Stock views on Bajaj Auto, Unity Infra, CMC

Sharekhan on Bajaj Auto - Target Rs 1695

Sharekhan is bullish on Bajaj Auto and has recommended buy rating on the stock with a target of Rs 1695, in its research report.

"Bajaj Auto recently launched the new Pulsar 135 cc bike to further strengthen its position in the 125+cc segment. The new Pulsar 135 LS, powered with a four-valve DTS-i engine, is competitively priced at Rs51,000 (ex-showroom Delhi) and has a mileage of 68 kilometre per litre (kmpl; as certified by the Automotive Research Association of India), which is good considering the engine capacity of 135cc. With the increase in our volume estimates for the motorcycle segment, our overall volume growth estimates for FY2010 and FY2011 stand revised to 27.2% and 14.2% respectively. In line with this, we have revised upwards our earnings per share (EPS) estimates for FY2010 and FY2011 from Rs108.9 and Rs114.3 earlier to Rs114.8 and Rs127.1 respectively. However, a probable increase in the excise duty in the forthcoming budget and a sharper than expected increase in raw material prices remain the key risk to our estimates."

"At the current market price, the stock is trading at 13.3x its FY2011E earnings of Rs127.1 and enterprise value (EV)/earnings before interest, tax, depreciation and amortisation (EBITDA) of 8.1x. On the back of the upgrade in our earnings estimates, our price target stands revised to Rs1,907 (15x FY2011E EPS) and considering the significant upside from the current market price of Rs 1,695, we upgrade our recommendation to Buy from Hold earlier."


Sharekhan on Unity Infra - Target Rs 569

Sharekhan is bullish on Unity Infraprojects and has recommended buy rating on the stock with a target of Rs 569.

"Unity Infraprojects (Unity) has raised Rs 73 crore by private placement of 14.5 lakh shares with qualified institutional buyers at the price of Rs506 per share. The proceeds from the qualified institutional placement (QIP) is expected to be utilised by the company to partly fund its capital expenditure (capex) and to meet its working capital requirement."

"Given the strong order intake in M9FY2010 and expected lower interest cost, we are upgrading our order book estimates and hence PAT estimates for FY2010 and FY2011 by 5% and 18% respectively. Further the lower than expected earnings dilution will result in our revised EPS getting upgraded by 7% for FY2011. Hence, we are increasing our price target to Rs 569 and maintain our Buy recommendation, as we feel the stock is attractively valued. At current market price of Rs 506, the stock trades at 8.9x and 7.1x its FY2010 and FY2011 diluted earnings respectively."


Fairwealth Securities on CMC - Target Rs 1530

Fairwealth Securities has recommended buy rating on CMC with a target of Rs 1530, in its research report.

“CMC synergistic relationship with TCS, CMC is gearing itself in IT industry. In embedded systems, the Company is seeing growth in US, UK and Europe. In Government segment, the Company is seeing traction in treasury management, HRMS systems for various states, energy sector (APDRP, billing), GST related migration. In private sector, the Company is expecting growth from Insurance and Financial sector (depository product), banks. The Company has a good base in Insurance space with 80% of market. The Company would be focusing on the transportation vertical, in e-Governance space with TCS and in Defense space. In the private space it is looking at cross-selling solutions & services. The Company is seeing new services like video surveillance, identity management and large corporate are going for offshore. The company would be re-looking at its franchisee business in E&T SBU. The Company is seeing growth in corporate training business. The Company is focusing on value added services and cost effective niche solutions as CMC already has a rich portfolio of industry specific assets.”

“Phase I of the SEZ has been completed. Phase II would be completed by June 2011 with a capex of Rs 155 crore over 2 years. The Company won defense contract in Q2FY2010 which will improve margins in future as these contracts are all long term contracts. The average deal size is Rs 5 – 10 crore with engagement of 2-3 years. SI with 41.43% PBIT margin in Q1FY10, we see scope of tremendous growth in this SBU which going forward will improve margins for company. Its Egovernance business has a huge potential for growth. Company expects operating profit margin to grow to 20% in next 6-12 months. Presently its stands at 18%, highest ever for the company,” says Fairwealth Securities research report.

