Motilal Oswal Views on Tata Consultancy Services, IVRCL Infrastructure, Reliance Infra

Motilal Oswal on Reliance Infra - Target of Rs 1785

Motilal Oswal has maintained its buy rating on Reliance Infrastructure with a target price of Rs 1785 in its research report.

"We expect Reliance Infrastructure to report net profit of Rs 10.5 billion (up 58.9% YoY) in FY09, Rs 9.9 billion in FY10 (down 5.4% YoY) and Rs 10 billion in FY11 (up 1.9% YoY). The stock quotes at PER of 10.5x FY09E, 11.1x FY10E and 10.9x FY11E. We arrive at a target price of Rs 785/share, comprising of: Power business Rs 90/share, Delhi business Rs 34/share, EPC business Rs 49/share, Cash and cash equivalent Rs 251/share and holding in Reliance Power Rs 361/share (20% holding company discount). Maintain Buy," says Motilal Oswal's research report.


Motilal Oswal on TCS - Target of Rs 750


Motilal Oswal has maintained its buy rating on Tata Consultancy Services with a target price of Rs 750 in its research report.

"We have revised our estimates to factor in project cancellations, adverse cross currency impact and revised INR/USD assumptions. Our INR/USD assumptions for FY10 have changed from Rs 45.6 to Rs 49.6. We model 3% volume growth and 6% pricing decline for TCS in FY10. USD revenues including CGSL are expected to rise 0.7% in FY10 (down 2.4% ex-CGSL). We cut our FY10 EPS by 6.3% to Rs 52.9 (from Rs 56.5 earlier). Stock trades at 9x FY10E earnings. Maintain 'Buy' with a target price of Rs 550 (upside of 16%)," says Motilal Oswal's research report.


Motilal Oswal on IVRCL Infrastructure - Target of Rs 184


Motilal Oswal has maintained its buy rating on IVRCL Infrastructure and Projects with a price target of Rs 184 in its research report.

"We expect IVRCL to report net profit of Rs 2.2 billion in FY09 (up 6% YoY) and Rs 2.5 billion in FY10 (up 16% YoY). The stock is trading at 7x FY09 and 6x FY10E. Maintain Buy with a price target of Rs 154/share (36.3% upside). We have valued the core business at Rs 123/share (7xFY10 earnings, 15% discount to industry average, to factor in lower tax rates due to 80IA benefits being considered), BOT projects at Rs 20/share (book value) and other subsidiaries at Rs 11/share (based on the CMP)," says Motilal Oswal's research report.

Motilal Oswal views on TCS, Marico, United Spirits

TCS - Target Rs 760

Motilal Oswal has maintained its buy rating on Tata Consultancy Services (TCS) with a target of Rs 760 in its October 22, 2008 research report. "TCS reported USD revenue growth of 3.2% QoQ and 11.2% YoY at USD 1574 m (v/s our est. of USD 1,600 million). PAT at Rs 12.6 billion grew 1.4% QoQ (1.2% YoY), significantly below our estimates (Rs 14.1 billion) due to forex losses of Rs 2.6 billion. We are revising our FY10 USD revenue growth estimates downward by 470bp from 19% to 14.3%, on account of client specific issues with respect to TCS and overall demand uncertainty."

"Our FY09 EPS stands revised to Rs 58.1 from Rs 60.4 while we have lowered our FY10 EPS to Rs 63.3 from Rs 69.1. We are assuming an average rate of Rs 45.2/USD for FY09 and Rs44/USD for FY10 against our earlier estimate of Rs 43/USD for FY09 and Rs 42/USD for FY10. We expect FY08-FY10 revenue CAGR of 19% and EPS CAGR of 11%. The stock is trading at 8.6x FY10E earnings. We revise our target price to Rs 760 (12x FY10 EPS), implying 39% upside. Maintain Buy," says Motilal Oswal's research report.

