Stock views on Nagarjuna Construction, Prism Cement, Crompton Greaves

IndiaInfoline on Nagarjuna Construction - Target Rs 185

IndiaInfoline research is bullish on Nagarjuna Construction with a target of Rs 185, in its research report.

"Nagarjuna Constructions continues to be in an uptrend after breaking out from consolidation between range of Rs145-180 from first week of November 2009. The momentum indicator RSI is exhibiting positive movement suggesting further upside in the near term. Moreover, volumes have also picked up substantially as the stock breached the upper end of the consolidation range mentioned above. Keeping in mind the above mentioned technical parameters, we recommend traders to buy the stock in the range of Rs173-177 with a stop loss of Rs169 for a target of Rs 185, says IndiaInfoline research report.

Hem Securities on Prism Cement - Target Rs 70

Hem Securities is bullish on Prism Cement and has recommended buy rating on the stock with a target of Rs 70, in its research report.

“The company enjoys cost competitiveness due to modern plant, lower overheads, operational efficiencies and logistics management. It is ideally positioned with a strong brand name in the high potential markets of UP, MP and Bihar. The company would sustain its industry leading profitability due to focus on high net cement realisation zone, flexible product and distribution mix (trade and non trade) and lower total delivered cost. Major expansion plan initiated by the company would enhance growth in coming years. In wake of such growth, Prism Cement Ltd seems to be extremely attractive investment opportunity.”

“Presently, the stock is trading at Rs 50.40 which is at 7.47 times to its TTM (Trailing twelve months) earnings and 1.92 times to its book value of Rs 26.25. Since the stock offers good opportunity, we initiate a ‘BUY’ signal on the stock with a target price of Rs 70 in long term investment horizon expecting an appreciation of about 39% from the current level of Rs 50.40.”

Angel Broking on Crompton Greaves - Target Rs 525

Angel Broking has come out with a research report on Crompton Greaves. The research firm has upgraded the stock from accumulate to buy, with a 15-month target price of Rs 525.

"We have been maintaining positive stance on Crompton Greaves (CGL) right from initiating coverage report dated June 12, 2009, citing its unjustifiably huge valuation gap with peers ABB and Areva T&D. Now we introduce our FY2012 estimates, and expect the company to register a top-line and bottom-line CAGR of 12.1% and 19.8%, respectively, during FY2009-12E. We upgrade the stock from accumulate to buy, with a 15-month Target Price of Rs 525", says Angel Broking.

Stock views on Yes Bank, Sobha Developers, Crompton Greaves

Motilal Oswal on Yes Bank - Target Rs 327

Motilal Oswal is bullish on Yes Bank and has recommended buy rating on the stock with a target of Rs 327, in its reports.

“Despite 76% CAGR in assets over FY06-09, Yes Bank's market share is a mere 0.55% as of September 2009. Rapid branch network expansion, acquisition of new customers and deepening of existing customer relationships would help ensure that its asset growth remains higher than industry. With likely capital raising in next one year (we have factored in USD 235 million at Rs 250 per share), tier-I CAR would improve to ~12% and support asset growth over the next 2-3 years. We expect loan CAGR of 37% and PAT CAGR of ~32% over FY09-12.”

“We expect RoA of 1.5%+ and RoE of 17%+ over the next three years, despite equity dilution. Given the superior return ratios, superlative growth and a competent management, we believe Yes Bank deserves premium valuations. The stock trades at 2.3x FY11E BV and 15.7x FY11E EPS. We initiate coverage with a Buy recommendation and a target price of Rs 327 (3x FY11E BV).”

Edelweiss on Sobha Developers - Target Rs 316

Edelweiss has initiated coverage on Sobha Developers with a Buy rating and a fair value of Rs 316 per share - implying an upside of 29%.A report released on December 31 said: "We value Sobha based on DCF value of cash flow from ongoing projects (9.4 mn sq ft) and forthcoming projects – to be launched over FY10-14 (13.6 mn sq ft) and value of its balance land reserves (134 mn sq ft) land. We expect Sobha to generate INR 43.6 bn net cash from its ongoing and forthcoming projects, and value the same at INR 10.7 bn. We value the balance land reserves on land bank valuation at INR 27.5 bn, taking the total EV at INR 41.0 bn and a fair equity value of INR 30.9 bn. Consequently, we initiate coverage on the stock with a BUY and rate it Sector Performer on a relative return basis."

