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 Lupin, Godawari Power & Ispat, Crompton Greaves

Emkay Global on Lupin- Target Rs 980

Emkay Global Financial Services has maintained its buy rating on Lupin, with price target of Rs 980, in its report dated.

"Since this is a sub-judice matter, it is difficult to take a call which way the judgment goes? However, by the spirit of the matter taken up by the EU authorities and chronology of events leading to out of court settlement raises an iota of doubt about the intention of settlement between innovator (Servier) and Lupin. At the moment, we can not estimate the exact loss; therefore impact on financials can not be assessed. In worst case scenario, this event will lead to one time charges, which could be as high as Rs 3.7 billion (10% of FY09 revenue). Hence, we continue to maintain our Buy rating with a target of Rs 980," says Emkay Global Financial Services' research report.

Karvy Stock Broking on Godawari Power & Ispat - Target Rs 128

Karvy Stock Broking has recommended a buy rating on Godawari Power & Ispat, with price target of Rs 128, in its report.

"The stock is trading at 0.6x its FY09 & 0.55x its FY10 BV. We revise FY10 earning estimates by 6% on account of change in MAT rate. However, we retain our valuation of 0.8x FY10 BV and target price of Rs 128/share. However, due to recent correction in stock price, we revise our rating from out performer to 'BUY'," says Karvy Stock Broking's report.

Sharekhan on Crompton Greaves - Target Rs 308

Sharekhan has recommended a buy rating on Crompton Greaves, with price target of Rs 308, in its report.

"We like Crompton Greaves for its consistent performance at the operating level. Moreover, its ability to improve its working capital management in a tough environment (most other companies have indicated a stretched working capital cycle) is quite impressive. We reiterate our bullish stance on the company and maintain our Buy recommendation on the stock. At the current market price the stock is discounting its FY2010 and FY2011 earnings estimates by 16.3x and 14.8x respectively, target of Rs 308," says Sharekhan's research report.

Stock Views on Orchid Chemicals, Crompton Greaves

Reliance Money on Orchid Chemicals - Target Rs 176

Reliance Money has recommended a buy rating on Orchid Chemicals and Pharmaceuticals with a target price of Rs 176 in its research report.

"Orchid Chemicals & Pharmaceuticals (Orchid) is an integrated pharmaceutical company with core competencies in the cephalosporin injectable space and that too in regulated markets of US. Having an established strong base in US cephalosporin segment, the company is now spreading its wings to other regulated markets like Europe and Canada. Further the company is progressing well in the non-penicilin, noncephalosporin (NPNC) and drug discovery front."
"Orchid is currently trading at an attractive valuation of 5x it FY11 EPS its FY11 EV/ EBITDA. Further looking at the robust earning opportunities in the pipeline and debt reduction comitment, we recommend a 'BUY' rating on Orchid with a target price of Rs 176 (8x FY11E)," says Reliance Money's research report.

Sharekhan on Crompton Greaves - Target Rs 308

"We like Crompton Greaves for its consistent performance at the operating level. Moreover, its ability to improve its working capital management in a tough environment (most other companies have indicated a stretched working capital cycle) is quite impressive. We reiterate our bullish stance on the company and maintain our Buy recommendation on the stock. At the current market price the stock is discounting its FY2010 and FY2011 earnings estimates by 16.3x and 14.8x respectively, target of Rs 308," says

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.

Stock views on Crompton Greaves, Indian Overseas Bank, Patel Engineering

IIFL on Crompton Greaves - Target of Rs 151

IIFL has recommended an add rating on Crompton Greaves with a target price Rs 151 in its research report.

"We met Crompton’s management post the announcement of share buyback and investment in group company Avantha Power & Infrastructure Ltd (APIL). The management views these initiatives as the best use of cash on the parent balance sheet, as the company has slowed down its own capex plans. These two initiatives would result in cash outflow of Rs 4.51 billion during FY10."