Marico - Target Rs 65

Motilal Oswal has maintained its buy rating on Marico with a target of Rs 65 in its October 22, 2008 research report. "Marico posted in-line net sales of Rs 6 billion, a growth of 30% YoY. Adjusted net profit grew 11.6% YoY to Rs 471 million against our estimate of Rs 495 million."
"The management has given a cautious outlook on volume growth for 3QFY09. Prices of copra are likely to retreat in line with other edible oils in the coming weeks, which would be margin accretive for Marico. We expect adjusted PAT growth to remain under pressure in FY09 (16.5%); margin expansion of 90bp would result in 20% PAT growth in FY10. The stock is trading at 17.7x FY09E EPS of Rs 3 and 14.9x FY10E EPS of Rs 3 .6. We maintain Buy, target of Rs 65," says Motilal Oswal's research report.

United Spirits - Target Rs 1351

Motilal Oswal has maintained its buy rating on United Spirits with a target of Rs 1351 in its October 22, 2008 research report. "Revenues at Rs 9 billion (est. of Rs 9.2 billion) were up 20%. PAT at Rs 939 million (est. of Rs 1.05 billion) was up 17%. Gross margin declined 610bp due to sharp increase in raw material and packaging cost. EBIDTA margin improved 20bp due to sharp decline in advertising spend (down 340bp) and staff cost (down 240bp). EBIDTA is Rs 1.8 billion v/s est. of Rs 1.9 billion, up 21% YoY."

"We believe the growth story in United Spirits is intact. Volumes are expected to grow at 12% CAGR in the long term and the outlook from the regulatory changes continues to be positive. We are downgrading FY09 and FY10 EPS (excluding treasury stock) estimates from Rs 56.6 and Rs 77.6 to Rs 47.6 and Rs 67.6. The stock is trading at 16.3x FY09 EPS of Rs 47.6 and 11.5x FY10 EPS of Rs 67.6. Maintain Buy,target of Rs 1351" says Motilal Oswal's research report.

KRChoksey Views on Tata Consultancy Services, GSK Consumer, Infosys

Tata Consultancy Services - Target of Rs 989

KRChoksey Research has recommended a buy rating on Tata Consultancy Services with a target price of Rs 989 in its September 12, 2008 research report. "Currently IT companies are trading at 13-15x FY09E earnings, which is much below their trading multiples of 30x in Dec’06. We believe that investors’ short term focus on cross currency movement is unwarranted. We also expect investors to shift focus on absolute growth rates and USD/INR currency movements in medium term. We therefore continue to maintain our view on IT sector," says KRChoksey's research report.

GSK Consumer - Target of Rs 781

KRChoksey Research has recommended a buy rating on GlaxoSmithKline Consumer Healthcare with a 12-month target price of Rs 781 in its September 19, 2008 research report. "At the CMP of Rs 619, the stock is trading at 14.4x TTM EPS of Rs 43.0. Going forward, we believe the company is expected to see strong performance driven by leveraging its flagship brand Horlicks and aggressive plans of new launches. We initiate coverage on the stock with a Buy rating and a 12-month target price of Rs 781, implying an upside potential of 26% which is arrived by discounting CY09E EPS of Rs 52 by 15x," says KRChoksey's research report.

Infosys - Target of Rs 2079

KRChoksey Research has recommended a buy rating on Infosys Technologies with a target price of Rs 2079 in its September 12, 2008 research report. "Currently IT companies are trading at 13-15x FY09E earnings, which is much below their trading multiples of 30x in Dec’06. We believe that investors’ short term focus on cross currency movement is unwarranted. We also expect investors to shift focus on absolute growth rates and USD/INR currency movements in medium term. We therefore continue to maintain our view on IT sector," says KRChoksey's research report.

Stock Views on Reliance Industries, Tata Consultancy Services, Allied Digital, Grasim Industries, Karuturi Global

ICICI Securities on Reliance Industries - Rating: BUY

ICICI Securities has maintained its buy rating on Reliance Industries in its June 11, 2008 research report. "We are increasing our FY09 and FY10 crude price and exchange-rate estimates as well as building-in lower refining and petrochemical margins for Reliance Industries (RIL). We are also factoring-in an expected delay in commencement of production from the KG D6 block and operations of the Reliance Petroleum (RPL) refinery commencing September ’08. Recent Government decision to keep private companies out of the purview of subsidy sharing is positive. However, we remain positive on the long-term prospects of RIL on the back of impressive earnings growth and attractive E&P portfolio. Reiterate BUY.""We value RIL’s extant petrochemical and refining business at Rs 1381 per share, retail at Rs 140 per share, E&P at Rs 1,168 per share and RIL’s stake in RPL at Rs 343 per share. We also attribute Rs 85 per share value to the company’s SEZ at Haryana, implying fair value of Rs 3,060 per share," says ICICI Securities' research report.

