Stock views on Hikal, HCL Technologies, UltraTech Cement

Sunidhi Securities on Hikal - Target Rs 400

Sunidhi Securities & Finance has recommended a buy rating on Hikal with a target price of Rs 400 in its research report.

"Hikal is committed to creating a world class, customer focused, innovative organisation and becoming partner of choice to the life science industry. In its long association, Hikal is supplying agro chemicals and intermediates to the top four global agro- and fine-chemical players such as Pfizer, Syngenta, Bayer and Degussa. The pharma division is now expecting stupendous growth and is very optimistic about contract research and manufacturing services (CRAMS). Hikal wants to establish itself as among the top companies in the world in the CRAMS business. We recommend 'BUY' with a target price of Rs 400 in the medium term, says Sunidhi Securities & Finance's research report.


Anand Rathi on HCL Tech - Target Rs 375

Anand Rathi Securities has maintained its buy rating on HCL Technologies with a target price of Rs 375 in its research report.

"HCL Tech’s US$-revenue grew 7.6%, margin was up 82bps and profit up 52% sequentially. Pricing strength and IMS growth were surprising. The BPO business turned around from the negative to positive growth zone. We maintain our target multiple of 15x average FY11e earnings of Rs25, thus raising our target price to Rs 375. We maintain our Buy rating. In the past, the stock has traded at a 28% discount to Infosys," says Anand Rathi Securities' research report.

Sharekhan on UltraTech Cement - Target Rs 850

Sharekhan has maintained its buy rating on UltraTech Cement with a target price of Rs 850 in its research report.

"Despite the overall slowdown in the economy the revenue of the company on a stand-alone basis grew by an impressive 16% in FY2009. The strong revenue growth was achieved on the back of capacity addition ahead of peers and a revival in the cement demand in the second half of the fiscal year. We maintain our 'Buy' recommendation on the stock with a price target of Rs 850 (valued at EV/tonne of USD87)," says Sharekhan's research report.

Stock views on HCL Technologies, Rural Electrification Corporation, Subros

Emkay Global Financial Services on HCL Tech - Target Rs 330

Emkay Global Financial Services has recommended an accumulate rating on HCL Technologies with a target price of Rs 330 in its research report.


HCL Tech reported revenues of USD 607.2 million (+7.9% QoQ). Revenues in constant currency up 4% sequentially. Revenues in Applications business (+4.5% QoQ) to USD 441.5 million while IMS revenues jump up by 25.5% sequentially (included USD 7 million of pass through revenues). We are upping rating on HCL Tech to 'ACCUMULATE' with a target price of Rs 330," says Emkay Global Financial Services' research report.

Motilal Oswal on REC - Target Rs 250

Motilal Oswal has recommended a buy rating on Rural Electrification Corporation (REC) with a target price of Rs 250 in its research report.

"REC is a long-term play on India's power-sector growth. We believe the stock offers earnings growth visibility (23% PAT CAGR through FY12E) and is reasonably valued (FY11E P/BV of 1.8x against a healthy RoE of 24%+). Our target price for REC is Rs 250 (2.2x FY11E BV). We initiate coverage with a Buy," says Motilal Oswal's research report.


Sharekhan on Subros - Target Rs 42

Sharekhan has maintained its buy rating on Subros with a target price of Rs 42 in its report.

"Given the improvement in demand environment and lower base of FY2009, we expect the company to report a stellar CAGR of 38.2% in its net profit for FY2009-2011. Apart from double-digit volume growth, the earnings growth would also be aided by lower interest outgo. Consequently, we have revised our estimates sharply upwards for FY2010 and FY2011 by 12.5% and 40% to Rs3 and Rs4.2 respectively. At the current market price the stock is trading at 8.3x its FY2011E earnings and EV/EBITDA of 3.2x. We maintain 'Buy' recommendation on the stock with revised price target of Rs 42," says Sharekhan's research report.

Stock Views on JSW Steel, HCL Tech, Tata Steel, HCC, Great Offshore

Tata Steel

Buy Target Rs 1083

Emkay Global Financial Services Ltd has recommended by rating on Tata Steel, with price target of Rs 1083, in its report dated 4th August, 2008.Tata Steel reported standalone 1QFY09 results, which are significantly ahead of our estimates. Net sales stood at Rs 61.65 billion (yoy up 46.9%, qoq up 7.5%), EBITDA stood at Rs 30.25 billion (yoy up 78%, qoq up 25.9%) and adjusted PAT stood at Rs 16.56 billion (yoy up 71.1%, qoq up 27.3%). The company reported Fx loss of Rs 3.03 billion. During the quarter, production volume declined by 6.4% on sequential basis to 1.19mt. The reduction in volumes was primarily on account of shutdown for 1.8mtpa expansion. Tata Steel expects 1.8mtpa expansion project to be ramped up by the end of 2QFY09. In 1QFY09, the company commenced “H” blast furnace having capacity of 2.5mtpa. For FY09, Tata Steel expects incremental hot metal production of 1mtpa. At CMP of Rs 681, the stock is trading at 6.3x FY09E FDEPS of Rs 108.3 and at 5.4x FY09E EV/EBITDA. We maintain BUY on the stock with target price of Rs 1,083.