"Deleveraging the subsidiary balance sheets or cash conservation in a downturn would have been a more prudent strategy, in our view. However, the management was sanguine on the outlook of both domestic and overseas power T&D businesses and expressed confidence on the cash generation ability of existing businesses. In our view, more clarity on APIL’s financial details and development plans would be required to improve investor sentiment on the related party transaction. "ADD" target price of Rs 151," says IIFL's research report.

Sunidhi Securities on IOB - Target of Rs 60

Sunidhi Securities & Finance has recommended a buy rating on Indian Overseas Bank with a price target of Rs 60 in its research report.

"Indian Overseas Banks' total business as on December 31, 2008 rose from Rs 1,33,413 crore as at end December 2007 to Rs 1, 62, 575 crore-a growth of 22%. Total deposits grew by 15% to Rs 90, 866 crore from Rs 78, 791 crore. Advances spurted 31% in Q3FY09 to Rs 71, 709 crore from Rs 54, 6222 crore (YoY). As at December 31, 2008 IOB’s CASA (current accounts saving accounts) is marginally down to 29.23% from 30.93% (YoY)."

"During Q3FY09, total income rose 40% to Rs 3204 crore and net profit by 26% to Rs 388 crore. NIM and NP margin stood at 3.14% % and 12.4% respectively. Its balance sheet grew by 31% to Rs 19, 747 crore (YoY). We recommend BUY with a target of Rs 60 in the medium term," says Sunidhi Securities & Finance's research report.

Karvy on Patel Engineering - Target of Rs 305

Karvy Stock Broking has maintained its buy rating on Patel Engineering Company with a price target of Rs 305 in its research report.

"Patel Engineering has bagged an order worth of Rs 7.99 billion from the Narmada Valley Development Authority for Bargi Diversion Project in joint venture with SEW Construction Ltd. The company's stake in the project would be around 60% which will translate the order inflow of Rs 5 billion. The project would be executed in three years and provide the EBIDTA margin of around 15%. We have excluded the real estate value from our valuation due to no clarity on development plans and revise the price target downward. We have valued the core business of the company using EV/EBITDA methodology by providing 20% discount to its historical trough multiple of 5.5x. We re-iterate our BUY rating with downgraded price target of Rs 305," says Karvy Stock Broking's research report.

Sharekhan views on Tata Tea, Sun Pharmaceutical, Crompton Greaves

Sharekhan on Tata Tea - Target of Rs 853

Sharekhan has maintained its buy rating on Tata Tea with a price target of Rs 853 in its research report.

"In line with the strategy, Tata Tea, together with European Bank of Reconstruction and Development (EBRD), has decided to acquire a 51% stake in Grand, a leading player in the Russian economic beverage segment. Tata Tea (through one of its overseas subsidiaries) and EBRD will hold a 33.2% and a 17.8% stake respectively in the company. The balance 49% stake will remain with the founding promoter of the company (Dr Alexander E Borisov)."
"With tea volumes growing moderately in the domestic and international markets, we expect Tata Tea’s new initiatives, such as the launch of green and herbal tea, the foray into non-carbonated beverage segment and the entry into new geographies, to drive growth at the consolidated level going forward. However, in the near term, the company’s profitability would remain under pressure, as the prices of its key raw materials (especially raw tea) shall remain firm. At the current market price, the stock trades at 8.7x its FY2010 earnings estimate and EV/EBIDTA of 3.2x. We maintain our Buy recommendation on the stock with a price target of Rs 853," says Sharekhan's research report.

Sharekhan on Sun Pharmaceutical - Target of Rs 1295

Sharekhan has maintained its buy rating on Sun Pharmaceutical Industries with a price target of Rs 1,295 in its research report.

