Stock Views on Petronet LNG, SKF India, Piramal Healthcare

PINC Research on Petronet LNG, target of Rs 66

PINC Research has recommended a buy rating on Petronet LNG Ltd with a price target of Rs 66 in its research report.

"Petronet LNG Ltd. (PLL) accounts for 23% of natural gas supply of India and boasts of a sovereign parentage of GAIL, IOCL, ONGC and BPCL. Considered as an Indian pioneer in import distribution, it regasifies 6.5 million mtpa of imported LNG from its facility in Dahej, Gujarat and is a major supplier to GAIL’s HVJ gas pipeline. The capacity expansions at Dahej should enable PLL volume growth by 13% in FY10 to 7.4 million mt and 24% in FY11 to 9.2 million mt garnering scale in earnings. Hence we initiate coverage on the stock with a ‘BUY’ recommendation and a price target of Rs 66 on a 24 month investment perspective," says PINC's research report.


LKP Shares on SKF India, target of Rs 190

LKP Shares has recommended a buy rating on SKF India with an 18-month price target of Rs 190 in its research report.

"SKF India is the 53.5% subsidiary of the Swedish bearing giant and is the largest bearing producer in India. It derives 90% of its revenues from bearings comprising of ball and hub bearings, deep groove ball bearings, cylindrical roller bearings and tapered roller bearings. The balance 10% of revenues comes from its four new technology platforms like seals, lubrication systems, mechatronics and services. SKF India being the industry leader controls a 30% share in the Rs 50 billion bearing market in India."

"SKF India with a strong balance sheet trades at 7xCY'09E and 5.7xCY'10E and we believe that a 15% correction in the stock price from current levels would be a good opportunity for gaining an entry into the stock with an 18-month price target of Rs 190. Over a longer time frame a revival in its key user industries could propel the stock to Rs 240 over a two-year time frame. 'Buy'," says LKP Shares' report.


Sharekhan on Piramal Healthcare, target of Rs 358

Sharekhan has maintained its buy rating on Piramal Healthcare with a price target of Rs 358 in its research report.

"In an effort to reduce costs and restructure its assets in a more efficient manner, Piramal Healthcare (Piramal) has decided to shut down its custom manufacturing facility at Huddersfield, UK (a part of Avecia) and consolidate its custom manufacturing operations at its other sites at Ennore (near Chennai), Digwal (near Ahmedabad) and Morpeth, UK. Even though the closure of the UK site would lead to a onetime hit in the FY2009 financials of the company, the move is in the long-term interest of the company, as it would result in the elimination of redundancies, cost savings, efficiency in operations and an overall improvement in profitability."

"With a presence across the entire contract research and manufacturing services (CRAMS) value chain, strong customer relationships and a favourable operating environment characterised by increased outsourcing, we expect Piramal’s custom manufacturing business to perform robustly in the future. We maintain our Buy recommendation on the stock with a price target of Rs 358, " says Sharekhan's research report.

Stock Views on Reliance Industries, Petronet LNG

Crude oil prices have come down to a level of $41 a barrel from a high of $146 a barrel last year. Consequently, upstream oil companies lost, but downstream companies gained. In terms of share price appreciation, downstream companies have outperformed the broader index, the Sensex.

Angel Broking on RELIANCE INDUSTRIES

RIL made two gas discoveries in the KG basin during the quarter. Development work of the gas from D1 and D3 fields is underway and production is likely to commence from 4QFY2009. RIL delivered decent set of numbers for 3QFY2009, which exceeded our expectations. It made a capital expenditure of Rs6,708cr in oil and Gas business.

Prabhudas Lilladhar on PETRONET LNG

Petronet’s capacity expansion at Dahej from 5.0mmtpa to 10.0mmtpa is on track and is scheduled to be completed in mid February. Expanded capacity will enable it to process higher spot volumes. Its blended re-gassification margin declined a little but management indicated this as a one-off incident.

Stock Views on Infosys, Garware Offshore,

Justtrade.in on Infosys - Target Rs 2090

Justtrade.in has maintained buy rating on Infosys Technologies with a price target of Rs 2090 in its report dated 28 th August, 2008."Infosys an IT and consulting company with revenues of over US$ 4 billion, designs and delivers technology enabled business solutions. It trades at a PE multiple of 20.8 based on EPS for trailing twelve months ended 30th June 2008, Price to Book ratio of 7.2 on 2008 Book-Value and Price to Sales ratio of 5.9 based on net sales for trailing twelve months ended 30th June 2008. On the basis of our research, we feel that this is a good stock to buy at the current market price of Rs 1708. If everything goes well, the price is likely to appreciate to Rs 2090, within 12 months, translating into a gain of about 22.5%." According to Justtrade.in report.

