Stock Views on BHEL, Yes Bank, Balrampur Chini

Karvy Stock Broking on BHEL - Target Rs 2653

Karvy Stock Broking has recommended an outperformer rating on Bharat Heavy Electricals (BHEL), with price target of Rs 2653, in its report.

"Bharat Heavy Electricals (BHEL) is a leading power equipment manufacturer in India and a play on India's increasing power generation requirement. The capacity addition of 10,000 MW (100% of existing) by FY12 is expected to improve execution capability and drive the revenue at a CAGR of 22.3%. The net profits are expected to boost up from 540 bps margin improvement mainly on account of cost control and are expected to increase at a CAGR of 30% to Rs 68.99 bn by FY12. We believe BHEL will be outperformer considering strong revenue visibility and earnings growth along with attractive return ratios (28% for FY10-FY12). We initiate our coverage with target price of Rs 2,653 over 12 month period," says Karvy Stock Broking's report.


Hem Securities on Yes Bank - Target Rs 244

Hem Securities has recommended a buy rating on Yes Bank with a price target of Rs 244 in its report.

"Yes bank has registered a compounded growth rate of around 60% since it interception. We expect the bank to continue to grow at a high rate. We are very positive on the long term business prospects of the company and financial performance. At Current Market Price of Rs 165.05 the stock is trading at a PE of 16.15x. With expected EPS for FY10 and FY11 of Rs 17.73 and Rs 19.32 respectively, the stock is trading at a PE of 9.7x and 8.9x respectively. The price of the stock is undervalued at current level of Rs 165.05. We reiterate “BUY” on the stock with target price of Rs 244 with a medium term investment horizon. The Upside for the stock is Rs 79," says Hem Securities' report.

SKP Securities on Balrampur Chini - Target Rs 157

SKP Securities has recommended a buy rating on Balrampur Chini Mills, with price target of Rs 157, in its report.

"With the festive season round the corner, the demand for sugar is expected to go up. As the consumption is about to outweigh demand, the domestic sugar prices have already touched a 30 year high, and is projected to move up even further. BCML is well poised to substantially gain from the price rise, on account of lower contracted import cost, improved margins and better realizations. We recommend a 'BUY' on the stock with a 12 month target price of Rs 157 at 10x FY10E earnings, giving it an upside potential of 39%," says SKP Securities' report.

ICICI Securities on Bajaj Hindustan, Balrampur Chini

ICICI Securities on BALRAMUR CHINI
It reported its Q4SY08 (sugar year) results with a topline growth of 40% to Rs 416.7 crore from Rs 297.8 crore in Q4SY07, supported by volume growth and improvement in price realisations. It currently holds a large sugar inventory, in anticipation of higher sugar prices and it is well positioned to gain in such a scenario. However, disputes over pricing between the industry and the state pose concerns.


ICICI Securities on Bajaj Hindustan

Revenues are expected to rise by 47.4% QoQ to Rs 676.7 crore on account of higher sugar prices and strong growth in volumes. EBITDA margins are expected to improve to 31.4% QoQ on the back of higher sugar and rectified spirit prices. Net profit is expected to stand at Rs 58.5 crore from the loss of Rs 35.5 crore in Q3SY08. Key swing factors are firm sugar prices and the SC ruling on sugarcane prices.

Stock Views on SBI, Balrampur Chini, Zee News, PSL

Karvy on SBI - Target Rs 1559

Karvy Stock Broking has maintained its buy rating on State Bank of India (SBI) with a target price of Rs 1559 in its October 31, 2008 research report. "In 2QFY09, State Bank of India's net interest income grew by 45% (Y/Y) to Rs 54.5 billion much higher than our estimates (of Rs 45.6 billion) mainly due to much higher credit growth and higher yield on advances. SBI's net profit reported 40% jump (Y/Y) to Rs 2.6 billion growth due to reversal in investment depreciation. We reiterate BUY rating with a price target of Rs 1559," says Karvy's research report.

