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.

PINC Research on Triveni Engineering, Deepak Fertilizers, Time Techno

Triveni Engineering - Target of Rs 45
PINC Research has upgraded its rating on Triveni Engineering to buy with a target of Rs 45 in its November 21, 2008 research report. "Triveni Engineering and Industries Ltd. (TEIL) reported a YoY growth of 41% in net sales to Rs 4.3 billion for Q4FY08. Net profits surged by 5.4x to Rs 270 million. Although we expect the profitability to be impacted by higher cane price, we believe the same would be partially compensated by liquidation of low cost sugar of SS 07-08 and better distillery product prices. Hence, we upgrade our recommendation to ‘BUY’ with a price target of Rs 45 (valuing at 6.5x) on a one year investment perspective," says PINC's research report.

Deepak Fertilizers - Target Rs 80

PINC Research has recommended a buy rating on Deepak Fertilizers, with price target of Rs 80, in its report dated November 7, 2008. "Deepak Fertilisers and Petrochemicals Corporation (DFPCL) posted net sales of Rs 3.8 billion in Q2FY09 (+ 67% YoY). Revenues from chemical segment jumped by 63% to Rs 2.5 billion due to price & volumes increase in AN (Ammonium Nitrate) and fertilisers along with increased trading revenues. Sales of manufactured fertiliser surged by 4x to Rs 586 million pushing fertiliser sales up by 71% to Rs 1.2 billion. Consequently, net profit surged by 91% to Rs 418 million."

"At the CMP of Rs 59, DFPCL is trading at a P/E of 3.7x, EV/Sales of 0.6x and EV/EBIDT of 2.6x discounting its FY10 estimates. Spike in chemical prices, favorable fertiliser policy and expected increase in availability of gas augurs well for DFPCL. Accordingly, we expect higher sales volumes of methanol and fertilisers in FY10. With the recent correction in its stock price, DFPCL is available at attractive valuations. Hence we revise our recommendation upwards to ‘BUY’ with a target price of Rs 80 on a time horizon of 6-12 months. Our target price implies a PE of 5x FY10E earnings," says PINC's research report.

Time Techno - Target of Rs 50

PINC Research has maintained its buy rating on Time Technoplast with a target of Rs 50 in its November 21, 2008 research report. "We have moderated our outlook primarily due to the deteriorating economic conditions. Even though feedstock prices continue to ease, we believe the bigger threat to earnings is from lower offtake from the auto sector. We remain confident of the company’s ability to sustain margins in the 19-20% band and maintain our ‘BUY’ recommendation, but have revised downwards our price target to Rs 50 to reflect the lower earnings," says PINC's research report.

Emkay Global on Piramal Life, Bank of India, Deepak Fertilizers

Piramal Life - Target Rs 270

Emkay Global Financial Services has recommended a buy rating on Piramal Life Sciences with a target price of Rs 270 in its September 1, 2008 research report. “Piramal Life Sciences Limited (PLSL), the demerged R&D entity of Piramal Healthcare (PIHC) began operations a decade ago. PLSL today boasts of a world class drug discovery facility, a strong pipeline of 15 molecules (half of them in Phase I and Phase II) and in-licensing agreements with global innovator companies like Eli Lilly, Merck and Pierre Fabre Laboratories. Our risk adjusted DCF based NPV is Rs 270 per share. From the infrastructure view, the company is a value play. The replacement cost of its R&D facility is 50% of its current Enterprise Value (EV). PLSL trades at a significant discount to its only comparable competitor, SPARC. Despite having a stronger pipeline of 15 molecules as against 8 for SPARC, PLSL trades at a significant discount (80%) to SPARC's market cap. We initiate coverage on the stock with a buy rating and a DCF based target price of Rs 270,” says Emkay Global Financial Services' research report

Bank of India- Target Rs 340

Emkay Global Financial Services has recommended a buy rating on Bank of India with price target of Rs 340, in its report dated October 23, 2008. "Bank of India (BOI) has reported a net profit of Rs 7.6 billion for Q2FY09, far ahead of our expectations. The stock currently trades at valuations of 4.7 x FY10E EPS and 1.0x FY10E ABV, with an FY10 ROE of 24%. We maintain BUY rating on the stock with a price target of Rs 340," says Emkay Global Financial Services' report.

Deepak Fertilizers - Target Rs 64

Emkay Global Financial Services has recommended a buy rating on Deepak Fertilizers with price target of Rs 64, in its report dated October 24, 2008. "Deepak Fertilizers and Chemicals reported strong performance in Q2FY09 on back of higher margins in Chemicals Segment (up 550 bps yoy) and good performance in Fertilizer Segment (EBIT of Rs 95 million against loss of Rs 15 million). We maintain our BUY rating with 25% upside," says Emkay Global Financial Services' report.