India Capital Markets on Garware Offshore - Target Rs 244

India Capital Markets has recommended a buy rating on Garware Offshore Services with a target price of Rs 244 in its October 29, 2008 research report. "Garware Offshore Services (GOSL) has reported excellent numbers in Q2FY09 with strong revenue growth in revenues 79% yoy at Rs 446 million. GOSL is currently trading at a discount of 30-40% to its peer group. Our target price of Rs 255 was based on DCF valuation on a long term perspective. However, contraction in multiples will lower our target price to Rs 144, which works at 4x FY2010 earnings. Hence we recommend a BUY on the stock," says India Capital Markets' research report.

KRChoksey on Petronet LNG - Target Rs 48

KRChoksey Research has maintained its buy rating on Petronet LNG with a target price of Rs 48 in its October 20, 2008 research report. "Net profit declined 10.5% y-o-y to Rs 103.4 crore for the company owing to lower taxes and higher other income. Effective tax rate drop 272 bps y-o-y to 31.1% which restricted decline in PAT. At the CMP of Rs 39.1, Petronet LNG is trading at 6.4x its TTM earnings and 6.3x its FY09E EPS of Rs 6.2. We maintain a buy on the stock with target price of Rs 48. At the target price the stock would be valued at 6.8x its FY10E EPS of Rs 7.0, and 1.5x P/BV," says KRChoksey's research report.

Stock Views on Titan, Cipla, Petronet LNG

HSBC on Titan Industries

HSBC reiterates ‘overweight’ rating on Titan Industries. The company’s second-quarter FY09 results were quite good. It reported a 53% increase in sales and 88% net profit growth. Moreover, both the watches and jewellery divisions posted satisfactory sales growth and handsome margin expansion. HSBC expects that the effects of the slowdown will be reflected in Titan’s results from Q3 onwards. Nevertheless, the risks to FY09E estimates are more to the upside than the downside. However, HSBC has cut the company’s EPS estimate for FY10E by 3.5% to factor in slower demand next year. HSBC has identified the following growth drivers for Titan: 1) The company has recently forayed into the eyewear business with 30 stores, which may cross 150 stores by FY11E; 2) New designs and innovation across products should take wallet share; 3) Increase in charges for making jewellery; and 4) Increased preference of consumers for branded jewellery. HSBC values Titan at 20x FY10E EPS, with a target price of Rs 1,100 per share. The target price gives a potential total return of 31%.

INDIA Infoline on Petronet LNG

INDIA Infoline upgrades Petronet LNG from a ‘market performer’ to a ‘buy’, with a target price of Rs 48 and upside of 22.8%. The company reported a flat sales growth, despite a near 10% fall in sales volumes to 75 TBTUs as one high-pressure pump was de-commissioned for repair. The fall in volumes was higher than expected as the repair work stretched over a period of 3.5 months. However, the volume decline was offset to some extent on account of higher realisations aided by depreciation in the rupee. Going ahead, the 5 mmt expansion at Dahej terminal is scheduled to commence operations in Q4 FY09, while the Kochi project is likely to go on stream in ’12. With domestic gas supplies expected to increase, Petronet will find it tough to market the costlier regasified LNG. Further, with tightness in the international market, sourcing long-term LNG at affordable prices is difficult. However, the 35% correction in the company’s stock price over the past couple of months is unwarranted and is steeper than the perceived risks.

MERRILL Lynch on Cipla

MERRILL Lynch maintains ‘underperform’ rating on Merrill Lynch, despite stable margin outlook, given rich valuations and lack of upside triggers. Cipla’s Q2 net income was 7% lower than Merrill Lynch’s estimates due to higher-than-expected forex loss (Rs 100 crore) despite 23% growth in topline and stable margins of 23.3%. Cipla trades at 21x FY09E and 16x FY10E earnings — over 25% premium to the average of the domestic generics sector. The stock has corrected in the past few weeks and it is expected to be range-bound, given lack of visibility on big product upsides. Within inhalers, Cipla has developed eight HFA inhalers for the European Union market, and six products have been submitted, which can involve a long clinical trial process. The company is setting up capacities at different places (four plants in Indore SEZ coming up in February ’09); the full impact of this will be seen later. Work on the Goa SEZ remains stalled (Rs 150 crore has been invested so far). Cipla faces the risk of fluctuating margins in the coming quarters, given high contribution from low-margin HIV products (>30% of revenues) and pricing pressure in developed markets.

LKP Securities views on Midcap Oil & Gas stocks

INDRAPRASTHA GAS

IGL has captured significant market share to be a leader in CNG distribution in NCR & NCT (Delhi) region. Geographical expansion in industrial belts like Greater Noida & Ghaziabad and private vehicles conversion to CNG, along with Delhi government mandatory regulation will help company’s growth. With EPS of Rs.12 for FY09E, it looks attractively valued.

