Stock views on Bharati Shipyard, Nitin Fire Protection, GAIL India

BNP Paribas on GAIL INDIA

BNP Paribas has initiated coverage on GAIL India with a ‘reduce’ rating, as it expects gas transmission prices to fall thereby affecting the company’s core business segments. “We initiate research coverage on GAIL India with reduce rating to factor in a steep decline in profitability of GAIL’s petrochemicals, LPG and liquid hydrocarbons (LPG/LHC) segments in the wake of a cyclical downturn,” says a brokerage report. These business segments together accounted for 51.8% of GAIL’s FY08 EBITDA, adds the report. BNP Paribas expects EBITDA of petrochemicals and LPG/LHC segments to decline by 50.5% and 10.7%, respectively, in FY08-10. The bearish outlook is also based on the fact that the Petroleum and Natural Gas Regulatory Board (PNGRB) has proposed to use the depreciated asset value of GAIL’s existing pipelines to determine tariffs. Gas transmission tariffs will likely fall on new regulation, notes the report. The brokerage also feels that RIL’s ongoing legal dispute over the supply and pricing of gas could delay the onset of gas supplies beyond its estimate of April 2009.


Karvy Stock Broking on NITIN FIRE PROTECTION

Karvy Stock Broking has maintained a ‘buy’ rating on Nitin Fire Protection even while lowering the target price by 33.60% to Rs 239. “We are downgrading our earnings estimates by 4% and 11.5% for FY09 and FY10, respectively. We expect the company’s fire protection safety and security business to be impacted on account of slowdown in the construction sector and corporate capex plans,” says a report. The brokerage has also lowered its revenue estimates from the company’s high pressure cylinder business on account of lowerthan-expected capacity utilisation at the Vizag plant. “We are reducing our sales estimates for the cylinder business by 8.1% and 15% to Rs 1,508 million and Rs 2,036 million for FY09E and FY10E, respectively,” says the report. On consolidated basis, Karvy has lowered its sales estimates by 5.5% for FY09E and 12.6% for FY10E.


Prabhudas Lilladher on BHARATI SHIPYARD

Prabhudas Lilladher has retained a ‘buy’ rating on Bharati Shipyard after the company’s wholly-owned subsidiaries lent Rs 2-2.5 billion to Great Offshore’s promoters against a pledge of 14% equity. According to the brokerage, although there would not be any P/L implication on the company, as the interest rate on the loaned amount is at commercial terms, Bharati Shipyard “would have to leverage further in order to fund its capex”.

KRChoksey Views on Blue Dart, JMC Project, C and C Constuctions, Aegis Logistics

Blue Dart - Target of Rs 520





KRChoksey Research has recommended a buy rating on Blue Dart Express with a target price of Rs 520 in its November 19, 2008 research report. "Net sales increased 27.8% y-o-y and 8.6% q-o-q to Rs 265.8 crore driven by increase in the average pricing (15-20% in air cargo charges and 10-15% in the ground network service charges). We recommend a BUY on this stock with target price of Rs 520, which represents an upside potential of 21.8%," says KRChoksey's research report.





JMC Project - Target of Rs 97





KRChoksey Research has maintained its buy rating on JMC Projects (India) with a target of Rs 97 in its November 17, 2008 research report. "Company’s sales increased by 76.4% y-o-y to Rs 325.5 crore. The PAT was flat at Rs 6.8 crores. We have reduced our sales estimates for FY09, as there is no visibility of fresh order inflows. However, we anticipate order execution will be at expected pace. The EBITDA margins have been revised downward, mainly due to an increasing trend in construction expenses."





"Interest cost estimates have been revised upwards due to an increase in interest cost during the quarter. It will impact the PAT margins of the company by 27bps. We have given additional liquidity discount of 10% to company’s multiples. We therefore downgrade our target price to Rs 97, maintaining a BUY rating, with an upside potential of 51.5%," says KRChoksey's research report.




C and C Constuctions - Target of Rs 137





KRChoksey Research has maintained its buy rating on C and C Constuctions with a target of Rs 137 in its November 14, 2008 research report. "Company’s sales increased by 162% yoy to Rs 129 crore on the back of strong order book position. PAT was flat at Rs 4.95 crores. We have revised our sales estimates for the year upwards by 8.6% due to fresh inflow of orders. However, we anticipate slowdown in order execution thus affecting the topline. The EBITDA margins have been maintained owing to falling commodity prices. An increase in debt levels of the company is anticipated, which will impact the PAT margins of the company. We therefore downgrade our target price from Rs 265 to Rs 137, maintaining a BUY rating, with an upside potential of 25.6%," says KRChoksey's research report.





Aegis Logistics - Target of Rs 96





KRChoksey Research has recommended a buy rating on Aegis Logistics with a target of Rs 96 in its November 17, 2008 research report. "Net sales increased 42.5% y-o-y to Rs 130.9 crore driven by strong growth in both gas (47.6%) and liquid logistics (18.0%) divisions. Net profit dipped 13.0% y-o-y to Rs 7.8 crore."





"In the long run, we firmly believe that the key upside to Aegis’ story is its Auto Gas business, which is likely to be driven by the company’s strong expansion plan and increasing price differential between Auto LPG, with respect to diesel and petrol. At CMP the stock is trading at 3.2x on FY09E EPS of Rs 20.7. We recommend a BUY on this stock with target price of Rs 96, which represents an upside potential of 43.3%," says KRChoksey's research report.