Stock views on Jet Airways, Unity Infra, Hindustan Construction Company

IndiaInfoline on Jet Airways - Target Rs 575-580

IndiaInfoline is bullish on Jet Airways and has recommended buy rating on the stock with a target of Rs 575-580, in its research report.

"On the daily chart, Jet Airways has formed a bullish price channel. It is a continuation pattern that slopes up and is bound by an upper and lower trend line. On Tuesday, the momentum indicator RSI depicted a positive divergence. In addition the stock is trading above its key short-term moving averages. We recommend a buy at current levels and on declines up to Rs 555 with a stop loss of Rs 551 for a target of Rs 575, 580," says IndiaInfoline research report.

Karvy Stock Broking on HCC - Target Rs 171

Karvy Stock Broking is bullish on Hindustan Construction Company, HCC and has recommended buy rating on the stock with a target of Rs 171, in its research report.

“Hindustan Construction Company (HCC) one of the largest and oldest companies engaged in construction business is in a sweet spot with core construction business on a growth trajectory driven by improving visibility for new order inflow and 135% higher infrastructure investments in 11th five year plan. We expect order book would grow at CAGR of 19% over the next two years to Rs 233 billion, primarily from sectors like hydro power and irrigation."

"Consequently, HCC's revenue would grow at CAGR of 26% over FY10-11 and able to sustain margin at higher level. In addition to that, value unlocking from its foray into real estate primarily Lavasa Corporation would add significant value to HCC's shareholders. We initiate coverage with a BUY rating and price target of Rs 171 based on our SOTP (Sum of the Parts) valuation,” says Karvy Stock Broking research report.


Nirmal Bang on Unity Infra - Target Rs 669


Nirmal Bang is bullish on Unity Infraprojects and has recommended buy rating on the stock with a target of Rs 669, in its research report.

"Unity Infraprojects has raised Rs 73.3 crore through a QIP issue. The QIP was issued at Rs 506 per share resulting in a post issue dilution of 10.7%. The promoter shareholding in the company now stands at 62.7% down from 69.5%. The company has issued 14,49,476 shares at a premium of Rs 496 per share. The equity share capital for the company now stands at Rs 14.8 crore. We have revised the target price of UIL to Rs 669 per share down from Rs 726 primarily to factor in the equity dilution. At the current market price of Rs 508 per share the stock looks quiet attractive. We maintain a ‘BUY’ recommendation with a long term view," says Nirmal Bang research report.

Stock Views Patel Engineering, Federal Bank, Unity Infra

Sushil Finance on Patel Engineering - Target Rs 572

Sushil Finance has maintained its buy rating on Patel Engineering with price target of Rs 572, in its report.

“Patel Engineering has continued its strong performance on quarterly basis and we are confident that it would be able to deliver a strong growth going forward. However, rising interest rates and depreciation expense has slowed down its bottom-line growth.”

FinQuest Securities on Federal Bank - Target Rs 300

FinQuest Securities has maintained its buy rating on Federal Bank, with price target of Rs 300, in its report.

"We expect Fed Banks' profits to grow at a CAGR of 19% over FY09-FY11E leading to ROE of 14% by FY11E. Management has indicated that the merger with CSB (Catholic Syrian Bank) bank will materialise in next six months. We maintain 'Buy' rating with a target price of Rs 300 (1x FY11E ABV)," says FinQuest Securities' report.

Sharekhan on Unity Infra - Target Rs 430

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

"Unity Infraprojects (Unity)’s Q1FY2010 revenues grew by 24.6% year on year (yoy) to Rs 278.6 crore, which is in line with our expectation. We maintain our 'Buy' recommendation on the stock with the revised price target of Rs 430. At the current market price, the stock is trading at attractive valuation of 6.2x FY2010 and 5.8x FY2011 earnings estimates and 0.8x FY2011 P/BV," says Sharekhan's research report.