CLSA on IRB Infra

CLSA initiates coverage on IRB Infra with a `Buy’ rating. As one of India’s largest integrated players in the space with in-house EPC complementing its BOT (build, operate and transfer) developments, IRB is a natural beneficiary. CLSA expect IRB to add to its existing BOT portfolio over the next few years, therefore, anticipates EPS rising at a about 20% CAGR over FY10-20CL. Road highway project activity is to intensify manifold. The recent changes to improve financial viability of road-highway projects, increase land acquisition thresholds before award to cut delays, make eligibility norms pragmatic and streamline procedural bottlenecks. Increased access financing have largely removed the key hurdles holding back investments in India’s road sector.

Consequently, over 34,000 km of new highway projects is to be awarded in the next four years - 1.7x that in the last decade. This opens up a $60-billion project award opportunity by FY14. With six projects aggregating Rs 67 billion already in the execution phase, EPC will drive earnings growth over FY10-13 with BOT earnings driving growth thereafter as projects get completed. Even without the new wins, EPS will still grow at a 16% CAGR over the next decade. New project wins are to be the key catalyst; five projects aggregating 576 km where IRB is on the final shortlist, will be awarded in the next quarter while it is in the pre-qualification stages for another 1,925 km. Lower than expected traffic and slower than expected awards are key risks.

Stock views on Unity Infraprojects, IRB Infrastructure, Torrent Pharma

Sharekhan on Unity Infraprojects - Target Rs 430

Sharekhan has maintained its buy rating on Unity Infraprojects, with price target of Rs 430, in its report.

"We have not factored in any dilution from the likely QIP in our estimates due to lack of clarity on the QIP. In view of the company’s ability to bag big-ticket orders and the order inflow of Rs 400 crore seen by the company in the financial year till date (28% of our FY2010 order inflow), we remain positive on Unity Infraprojects. We maintain our Buy recommendation on the stock with a price target of Rs 430. At the current market price, the stock is trading at attractive valuations of 6.4x FY2010 earnings estimate and 6.0x FY2011 earnings estimate," says Sharekhan's report.


India Capital Markets on IRB Infra - Target Rs 260

India Capital Markets has recommended a buy rating on IRB Infrastructure Developers with a target of Rs 260 in its research report.

"We have valued the company on an SOTP. The BOT road project at Rs 154.4 (FY11E NPV basis) and Core Construction Business at Rs 74.0 (12x on FY11 earnings), NAV of the Real Estate valued at Rs 10.3, Wind Mills at Rs 3.2 and Cash in holding Co at 17.8 per share. Thus aggregation to Rs 259.7/ per share. Hence, we recommend clients to “BUY” the stock for a long term basis on the back of key surprises & development expected on the order book front. We initiate the coverage with the target price of Rs 260," says India Capital Markets' report.

Karvy Stock Broking on Torrent Pharma - Target Rs 330

Karvy Stock Broking has maintained its buy rating on Torrent Pharmaceuticals with a target price of Rs 330 in its research report.

"We maintain our FY2010 and FY2011 revenue and earnings estimates. The stock is currently quoting at 9x FY2010E and 7.7x FY2011E. In lieu of the current re-rating in the stock we upgrade our multiple from 8.1 x to 10 x We revise our price target upwards by 22% to Rs 330 based on 10x FY2011E. We maintain our 'BUY' rating on the stock," says Karvy's research report.