Om Metals Infraprojects

Om Metals Infraprojects is the largest hydro-mechanical equipment supplier in India with amarket share of over 60 per cent. The company presently has an order book of Rs 636 crore, which is 3.5 times first half 2009-10 annualised sales and is expected to be completed in next 3 years. This provides substantial medium-term revenue visibility. In addition, the company has submitted bids for more projects, which are expected to take the total order book to over Rs 800 crore by 2009-10.

The company has recently forayed into the infrastructure segment by winning two contracts for the development of a port and a multi-product SEZ, both in Pondicherry. The SEZ project is spread over 860 acres and the company has a 20 per cent stake in it. It has a 50 per cent stake in the port project, which is to be developed in next 5-6 years. Both projects are expected to be developed through separate SPVs.

Further, there is potential to unlock value from its saleable land-bank (1.5 MSF) situated at Hyderabad, Jaipur, Mumbai, Faridabad and Kota. The stock is trading at 5.3 times its core 2010-11 estimated earnings. Maintain ‘buy’.

Stock Views on SBI, Balrampur Chini, Zee News, PSL

Karvy on SBI - Target Rs 1559

Karvy Stock Broking has maintained its buy rating on State Bank of India (SBI) with a target price of Rs 1559 in its October 31, 2008 research report. "In 2QFY09, State Bank of India's net interest income grew by 45% (Y/Y) to Rs 54.5 billion much higher than our estimates (of Rs 45.6 billion) mainly due to much higher credit growth and higher yield on advances. SBI's net profit reported 40% jump (Y/Y) to Rs 2.6 billion growth due to reversal in investment depreciation. We reiterate BUY rating with a price target of Rs 1559," says Karvy's research report.

SBICAP Securities on PSL - Target of Rs 181

SBICAP Securities has maintained its buy rating on PSL with price target of Rs 181 in its November 21, 2008 research report. "At the CMP of Rs 95, PSL is trading at a PE of 2.8x and 2.1x its FY08E and FY09E earning respectively. EV / EBITDA is at 3.9x and 3.2x FY08E and FY09E respectively. We initiate coverage on PSL with a buy rating and 12 month price target of Rs 181 implying an upside of 90%," says SBICAP Securities' research report.

Karvy on Balrampur Chini - Target of Rs 55

Karvy Stock Broking has recommended a buy rating on Balrampur Chini Mills with a target of Rs 55 in its December 4, 2008 research report. "Balrampur Chin Mill (BCML) reported revenue increase of 40.8% YoY (QoQ increase of 30.2%) to Rs 4.11 billion mainly on account of higher sugar and distillery revenue in the Q4FY08. The company reported profit of Rs 145 million translating into EPS of Rs 0.57 for the quarter."

"The company is expected to report loss of Rs 240 million in FY09 and profit of Rs 1.26 billion in FY10. We have assumed cane cost of Rs 140 per quintal in FY09 and Rs 148 per quintal in FY10. Considering lower profitability in sugar and uncertainty on cane cost, we continue our valuation based on replacement cost method. We are revising our valuation of EV/ Ton from Rs 0.35 million to Rs 0.3 million with target price of Rs 55 (Previous Rs 68), Buy," says Karvy Stock Broking's research report.

Prabhudas Lilladher Zee News - Target of Rs 57

Prabhudas Lilladher has recommended an accumulate rating on Zee News (ZNL) with a target of Rs 57 in its September 24, 2008 research report. "We expect the company to post 24% and 37% revenue and earnings CAGR, respectively in FY08-11E. The stock currently trades at 22.9x and 16.8x our FY09E and FY10E earnings estimates and remains one of the cheapest stocks in our broadcasting universe. We assume coverage on ZNL with a Accumulate rating and a target price of Rs 57," says Prabhudas Lilladher's research report.

SBICAP Securities Views on Smallcap IT Stocks - TAKE Solutions, Megasoft

TAKE Solutions

TAKE leverages management bandwidth and domain expertise to deliver products for niche supply chain management and life sciences. Supply chain management and life sciences are less impacted by US meltdown (compared to banking, financial services and insurance). The company conducts business in 12 countries with more than 300 customers. TAKE has high exposure (64 %) to North America and has to withstand competition from international players. TAKE’s management is optimistic on its growth prospects for the coming years and also looking at inorganic growth initiatives to strengthen its growth prospects. Its non linear model will help deliver 35% revenue compounded annual growth rate for three years. It looks attractive at FY09 P/E of 6x, FY10 P/E of 4x for a company with return on capital employed and return on equity of over 25%.

Megasoft

Megasoft is a domain centric, intellectual property driven, technology solutions company in the telecom and IT sector. The company’s telecom product focus and geographic profile (USA 50%, Europe 25%) reduces the impact of US meltdown and banking, financial services and insurance (BFSI) turmoil. The company has reported revenues of Rs 850 mn and PAT of Rs 121 mn for the quarter ended June 30, 2008 as compared to revenues of Rs 601 mn and PAT of Rs 94 mn in the corresponding quarter last year. The company has high revenue visibility with an order book — 65% CY10 revenues. Trigger comes from value unlocking of its Rs 3 billion real estate (greater than market capitalisation of Rs 2 billion). It has a non-linear model with high offshore revenues (80%). The stock is extremely attractive at CY10 P/E of 2x with good dividend yield.

SBICAP Securities Views on IDFC, Patel Engineering, Piramal Healthcare

Piramal Healthcare - Target 360
SBICAP Securities has maintained its buy rating on Piramal Healthcare with a target of Rs 360 in its September 16, 2008 research report. "We value PIHC using a range of approaches including DCF and relative approaches. We use relatives to set our target valuation of Rs 360 based on a sum-of-parts PE approach on weighted average EPS of Rs 22.10 (FY09-10); implying an exit PE multiple of 17.4x and 14.9x over the FY09 and FY10 EPS of Rs 20.64 and Rs 24.13 respectively, Buy," says SBICAP Securities' research report.

Patel Engineering - Target 490

SBICAP Securities has recommended a buy rating on Patel Engineering Company with a target of Rs 490 in its September 17, 2008 research report. "At the current price of Rs 370, assuming full tax rate of 33%, the stock trades at a P/E multiple of 17.4x its FY09E consolidated EPS of Rs 21.2 and at 14.3x its FY10E consolidated EPS of Rs 25.9. On an EV/EBIDTA basis, it trades at 8.8x FY09E and 7.7x FY10E. We value the real estate subsidiary at Rs 185 per share, BOT subsidiaries at Rs 13 per share and assign a conservative 12x P/E multiple to its core construction business's standalone FY10EEPS of Rs 24.4. Thus,arriving at an SOTP value of Rs 490 per share (an upside of 32% from the current level),we recommend a BUY on the stock," says SBICAP Securities' research report.

IDFC - Target 360

SBICAP Securities has maintained its buy rating on Infrastructure Development Finance Company (IDFC) with a target of Rs 104 in its September 16, 2008 research report. "IDFC has evolved as a diversified financial institution in the infrastructure finance segment with two major acquisitions of SSKI Securities (79.8%) and the Standard Chartered Mutual Fund (100%). IDFC's private equity business continues to scale up rapidly with assets under management expected to triple to USD 2.3 bn. by the end of this fiscal."

" Despite the diversification, much of IDFC's revenues continue to flow from the project finance business. We believe that except for the mutual fund business, the other businesses are more or less likely to grow at similar rates. We value IDFC using the SOTP methodology and arrive at a target price of 104. We initiate coverage with a BUY rating.," says SBICAP Securities' research report.