in its June 10, 2008 research report. "Divi's remains our preferred pick in the Indian CRAMS space, given its healthy relationship with top innovators amid a growing outsourcing trend. Through its focus on high-margin CCS, the company's EBITDA margin will remain amongst the highest in the CRAMS segment. Further, as Divi's emerges from its heavy capex phase, we expect return ratios to improve significantly. We estimate a PAT CAGR of 28% to Rs 6bn over FY08-FY10, and maintain Buy with a target price of Rs 1,833," says Religare's research report.

Buy Axis Bank, target of Rs 805

Religare Research has maintained its buy rating on Axis Bank with a revised target price of Rs 805 in its July 16, 2008 research report. "Axis Bank's Q1FY09 results have surpassed our estimates primarily on the strength of higher loan growth and robust non-interest income. NII expanded 93% YoY to Rs 8.1 billion, driven by increased asset growth as advances and deposits swelled 48% and 46% respectively. In another key positive, fee income surged 80% YoY during the quarter to Rs 4.8 billion, aiding net profit growth of 89% to Rs 3.3 billion.""The management expects to maintain the robust business growth momentum in the coming months. However, the weakening asset quality remains a concern. We have revisited our estimates for fee-based income to incorporate the strong growth during the quarter, while raising our estimate for provisioning expenses in FY09 and FY10 on account of higher non-performing assets and depreciation on investments. On a net basis, these changes have no impact on our profit targets. In light of the increased market risk, we have raised our DDM valuation assumptions for risk free rate to 9.1% and beta factor to 1.2. This gives us a revised target price of Rs 805 from Rs 984. We maintain a Buy on the stock," says Religare's research report.