Stock views on Crompton Greaves, Indian Overseas Bank, Patel Engineering

IIFL on Crompton Greaves - Target of Rs 151

IIFL has recommended an add rating on Crompton Greaves with a target price Rs 151 in its research report.

"We met Crompton’s management post the announcement of share buyback and investment in group company Avantha Power & Infrastructure Ltd (APIL). The management views these initiatives as the best use of cash on the parent balance sheet, as the company has slowed down its own capex plans. These two initiatives would result in cash outflow of Rs 4.51 billion during FY10."

"Deleveraging the subsidiary balance sheets or cash conservation in a downturn would have been a more prudent strategy, in our view. However, the management was sanguine on the outlook of both domestic and overseas power T&D businesses and expressed confidence on the cash generation ability of existing businesses. In our view, more clarity on APIL’s financial details and development plans would be required to improve investor sentiment on the related party transaction. "ADD" target price of Rs 151," says IIFL's research report.

Sunidhi Securities on IOB - Target of Rs 60

Sunidhi Securities & Finance has recommended a buy rating on Indian Overseas Bank with a price target of Rs 60 in its research report.

"Indian Overseas Banks' total business as on December 31, 2008 rose from Rs 1,33,413 crore as at end December 2007 to Rs 1, 62, 575 crore-a growth of 22%. Total deposits grew by 15% to Rs 90, 866 crore from Rs 78, 791 crore. Advances spurted 31% in Q3FY09 to Rs 71, 709 crore from Rs 54, 6222 crore (YoY). As at December 31, 2008 IOB’s CASA (current accounts saving accounts) is marginally down to 29.23% from 30.93% (YoY)."

"During Q3FY09, total income rose 40% to Rs 3204 crore and net profit by 26% to Rs 388 crore. NIM and NP margin stood at 3.14% % and 12.4% respectively. Its balance sheet grew by 31% to Rs 19, 747 crore (YoY). We recommend BUY with a target of Rs 60 in the medium term," says Sunidhi Securities & Finance's research report.

Karvy on Patel Engineering - Target of Rs 305

Karvy Stock Broking has maintained its buy rating on Patel Engineering Company with a price target of Rs 305 in its research report.

"Patel Engineering has bagged an order worth of Rs 7.99 billion from the Narmada Valley Development Authority for Bargi Diversion Project in joint venture with SEW Construction Ltd. The company's stake in the project would be around 60% which will translate the order inflow of Rs 5 billion. The project would be executed in three years and provide the EBIDTA margin of around 15%. We have excluded the real estate value from our valuation due to no clarity on development plans and revise the price target downward. We have valued the core business of the company using EV/EBITDA methodology by providing 20% discount to its historical trough multiple of 5.5x. We re-iterate our BUY rating with downgraded price target of Rs 305," says Karvy Stock Broking's research report.

Angel Broking views on Banking Stocks Part II - HDFC Bank, Axis Bank, Indian Overseas Bank

HDFC Bank - Target of Rs 1361

Angel Broking has maintained its buy rating on HDFC Bank with a 12-month target price of Rs 1361 in its November 21, 2008 research report. "We believe HDFC Bank is among the most competitive banks in the sector and is poised to maintain its profitable growth over the long term. We believe the bank's competitive advantages, driving gains in CASA market share and traction in multiple fee revenue streams, can support upto 5% higher core sustainable RoEs vis-à-vis sectoral averages over the long term, creating a material margin of safety in our target valuation multiples. At Rs 857, the stock is trading at 13.0x FY2010E EPS of Rs66 and 1.9x FY2010E ABV of Rs 453.6. We value the stock at 3.0x FY2010E ABV to arrive at a 12-month target price of Rs 1361, implying an upside of 59%. We maintain Buy on the stock," says Angel's research report.