PETRONET LNG

Petronet LNG imports liquefied natural gas and has regasification facilities of 5 million metric tonne per annum (MMTPA) at Dahej augmented to 10MMTPA scalable to 12.5MMTPA by 2009. Company has grown at compounded annual growth rate of 68% in revenues in last 3 years. We believe outlook on gas sector remains positive in India augments well for the stock.

Karvy Stock Broking Views on HDFC Bank, Petronet LNG

Petronet LNG - Target of Rs 63

Karvy Stock Broking has changed its rating on Petronet LNG from market performer to buy with a target of Rs 63 in its October 15, 2008 research report. "For FY09, we expect the revenue growth of 9.8% to Rs 71,948 million and adjusted profit to rise by 11.9% to Rs 5,309 million. We maintain our target price of Rs 63, but change our rating from Market performer to BUY due to the fall in market price," says Karvy Stock Broking's research report.

HDFC Bank - Target of Rs 1435

Karvy Stock Broking has recommended a buy rating on HDFC Bank with a target of Rs 1435 in its October 15, 2008 research report. "In FY2008-10, we expect that the bank's total business, NII and net profit would grow by 32%, 34% and 31.3% CAGR respectively. Though in FY09, there would slight strain on margin but it would still remain strong at 4.57% (around 38 bps lesser) and thereafter it would improve to 4.7% in FY10. The bank is expected to report RoAA of 1.3% and RoAE of 17%."

Stock views on Petronet LNG, CESC, Asian Paint

Asit.C.Mehta on Asian Paint - Target price Rs 1419

Asit.C.Mehta research ahs maintained buy rating on Asian Paint wih target price of Rs 1419 in its May 13, 2008 research report. "Asian Paints Ltd. (APL) consolidated revenue for Q4 FY08 increased by 18.2% from Rs. 9,589 million in Q4 FY07 to Rs 11330 million in Q4 FY08. Whereas the consolidated revenue for FY08 increased by 20% from Rs 36,699.7 million in FY07 to Rs. 44,043 million. The growth was due to: The quantity sold increased by 18.7% from 481812 tonnes in FY07 to 571,911 tonnes in FY08. Increase in the value of sales due to good market conditions prevailing in domestic and Middle East. At CMP of Rs. 1230.0 the stock is trading at 25.6 x FY09E & 19.9x FY10E earnings per share. With Industry and company’s outlook remaining status quo and in line with our expectations. We maintain a “BUY” recommendation for Asian Paints Ltd. price-objective of Rs 1419 (implying a forward P/E multiple of 23x) on account of robust domestic demand for decorative paints" says Asit.C. Mehta research report.

Angel Broking on CESC - Target price Rs 643

Angel Broking has maintained buy rating on CESC with target price of Rs 643 in its May 13, 2008 report. "We remain positive on the domestic Power Sector and expect it to grow in line with the country’s GDP growth. Our positive stance stems from the fact that peak power demand in excess of 13% gives immense opportunity to players like CESC, who are in a position to tap this huge opportunity on account of their vast experience. Further, with the company also having huge expansion plans which are on track, we believe rapid growth would continue going ahead"

"We expect CESC to record a CAGR growth of 7.6% in Top-line over FY2008-10, while Bottomline would grow at a CAGR of 10.4% in the mentioned period. At the CMP, the stock is trading at 14.9x FY2010E EPS and 1.7x FY2010E P/BV. We have introduced our FY2010 estimates. We have also assigned a lower FY2010 P/BV multiple to the company’s existing Power business at 1.75x (earlier 2.5x FY2009E) owing to drop in relative valuations. Hence, we revise our SOTP Target Price to Rs 643 (Rs 723). Nonetheless, considering that the company is inexpensive in terms of P/BV on FY2010E basis, we maintain a Buy on the stock" according to Angel broking research report.

Angel Broking on Petronet LNG - Target price of Rs 90

Angel Broking has upgraded its rating on Petronet LNG to buy rating with a target price of Rs 90 in its May 9, 2008 research report. "Dahej expansion to 12.5 mmtpa (current 6.5 mmtpa) is slated to come on stream July onwards in a phased manner. Expanded capacity will help Petronet process more Spot volumes till the 2.5mmtpa contracted supplies from Qatar commence October 2009 onwards. For the next 2-3 years, growth will primarily be driven by Spot LNG and the expanded capacity will benefit from the situation."

"The company is now also diversifying into different segments like power, port development, etc., which is expected to generate value over a period of time. We have valued Petronet on DCF methodology with a Cost of Equity of 15.2% (high as it is a high beta stock), Cost of Debt - 10% and WACC - 9.2%. The stock is currently available at 9.8x FY2010E EPS of Rs7.7. Based on our DCF valuation model, we upgrade the stock to a Buy, with a target price of Rs 90," says Angel's research report