Religare Views on Axis Bank, Divis Labs, Deepak Fertilizers, PSL, Gujarat Industries Power

Buy Gujarat Industries Power Co, Target Rs 123

Religare Research has maintained its buy rating on Gujarat Industries Power Company with a target price of Rs 123 in its August 6, 2008 research report. "The company's revenue at Rs 2,624.5 million was above our estimate by 31.4% due to higher fuel prices for its gas based power plants at Baroda. The higher fuel cost being a pass-through increased the revenue by 22% YoY. The EBITDA of the company at Rs 554.5 million was down 21.4% YoY mainly due to the additional O&M expenditure incurred during the planned annual shutdown of its 250MW lignite based plant at Surat. The net profit of the company was also below our expectation by 8% at Rs 224.9 million, showing a negative growth of 40.5% YoY due to additional O&M expenditure and lower other income."

"We are revising our estimates to incorporate the higher fuel cost which is a pass-through and the delay in commissioning for its SLPP II project. The stock is currently trading at 1x its FY09 and FY10 book value, a considerable discount to its peers. We have revised our DCF assumptions for the risk-free rates to 9.3% from the earlier 8.4% to reflect the current interest rate scenario. Based on the weighted average of the DCF and P/BV methods, we arrive at the target price of 112 down from our earlier target price 123 maintaining our Buy recommendation," says Religare's research report.


Buy PSL, Target of Rs 500

Religare Research has maintained its buy rating on PSL with a target price of Rs 500 in its July 16, 2008 research report."Net sales increased by 59% YoY to Rs 6.5 billion on the back of strong volume growth (+32.8%) and Rs 600 million of additional revenue contribution from the sale of pipe manufacturing mill to the US subsidiary. EBITDA increased by 46.2% YoY and 24% QoQ to Rs 594 million. EBITDA margins expanded by 180bps QoQ to 9.1%. Adjusted PAT increased by 52% YoY and 41.1% QoQ to Rs 260 million. Adj. PAT margins expanded by 120 bps QoQ to 4%."

"At the CMP of 310, the stock trades at 9.0x FY09E diluted earnings. We maintain our Buy recommendation on the stock target of Rs 500," says Religare's research report.

Buy Deepak Fertilizers, target of Rs 183

Religare has maintained its buy rating on Deepak Fertilizers and Petrochemicals Corp with a price target of Rs 183 in its June 10, 2008 research report. "The company is expanding its diluted nitric acid capacity to 1,350MT/day from 900MT/day by June 2009 with a total investment of Rs 1.1 billion. This is expected to elevate its market share from 48% to 58%, while boosting the production of nitro phosphates and ammonium nitrate. The company has started to procure."

"0.2–0.3mmscmd of LNG from GAIL through its Dahej-Uran pipeline, which is expected to increase plant capacity utilisation. It also expects gas supply from the Reliance KG-basin to commence shortly. This apart, Ishanya will lend an added dimension to profitability. We maintain our Buy recommendation on the stock with a price target of Rs 183," says Religare's research report.

Buy Divis Labs, target of Rs 1833

Religare has maintained its buy rating on Divis Laboratories with a target price of Rs 1833 in its June 10, 2008 research report. "Divi's remains our preferred pick in the Indian CRAMS space, given its healthy relationship with top innovators amid a growing outsourcing trend. Through its focus on high-margin CCS, the company's EBITDA margin will remain amongst the highest in the CRAMS segment. Further, as Divi's emerges from its heavy capex phase, we expect return ratios to improve significantly. We estimate a PAT CAGR of 28% to Rs 6bn over FY08-FY10, and maintain Buy with a target price of Rs 1,833," says Religare's research report.

Buy Axis Bank, target of Rs 805

Religare Research has maintained its buy rating on Axis Bank with a revised target price of Rs 805 in its July 16, 2008 research report. "Axis Bank's Q1FY09 results have surpassed our estimates primarily on the strength of higher loan growth and robust non-interest income. NII expanded 93% YoY to Rs 8.1 billion, driven by increased asset growth as advances and deposits swelled 48% and 46% respectively. In another key positive, fee income surged 80% YoY during the quarter to Rs 4.8 billion, aiding net profit growth of 89% to Rs 3.3 billion.""The management expects to maintain the robust business growth momentum in the coming months. However, the weakening asset quality remains a concern. We have revisited our estimates for fee-based income to incorporate the strong growth during the quarter, while raising our estimate for provisioning expenses in FY09 and FY10 on account of higher non-performing assets and depreciation on investments. On a net basis, these changes have no impact on our profit targets. In light of the increased market risk, we have raised our DDM valuation assumptions for risk free rate to 9.1% and beta factor to 1.2. This gives us a revised target price of Rs 805 from Rs 984. We maintain a Buy on the stock," says Religare's research report.