India Infoline on Tata Consultancy Services - Target Rs 875

India Infoline has recommended a buy rating on Tata Consultancy Services with a target price of Rs 875 in its July 17, 2008 research report. "Though the Q1 FY09 performance of TCS was sedate, as expected, and business outlook remains challenging, the stock is likely to outperform in the short-term given the bleak expectations before the results. Over the last three months, TCS has significantly underperformed the sector especially vis-à-vis similar-sized peers, Infosys and Wipro, due to higher uncertainty about its Q1 FY09 performance." "Since April 2008, TCS has delivered a negative return of 12.5% against positive return of 1% in BSE IT and 9% for Infosys. Since announcement of Infosys Q1 FY09 numbers, TCS is down 16% implying further moderation of expectations. Q2 FY09 is likely to be a better quarter for the company with improved growth outlook in the two troubled BFSI clients and as also indicated by healthy hiring in Q1 FY09. We rate the stock as BUY with a target price of Rs 875 implying 20% upside," says India Infoline's research report.

FinQuest Securities on Allied Digital Services - Target Rs 1198

FinQuest Securities has maintained its buy rating on Allied Digital Services with a target price of Rs 1198 in its August 8, 2008 research report. "ADSL reported operating revenue of Rs 896 million for the quarter ended 1QFY09, an increase of 38% YoY from Rs 652 million in the corresponding quarter last year. Its EBITDA grew by 57% YoY to Rs 218 million from Rs 139 million. EBITDA margin expanded by 250bps YoY to 23.6%, attributable to change in revenue mix in favour of Services business, which commands higher EBITDA margin in the range of 50-60%."

"At current market price of Rs 791, ADSL is trading at P/E of 31.9x for FY08 EPS of Rs 24.8. We expect ADSL to trade at 15.6x FY09E and 8.6x FY10E EPS of Rs 50.6 and Rs 92.1 respectively. We maintain BUY recommendation on the stock with price target of Rs 1198 using DCF-methodology, indicating an upside of 51% from the current level," says FinQuest Securities' research report.

Sharekhan on Grasim Industries - Target of Rs 3002

Sharekhan has recommended a buy rating on Grasim Industries with a price target of Rs 3002 in its June 11, 2008 research report. "Considering the poor performance of the sponge iron division in the past, we believe the sale of the business at 6.4x FY2008 EV/EBIDTA will be value accretive for the company. The sale of the sponge iron division will also boost the overall profitability of the company. The proceeds from the sale will enable the company to make fresh investments in its core businesses of cement and VSF. At the current market price of Rs 2192, the stock is trading at 8.8x its estimated FY2009E EPS. Based on our sum-of-the-parts valuation, we maintain our Buy recommendation on the stock with a price target of Rs 3002," says Sharekhan's research report.

Ambit Capital on Karuturi Global - Target of Rs 49

Ambit Capital has maintained its buy rating on Karuturi Global with a revised price target of Rs 49 in its June 10, 2008 research report. "Karuturi Global (KGL) announced its Q4FY08 and full year FY08 results, marginally below our expectations. Despite a strong showing in Q4FY08 that rounded off a very good second half for the company, KGL's performance was below our expectations.However, the company has delivered along expected lines as far as the margins are concerned."

"At its CMP of Rs 22, the stock is currently trading at a P/E of 5.6x and 4.8x our FY09E and FY10E fully diluted EPS estimates respectively. We maintain our 'BUY' recommendation on the stock with a revised price target of Rs 49; indicating 124% upside from CMP," says Ambit Capital's research report.