SBICAP Securities on PSL - Target of Rs 181

SBICAP Securities has maintained its buy rating on PSL with price target of Rs 181 in its November 21, 2008 research report. "At the CMP of Rs 95, PSL is trading at a PE of 2.8x and 2.1x its FY08E and FY09E earning respectively. EV / EBITDA is at 3.9x and 3.2x FY08E and FY09E respectively. We initiate coverage on PSL with a buy rating and 12 month price target of Rs 181 implying an upside of 90%," says SBICAP Securities' research report.

Karvy on Balrampur Chini - Target of Rs 55

Karvy Stock Broking has recommended a buy rating on Balrampur Chini Mills with a target of Rs 55 in its December 4, 2008 research report. "Balrampur Chin Mill (BCML) reported revenue increase of 40.8% YoY (QoQ increase of 30.2%) to Rs 4.11 billion mainly on account of higher sugar and distillery revenue in the Q4FY08. The company reported profit of Rs 145 million translating into EPS of Rs 0.57 for the quarter."

"The company is expected to report loss of Rs 240 million in FY09 and profit of Rs 1.26 billion in FY10. We have assumed cane cost of Rs 140 per quintal in FY09 and Rs 148 per quintal in FY10. Considering lower profitability in sugar and uncertainty on cane cost, we continue our valuation based on replacement cost method. We are revising our valuation of EV/ Ton from Rs 0.35 million to Rs 0.3 million with target price of Rs 55 (Previous Rs 68), Buy," says Karvy Stock Broking's research report.

Prabhudas Lilladher Zee News - Target of Rs 57

Prabhudas Lilladher has recommended an accumulate rating on Zee News (ZNL) with a target of Rs 57 in its September 24, 2008 research report. "We expect the company to post 24% and 37% revenue and earnings CAGR, respectively in FY08-11E. The stock currently trades at 22.9x and 16.8x our FY09E and FY10E earnings estimates and remains one of the cheapest stocks in our broadcasting universe. We assume coverage on ZNL with a Accumulate rating and a target price of Rs 57," says Prabhudas Lilladher's research report.

Stock views on ING Vysa Bank, Suzlon Energy, Balrampur Chini, Shobha Developers

ENAM Securities on ING Vysa Bank - Target RS 240

ENAM Securities has retained its “outperformer” rating on the stock with a price target of Rs 240, following robust second quarter numbers. “ING Vysya registered a 43% year-on-year growth in net interest income to Rs 1.56 billion driven by 26% growth in advance and 43-basis point improvement in NIM to 2.87%. The bank has shown a strong growth in NII over the past few quarters and the fee income growth is also impressive,” the Enam note to clients said. “While the tier-1 capital at 7% is bit of a constraint, the bank can still do well this year, even without raising any additional capital. The stock quotes at one time FY09(estimated) book value and 6.9 times FY09 earnings and is attractively valued,” the note added. While the stock has corrected significantly, given the multiple uncertainties, we believe it is best to stay away at this point, it goes on to add.

Morgan Stanley on Suzlon Energy - Target RS 52.45

Morgan Stanley has “downgraded” Suzlon Energy from overweight to equal-weight while lowering the price target to Rs 52.45 from the earlier Rs 450, citing slowdown in the global wind turbine market and the unresolved technological issues. “We expect a slowdown in the global wind turbine market in C2009, with growth moving down to only 6% from 25% in C2008,” says the report. Further, the foreign brokerage also does not expects Suzlon “to get access to REpower technology in the short term.” Morgan Stanley also feels that with the cancellation of the rights issue of the company, debt will become the primary source of funding the growth at Suzlon. “We believe that Suzlon is doing the right things... trying to delay the purchase of Martifer’s stake in REpower and cutting back on capex,” says the report. However, on our reduced numbers, we still perceive risk to Suzlon’s debt covenants. If the Martifer stake purchase cannot be pushed back, we expect Suzlon to breach its debt covenants, potentially resulting in punitive action from lenders, it adds.