HCL Tech

Accumulate Target Rs 297

Emkay Global Financial Services Ltd has recommended to accumulate HCL Technologies, with price target of Rs 297, in its report dated 4th August, 2008.We have revised our estimates and now build in (1) lower revenue growth (we expect FY09E US$ revenues growth at 19.4% now V/s 22.5% earlier, albeit see significantly lower/ negligible risk to these estimates), (2) lower employee addition (though compensated by an increase in utilization levels) and (3) exchange rate assumption set at Rs 42/$ and Rs 41/$ for FY09 and FY10 (in line with other peers). We now expect HCLT to report earnings of Rs 22.1 and Rs 24.8 for FY09 and FY10 respectively (highlight that sees low risk to these earnings estimates). With valuations looking extremely compelling at

JSW Steel

Buy Target Rs 1380

Emkay Global Financial Services Ltd has recommended buy rating on JSW Steel, with price target of Rs 1380, in its report dated 4th August, 2008. JSW Steel reported 1QFY09 results, which are significantly ahead of our estimates. Net sales stood at Rs 44.56 billion (yoy up 85.9%, qoq down 9.3%), EBITDA stood at Rs 8.15 billion. However, this includes forex loss of Rs 3.67 billion of which Rs 2.29 billion is on capital account translational loss. Adjusting for the notional Fx loss (including the impact on deferred tax on the same) EBITDA stood at Rs 10.4 billion (yoy up 46.5%, qoq down 1.5%) and APAT stood at Rs 4 billion (yoy up 35.7%, qoq up 30.1%). JSW reported Adjusted FDEPS of Rs 20. We believe a large part of this performance is attributable to the exports where we believe the realization is significantly higher as compared to the domestic markets. At CMP of Rs 797, the stock is trading at 8.6x FY09 and 5.7x our FY10 FDEPS estimate of Rs 93 and Rs 138 respectively. On EV/EBITDA, the stock currently trades at 5.7x and 4.3x FY09 and FY10 estimates. We maintain BUY on the stock with target price of Rs 1,380 which is 10x our FY10E consolidated FDEPS.

HCC

Buy Target Rs 125

Emkay Global Financial Services Ltd has recommended buy rating on Hindustan Construction Company, with price target of Rs 125, in its report dated 28th July, 2008. We continue to maintain our positive view on the company, as we believe that the company has one of the best quality orders, which should help it withstand the tough times ahead. The company’s real estate business is also shaping up well with two key projects of Lavasa and Vikhroli IT park expected to start generating revenues in the near term. The stock is currently trading at 13.1x FY09E EPS of Rs 4.3 and 8.5x FY10E EPS of Rs 6.8 (adjusting for value of non-contracting businesses). We value the construction business at Rs 87 per share base on 12.8x FY10E EPS. We assign our bear case valuation to the non-contracting businesses with real estate being valued at Rs 36 per share and the alone annuity BOT project valued at Rs 2 per share. We thus arrive at our target price of Rs 125 per share, which represents an upside of 30% from the current market price. We maintain our ‘BUY’ rating.

Great Offshore

Buy target of Rs 710

Emkay Global Financial Services has maintained its buy rating on Great Offshore with a target price of Rs 710 in its August 4, 2008 research report. "Great Offshore’s (GOFF) Q1FY2009 pre-exceptional net profit at Rs 356 million is below our expectation primarily because of lower revenue continuation from high margin offshore segment and higher than expected repairs & maintenance cost for the quarter.""We are not changing our earnings estimates for GOFF. The company has announced that it has called of its intention to acquire majority stake in Seadragon Offshore. Hence is absence of any near term upside from acquisition we are downgrading price target of GOFF to Rs 710. We have valued GOFF at 8X its FY2010 earnings of Rs 66 and added FY2010 estimated cash per share of Rs 180 on its book. Stock currently trades attractive valuations of 6.3X its FY2010 earnings and 3.74 X EV/EBIDTA. Maintain BUY," says Emkay Global Financial Services' research report.

Research by Emkay Global