"Sun’s domestic business has clearly outpaced the industry by registering a +17% growth in M9FY2009 vs a 12-14% industry growth in the same period. With a strong field force, a robust pipeline of new launches, strong product portfolio and a firm foothold in the domestic market, Sun expects its domestic formulation business to continue to outpace the industry growth of 10-12%. At the current market price, Sun Pharmaceutical Industries is valued at 12.6x FY2009E and 14.1x FY2010E fully diluted earnings. Uncertainty on the Taro acquisition and Caraco’s warning letter would remain as an overhang on the stock and cap the near-term upside. We maintain our Buy recommendation on the stock with a price target of Rs 1,295," says Sharekhan's research report.

Sharekhan on Crompton Greaves - Target of Rs 157

Sharekhan has maintained its buy rating on Crompton Greaves with a price target of Rs 157 in its research report.

"Crompton Greaves Ltd (CGL) has emerged as a strong power T&D product and service provider in the past few years, thanks to the acquisitions made globally. The stake purchase in APIL will squeeze the company’s plan to make any further acquisitions in the near term. Further, the diversification into the power business may be remunerative only in the longer term as any meaningful returns may flow in only after three to four years. This will suppress the company’s RoE in the near term, thereby exerting pressure on the stock’s valuations.
We remain positive about CGL’s business and operational efficiencies as CGL has performed consistently on these parameters. We have revised our price target for the stock to Rs 157 (9xFY2010E earnings) mainly to capture the lower returns expected after the investment in APIL. We are maintaining our Buy recommendation on the stock as its current valuation of 6.1x FY2010E earnings per share (EPS) is attractive. However, the stock may underperform in the near term as the proposed investment in a group company is sentimentally negative for the stock," says Sharekhan's research report.

Sharekhan views on Crompton Greaves, ICICI Bank, JP Associates

Sharekhan on Crompton Greaves - Target of Rs 210

Sharekhan has maintained its buy rating on Crompton Greaves with a price target of Rs 210 in its research report.

"The board of Crompton Greaves Ltd (CGL) has decided to buy back the company’s shares and will be meeting on March 24, 2009 to finalise the buy-back exercise. At the current market price, the CGL stock is discounting its FY2010E earnings by 7.4x. In our view, the valuation of the stock is compelling, as it clearly does not capture the growth prospects of the company, and this could have prompted the management to buy back the company’s shares. Furthermore, CGL’s strong balance sheet (a low debt-equity ratio at the consolidated level and net cash position at the stand-alone level) provides the company enough headroom to carry out the process smoothly."

"We believe the domestic power business would be the key revenue driver for the company in the near future (thanks to the increasing spend on power T&D projects in the country). It will also aid CGL to grow its revenues at a compounded annual growth rate of 20.7% over FY2008-10. We maintain our Buy recommendation on the stock with a price target of Rs 210," says Sharekhan's research report.


Sharekhan on ICICI Bank - Target of Rs 505

Sharekhan has maintained its buy rating on ICICI Bank with a price target of Rs 505 in its research report.

"As part of its strategy of focusing on capital preservation and improving asset quality, the bank does not intend to grow its balance sheet aggressively in the coming fiscal. It expects a balance sheet growth in mid single digits for FY2010, with the loan mix likely to shift further away from the retail segment."

"In view of the management, the pressure on the margins is likely to persist till H1FY2010 as the loan mix shifts away from the high yielding retail segment and a larger chunk of the wholesale deposits gets re-priced during the September-December 2009 period, paving the way for some margin expansion during H2FY2010."


Sharekhan on JP Associates - Target of Rs 112

Sharekhan has maintained its hold rating on Jaiprakash Associates with a target price of Rs 112 in its research report.

"We have revised our estimates downward to factor in the delay in the commissioning of cement capacity and the delay in the execution of real estate projects. We continue to value the company using the SOTP valuation methodology and value the stock at Rs 112. We have taken into account the delay in the commissioning of cement capacity in our valuation. Hence, we maintain our Hold recommendation on the stock," says Sharekhan's report.