ICICI Securities on Shobha Developers

ICICI Securities has maintained a “buy” on Sobha Developers after the company’s second quarter results were in line with expectations with revenues and PAT dipping 10% Y-o-Y and 13% Y-o-Y to Rs 2.9 billion and Rs 490 million, respectively. The brokerage, however, has downgraded the company’s NAV owing to sluggish sales and stretched balance sheet. According to the brokerage, the company is facing headwinds in the form of downturn in realty and strained balance sheet. “The debt level has increased three times to Rs 19 billion in one year, and new sales and project launches have slowed down. We lower FY09(estimated) NAV estimate to Rs 282/share (target price at Rs 169/share), assuming 25% drop in selling prices and increased timelines by 8-10 years (reducing development pipeline 55-65%). ICICI Securities has also lowered FY09E & FY10E earnings estimates by 51% and 71%, respectively. Sobha’s balance sheet is stretched and any respite through the proposed rights issue of Rs 3.5 billion will be temporary unless housing demand picks up, it adds.

Merrill Lynch on BALRAMPUR CHINI

Merrill Lynch has maintained an “underperform” rating on Balrampur Chini Mills while lowering the price target from Rs 56 to Rs 43. The brokerage’s revised price target is based six times FY09 (estimated) EV/EBITDA, which is equivalent to the long-term average of the sector since 1996, excluding periods of very low or negative profit. “Our price objective cut is driven by 17% cut in FY09E EPS and 6% cut in our target valuation multiple,” says the report. According to Merrill Lynch, key factors driving the earnings cuts are “4% higher sugarcane costs, 18% higher interest costs and 7% lower sugar sales volumes”. We expect the company’s earnings to remain under pressure due to fall in availability of sugarcane, the key raw material, adds the report.

Stock Views on Balrampur Chini, Suzlon Energy, GE Shipping

HDFC Securities on Balrampur Chini - Target of Rs 126
HDFC Securities has maintained its buy rating on Balrampur Chini Mills with a target of Rs 126 in its October 8, 2008 research report. "We have valued the stock on 7x EV / EBIDTA for CY10E (9.6x CY09E), with a target price of Rs 126, an upside of 90% over the CMP. Our bull case target is Rs 188 (upside of 184%) and bear case target price is Rs 77 (upside of 16% from current levels). We have based our valuation on a) Uptrend in sugar cycle resulting in higher realisation for sugar and by products b) Lower interest and deprecation burden c) Strong EPS growth of Rs 4.7 to Rs 9.8 from CY08E to CY10E at a CAGR of 44%. We maintain our Buy rating and target price of Rs 126 on the stock," says HDFC Securities' research report.

Nirmal Bang on Suzlon Energy - Target of Rs 194

Nirmal Bang has assigned a buy rating on Suzlon Energy with a target of Rs 194 in its October 7, 2008 research report. "We expect Suzlon to report a CAGR of 38.5% during FY08 to FY12E in net sales on the back drop of strong order book position and significant expansion plans of the company. These coupled with unprecedented demand for wind energy will drive growth for the company going forward. We expect Suzlon to report net profit CAGR of 54.7% during FY08 to FY12E. We assign a buy rating on the stock with the target price of Rs.194.0 per share which is 12X FY10 Diluted EPS of Rs 16.16 implying an upside of 52.6% from current levels," says Nirmal Bang's research report.

PINC Research on GE Shipping - Target of Rs 407

PINC Research has recommended a buy rating on Great Eastern Shipping Company with a target of Rs 407 in its October 13, 2008 research report. "Recently, its wholly owned subsidiary Greatship (India) Ltd. (GIL) formed a joint venture with Norway based DOF Subsea (world’s leading subsea project player) to explore opportunities in deep sea projects off the east coast of India. We believe that its expansion will improve the quality of earnings by enhancing the presence of offshore segment to total earnings."

"Based on SOTP calculations, we have arrived at a fair value of Rs 582 per share in FY10. We have further discounted the fair value by 30% to reflect trough valuations. Hence, we initiate coverage with a ‘BUY’ recommendation with a price target of Rs 407 on an 18 month investment perspective," says PINC's research report.