IOB, target of Rs 96

Angel Broking has maintained its buy rating on Indian Overseas Bank (IOB) with a 12-month target price of Rs 96 in its November 21, 2008 research report. "Given the bank's progressive decline in NIMs that has eroded sustainable RoEs as well as further downside risks to NIMs and asset quality, we have valued the stock at 0.9x FY2010E ABV below the median one-year forward P/ABV multiple of 1.2x that it has traded at since April 2002. Nonetheless, at Rs 62, the stock is trading at cheap valuiations of 2.6x FY2010E EPS of Rs 24.2 and 0.6x FY2010E ABV of Rs113.2. Hence, we maintain Buy on the stock, with a 12-month Target Price of Rs 96, translating into an upside of 54%," says Angel Broking's research report.

Axis Bank, target of Rs 748

Angel Broking has maintained its buy rating on Axis Bank with a target price of Rs 748 in its November 21, 2008 research report. "Over the past five years, Axis Bank has transformed itself into a strong private bank with a growing market share in Corporate and Retail banking. During this period, the bank has rapidly expanded its network and gained traction in segments such as transaction banking, wealth management and cards. We expect the bank's RoE to improve to 19% by FY2010E and expect the bank to deliver amongst the highest PAT growth in our coverage universe at 38% CAGR over FY2008-10E. We value the stock at 2.4x FY2010E ABV (20% discount to HDFC Bank, given higher asset quality concerns) to arrive at a revised 12-month target price of Rs 748 (Rs 929), implying an upside of 82%. We maintain a Buy on the stock," says Angel's research report.

Stock Views on Jubilant Organosys, Nagarjuna Construction, IOB, Axis Bank

Emkay Global on Jubilant Organosys - Target Rs 224


Emkay Global Financial Services has maintained its buy rating on Jubilant Organosys with a target of Rs 224 in its December 8, 2008 research report. "The stock price of Jubilant has come down by 31% in the last one month and has underperformed both- the Sensex as well as BSE healthcare index. We expect robust growth opportunities in outsourcing to be the key growth driver for the company. Being the largest CRAMS company in India, Jubilant is likely to capture a major share of the global outsourcing opportunity."


Prabhudas Lilladher on Nagarjuna Construction - Target Rs 90


Prabhudas Lilladher has upgraded its rating on Nagarjuna Construction Co from accumulate to buy with a target of Rs 90 in its December 4, 2008 research report. "The stock has also seen steep correction from its yearly highs and a robust order book along with lower interest and commodity rates makes it attractive at current levels. The company is also now expected to limit on road BOTs reducing business risk. We upgrade our rating from Accumulate to BUY, target of Rs 90," says Prabhudas Lilladher's research report.


Karvy Stock Broking on Indian Overseas Bank (IOB) - Target Rs 144


Karvy Stock Broking has maintained its buy rating on Indian Overseas Bank (IOB) with a target price of Rs 144 in its December 8, 2008 research report. "We are revising downward Indian Overseas Bank's earning estimates by 4.2% to Rs 11.7 billion in FY10 due to pressure on margin, reduced other income (mainly due to relatively negligible treasury income) and higher credit cost. Based on our revised estimates, we reduce our IOB's earning estimates by 4.2% Rs 11.7 billion in FY10 and revise downward our target price by 12.4% to Rs 144; we re-iterate our BUY rating with a target price of Rs144. Based on our target price the stock would trade at 1.52x adjusted book value FY10," says Karvy's research report.


ULJK Securities on Axis Bank - Target of Rs 596


ULJK Securities has recommended a buy rating on Axis Bank with a target of Rs 596 in its December 2, 2008 research report. "Axis Bank has been able to sustain a high growth in its loan book since the last five years and the Bank is able to maintain the same growth during H1FY09. The return ratios of the Bank are among one of the highest in the industry. Looking at its exponential growth prospects and the valuation, we believe the stock provides an investment opportunity for a decent return in the medium to long term. At our target price, Axis Bank will trade at a P/BV of 1.9x on the FY09E book value of Rs 277 and a P/BV of 1.6 on the FY10E book value of Rs 319, Buy," says ULJK Securities' research report.