Angel Securities on Crompton Greaves - Target Rs 525

Angel Securities has upgraded the rating on Crompton Greaves from Accumulate to Buy with a target price of Rs 525 - an upside of over 20%.A report released on January 4 said: "We have been maintaining our positive stance on Crompton Greaves (CGL) right from our initiating coverage report dated June 12, 2009, citing its unjustifiably huge valuation gap with peers ABB and Areva T&D. Now we introduce our FY2012 estimates, and expect the company to register a topline and Bottomline CAGR of 12.1% and 19.8%, respectively, during FY2009-12E."At the CMP, the stock is quoting at 18.8x and 16.2x FY2011E and FY2012E EPS, respectively, which we believe is attractive compared to its peers ABB and Areva T&D (which are quoting at 24.9x and 21.5x CY2011E EPS, respectively).

We believe that such a high valuation gap is unwarranted and going ahead it would narrow down as CGL has been bridging the technological gaps through various acquisitions. The gap would also narrow down on the back of superior earnings growth and higher average RoEs for CGL as against its peers. We assign CGL a Target P/E multiple of 20x and upgrade the stock from Accumulate to Buy with a 15-month Target Price of Rs 525."

Stock Views on oriental bank of commerce, Colgate-Palmolive, ABB

Morgan Stanley on oriental bank of commerce

OBC is now trading at a huge discount to other state-owned enterprise (SOE) banks. OBC has corrected sharply in the last few days. The stock is now trading at 0.4x book. The stock is mispriced compared with other SOE banks, which are trading close to 0.9x book, on an average. Morgan Stanley remains negative on OBC’s fundamentals, but that’s for all the SOE banks. The valuation gap is huge and some of this is likely to get bridged. OBC is now a most preferred stock among SOE banks. Earnings will be under pressure. Morgan Stanley is expecting the revenues to fall by 31% in F2010. This will be driven by a continued weakness in NIMs (net interest margins) and a sharp pick-up in credit costs. But, even on those earnings, the stock is trading at 4x. Morgan Stanley agrees things can be much worse in terms of asset quality, but OBC will not be the only one to be affected. Other banks (which are trading at significant premiums) will also be affected in equal measure. Hence, this is the stock to buy in the SOE universe. There is no change in the negative view on Indian banks. Morgan Stanley expects core earnings for Indian banks to remain weak in F2010 driven by increased credit costs and weak revenues. Plus, Indian banks still remain among the most expensive banks in the region.

HSBC on Colgate-Palmolive

HSBC maintains `Overweight’ rating on Colgate-Palmolive with a price target of Rs 470. The company’s sales growth volume for the first three quarters of this year has averaged 12%, with Q3 spiking up to 14%. However, the average over the last three years has been 9%. There are three factors responsible for this high growth rate:

(1) market share gains - Colgate has moved up from 47.8% in FY06 to nearly 50% currently (crossed 50% for the first time in several years for the month of January 2009)

(2) Price stability - Colgate has not taken any price increases in the year till date

(3) price point rationalisation - price of Cibaca 20g pack was reduced from Rs 6 to Rs 5, which has greatly boosted volumes.

Although Colgate is in staples category and is relatively immune to recession, it is possible that there may be a slight impact on the sales and volume growth may return to the three-year average in high single digits, from the current 12%+ which is probably above trend. The probability of a price increase, however, seems low given the softening commodity cost scenario.

