Stock views on Ashok Leyland, Punjab National Bank, Deepak Fertilizers

Angel Broking on Ashok Leyland - Target Rs 27

Angel Broking has maintained its accumulate rating on Ashok Leyland with a target of Rs 27.

"For 4QFY2009, Ashok Leyland (ALL) reported 52.5% yoy decline in Net Sales to Rs 1,218 crore, which was in line with our expectation of Rs 1,217 crore. Net Profit declined 70.5% yoy to Rs 53.3 crore. We estimate ALL to clock EPS of Rs1.7 in FY2010 and Rs 2.4 in FY2011. We reiterate an 'Accumulate' on the stock to play out the turn in the economic and commercial vehicle (CV) cycle, with a target price of Rs 27. Majority of the factors that drive freight demand and consequently M&HCV demand are expected to turn positive in the medium term. We expect the CV manufacturers to benefit from the expected economic recovery in 2HFY2010," says Angel Broking's research report.

IIFL on Punjab National Bank - Target Rs 754

IIFL has maintained its add rating on Punjab National Bank with a target price of Rs 754 research report.

"PNB’s 4QFY09 net profit was up 59% YoY to Rs 8,656 million, while full-year FY09 net profit was up 51% to Rs 31 billion. Rise in operating expenses and provision charges was more than offset by strong growth in interest and non-interest income. NPLs fell sharply even as the bank restructured 2.6% of its loans, taking problem loans to 4.4% as at end-FY09 from 2.7% as at end-FY08. The bank made aggressive provision for loan-loss charges, which increased 3x for full-year FY09, raising the NPL coverage to 91%, the highest in our coverage universe. We are upgrading our FY10 profit estimates by 8%, and are now forecasting 10% growth in profits. We maintain 'ADD', target price of Rs 754," says IIFL's research report.

PINC Research on Deepak Fertilizers - Target Rs 98

PINC Research has recommended a buy rating on Deepak Fertilizers (DFPCL), with a price target of Rs 98, in its report.

At the CMP, DFPCL is trading at a P/E of 6.2x and EV/EBITDA of 3.5x FY10E. Favourable fertiliser policy & expected increase in availability of gas post RIL KG basin development, augurs well for DFPCL. We maintain our ‘BUY’ recommendation with a target price of Rs 98, which implies a P/E of 7x FY10 earnings that is less than 5 years historical median P/E of 7.4x, says PINC's research report.

Angel Broking Views on Smallcap Autos - Automotive Axles, Subros

AUTOMOTIVE AXLES

The company enjoys superior valuation compared to its peers as it has been consistently achieving high levels of profitability. Given the good long-term growth opportunities, impressive clientele, high-end product portfolio and sustained high OPM of over 14%, Automotive Axles, which caters to the commercial vehicle (CV) segment is a good long term investment pick. Though overall CV industry is under cyclical pressure, in long run the MAV (Multi Axle Vehicle), sub-segment is particularly on high growth trajectory and is fast substituting the MCV (Medium Commercial Vehicle) segment. MAV growth is being driven by better cost economics. MAVs are more profitable than the ICVs and MCVs due to which the truck operators are shifting over to MAVs. Automotive Axles, by far the largest supplier (vis-a-vis competition) of tandom drive axles for the 6X4 MAVs, is expected to be one of the biggest beneficiaries of this structural shift to MAVs.

Subros

Subros prospects are derived largely from demand arising in the Passenger Vehicle (PV) segment, which is currently under pressure due to sluggish demand. This is reflected in Subros valuation too. However, newer growth opportunities are emerging for Subros, owing to increasing customer base on the back of investments by new OEMs entering Indian market. Subros is the market leader in the supply of AC systems to the Automobile OEMs with more than 40% market share. Further with the advent of Tata Nano the market is moving towards producing low-cost high-quality automobiles. As the company enjoys an edge over its peers on back of its strong Order book and technological backing from its two foreign collaborators viz. Denso and Suzuki, the company is all set to grab this opportunity. We estimate Subros to register an EPS of Rs 5.2 in FY2009E and Rs 6.4 in FY2010E.