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.

Sharekhan views on KSB Pumps, Indian Hotels, Bharti Airtel

Sharekhan on KSB Pumps
Sharekhan has maintained its buy rating on KSB Pumps in its research report.

"KSB Pumps has reported a strong top line growth of 31.4% to Rs175.4 crore for Q4CY2008. However, its margins declined on both year-on-year (y-o-y) and sequential bases on account of a change in the product mix and a greater contribution of the project business in the earlier quarters. KSB Pumps is likely to spend about Rs 200 crore over the next four years to raise its capacities. Looking at its almost debt-free status, funding of the same is not likely to be an issue, though we would try to get an update from the management regarding any changes in its capex plans. We maintain our Buy recommendation on the stock while we put the price target of the stock under review," says Sharekhan's research report.


Sharekhan on Indian Hotels - Target of Rs 82

Sharekhan has maintained its buy rating on Indian Hotels Company with a price target of Rs 82 in its research report.


"A significant slowdown in business and leisure travel has led the occupancies of the hotel industry to fall from 75% to 58% year on year (yoy) and the average room rate (ARR) decline by 17% yoy in January 2009. As for the hotel industry, we believe the occupancies and ARRs of Indian Hotels Company will also remain under pressure in Q4FY2009 and FY2010,
however the addition of new room inventory should help drive growth in FY2010. We maintain our buy recommendation on the stock with our price target of Rs 82," says Sharekhan's report.


Sharekhan on Bharti Airtel - Target of Rs 789

Sharekhan has maintained its buy rating on Bharti Airtel with a price target of Rs 789 in its research report.

"As per media reports, American Tower Corporation (ATC) is all set to acquire India-based independent tower company, Xcel Telecom. The deal, if it materialises, can give us certain indications of the ruling valuation of the domestic tower company and be used as a yardstick to value Bharti Airtel’s tower business."

"If we use the Rs 0.52 crore per tower valuation of Xcel Telecom to value the 61,355 towers of Bharti Infratel as on December 2008, the value for Bharti Airtel works out to Rs 31,814 crore and that for Bharti Airtel’s 92% stake in its tower subsidiary works out to Rs 154.2 per share. This is much ahead of the value of Rs 112 per share taken by us in our price target for the stock based on the discounted cash flow method. We maintain our Buy recommendation on the stock with a price target of Rs 789 per share," says Sharekhan's research report.