Motilal Oswal on ABB

Motilal Oswal has reiterated `Neutral’ rating on ABB with a target price of Rs 382, which implies a downside of 4% from current levels. ABB India reported in-line performance for 4QCY08, with revenues up 18% y-o-y to Rs 2,170 crore, EBITDA up 3% y-o-y to Rs 270 crore, and net profit up 6.8% y-o-y to Rs 190 crore. While 4QCY08/CY08 results are largely in line with the estimates, order intake witnessed sharper than anticipated decline (- 37% y-o-y, -33% q-o-q), as projects got deferred. Order backlog as of December 2008 stands at Rs 6,160 crore (up 22.6% y-o-y), and book to bill ratio is at 0.9x CY08 revenues. EBITDA margin declined 100 bps to 11.2% in CY08, in line with our estimates. EBIT margins for power systems declined 190 bps to 8.6% in CY08 from 10.5% in CY07, largely due to business restructuring (reduced focus on APDRP and RGGVY) and possibly higher costs in certain projects. Business headwinds on the industrial side (47% of CY08 EBIT) are getting stronger, particularly in the project segment, given delays in terms of financial closure. Metals and cement (~30% of industrial order book) are witnessing demand slowdown. Also, segments like hydrocarbons, paper/pulp and real estate constitute a sizeable part of the order book, where order intake would be impacted. Motilal Oswal is downgrading its earnings estimates by 9.8% for CY09 and by 11.6% for CY10 to factor in the business headwinds. The stock trades at 15.7x CY09E and 16x CY10E earnings.

Stock Views on Crompton Greaves, Madhucon Projects, Great Offshore

SKP Securities on Great Offshore - Target Rs 454

SKP Securities has recommended a buy rating on Great Offshore, with a price target of Rs 454, in its report dated.


"GOL has forayed in to port management and single point mooring operations by acquiring 100% equity stake in two Hydrabad based companies KEI-RSOS Maritime Ltd. (KEI) and Rajamahendri Shipping & Oilfield Services Ltd (RSOS) with purchase consideration of Rs 1.6 billion. At the current market price of Rs 360, the stock is trading at a P/BV of 1.16x and 0.95x of FY10E and FY11E book value of Rs 310 and Rs 378 respectively. We recommend 'BUY' rating on the stock with a target price of Rs 454/- (26% upside) in 12 months implying a P/BV multiple of 1.2x of FY11E book value," says SKP Securities' report.


Angel Broking on Madhucon Projects - Target Rs 246

Angel Broking has recommended a buy rating on Madhucon Projects, with price target of Rs 246, in its report .


"Madhucon Projects stock has outperformed the BSE Sensex significantly (by 25.2%) in CY2009 YTD, which is in line with our expectation as the stock had slipped into a deep undervaluation zone. We have increased our Target Price for the stock on the back of the following factors, viz.

1) Better demand outlook: Post election verdict there has been a positive change in economic outlook and the concerns hovering over Infrastructure Sector have been put to rest; and
2) Increasing our Target Multiple: We have valued MPL's core Construction business at a P/E of 6x FY2011E (discount to historical average and to peers like IVRCL Infra, Nagarjuna Construction, etc.) from 4x earlier on account of improved Earnings visibility and re-rating of the sector. We recommend a Buy on the stock with a SOTP Target Price of Rs 246, at which level the stock would trade at 1.3x FY2011E P/BV (discount to its peers). It may be noted here that we have not factored in any potential upside from MPL's Coal and Power ventures," says Angel Broking's report.

Angel Broking on Crompton Greaves - Target Rs 306

Angel Broking has recommended an accumulate rating on Crompton Greaves, with price target of Rs 306, in its report.

"It is pertinent to note here that during April 2005 - June 2009, CGL traded at an average discount of about 48% to the forward rolling P/E of ABB primarily due to the technological gaps and superior growth for ABB. Currently also, CGL is quoting at a hefty discount of 43-44% to ABB. However, we believe that such a high gap is unwarranted and going ahead it would narrow down as CGL has been bridging the technological gaps through various acquisitions."

"The gap would also narrow down on the back of superior Earnings growth (15.6% CAGR for CGL as compared to 3.6% CAGR for ABB over the next two years) and higher average RoEs of 28-29% for CGL as against 21-22% for ABB. Nonetheless, some discount would continue to persist due to the relative advantage of access to the parental technology, which ABB posses. We assign CGL a Target P/E multiple of 15x and Initiate Coverage on the stock, with an Accumulate recommendation and Target Price of Rs 306," says Angel Broking's report.