Stock views on Opto Circuits, GMR Infrastructure, Network 18

Karvy Stock Broking on Opto Circuits - Target Rs 244

Karvy Stock Broking has recommended a buy rating on Opto Circuits India with a target price of Rs 244 in its research report.

"We have increased our target price from Rs 243 on 16x FY10E estimated earnings to Rs 244 on 13x FY11E estimated earnings. The stock is currently trading at a P/E of 12.3x FY10E diluted EPS of Rs 15.4 and 10x FY11E diluted EPS of Rs 18.8. We maintain our recommendation on the stock as a BUY," says Karvy's research report.

Hem Securities on GMR Infra - Target Rs 214

Hem Securities has maintained its buy rating on GMR Infrastructure with a target price of Rs 214 in its research report.


"The company has performed very well although constrain on the margin, which we expect to be on track in the near future. The future growth is expected to come from power and airports. Lower naphtha prices and higher gas availability is further likely to benefit the company. The biggest growth driver is going to be the airport business. The company’s efforts to add new airlines, increase the user development fee and other aero charges will increase revenue. The roads projects help the company to improve their margins, as the margin from roads projects is highest. We are very positive on the long term business prospects of the company and financial performance. We reiterate “BUY” on the stock with target price of Rs 214.00 with a medium to long term investment horizon," says Hem Securities' research report.


Sharekhan on Network 18 - Target Rs 143

Sharekhan has maintained its buy rating on Network 18 Media & Investments with a target of Rs 143 in its research report.

"For the Network18 group FY2009 was a year of severe pressure in terms of both operations and fund availability. In our opinion, things are unlikely to get any worse. With the advertising market showing nascent signs of recovery on the back of considerable easing of the growth concerns among corporate India, Network18’s properties are likely to bounce back. Thus, with Network 18 sufficiently funded to take care of the gestation period of its ventures and the funding requirements of its businesses (especially for Viacom 18), being the holding company of the group it would create significant value for equity holders in the longer term. We maintain our 'Buy' recommendation on the stock with a sum-of-the-parts price target of Rs 143," says Sharekhan's research report.

Stock views on Opto Circuits, Gateway Distriparks, Welspun Gujarat Stahl Roh

IIFL on Opto Circuits - Target Rs 216

IIFL has maintained its buy rating on Opto Circuits with a price target of Rs 216 in its report.

"Opto Circuits continued its growth momentum in 4QFY09, with topline and EBITDA up 77% and 105% YoY, respectively. On a QoQ basis, topline growth of 1% was marginally below our projection, but a 425bps jump in margin led to EBITDA significantly surpassing our estimates at Rs 705 million (up 16% QoQ). We estimate FY09 organic topline and bottomline growth of about 40% and believe the company will maintain the momentum in FY10 as well. The added growth opportunities from Criticare will likely bolster organic growth. We continue to believe in the large global opportunity in medical devices. We raise our FY10 and FY11 earnings estimates by 1-3%, our target price to Rs 216, and maintain 'BUY' rating," says IIFL's report

SKP Securities on Gateway Distriparks - Target Rs 135

SKP Securities has recommended a buy rating on Gateway Distriparks with a target price of Rs 135 in its report.


"Gateway Distriparks Ltd (GDL), a leading provider of port related logistics support services in India, promoted by three business groups based in Singapore and a business group in India. GDL operates container freight station on a pan India basis with strategic locations at JNPT, Chennai, Vizag and Kochi and ICDs located at Garhi Harsaru and Ludhiana. This presence enables it to cater to the West coast traffic, demand from the Northern hinterlands as well as the east coast traffic. We believe that GDL Ltd is the strongest player in CFS business, led by its strong presence and continuing growth momentum. We expect GDL to post revenue at CAGR of 18% aided largely by higher growth coming from its rail business and new ICDs capacity addition. At current market price of Rs. 92.5/-, the stock is trading at a P/E of 10.2x of FY 11E earnings and EV/EBITDA of 5.5x of FY11E. We hereby initiate coverage on GDL Ltd. and recommend buy rating with a target price of Rs 135/- (46% upside) in 12 months," says SKP Securities' report.

ULJK Securities on Welspun Guj - Target Rs 295

ULJK Securities has maintained its buy rating on Welspun Gujarat Stahl Roh with a target of Rs 295 in its report.



“Welspun Gujarat Stahl Rohren Ltd (WGSRL) is one of the biggest SAW pipe companies in Asia and one of the top 3 companies in the world with regard to the completion of challenging and extremely critical projects. For the annual year ended FY2009A, WGSRL recorded 43.7% growth in Net Sales. Net Sales for the year stood at Rs 57,395.2 million. The net profit was down by 37.3% to Rs 2,135.1 million when compared with FY 2008A. The company plans to demerge Plate cum Coil mill into a 100% subsidiary. WGSRL will own 100% of this demerged entity. We retain Buy with a target price of Rs 295 per share. At this price, the stock will discount FY2010E earnings by 14 times," says ULJK Securities' research report.

Stock views on Gujarat Industries Power Co, Opto Circuits, Sesa Goa

IIFL on GIPCL - Target Rs 130

IIFL has maintained its buy rating on Gujarat Industries Power Co. (GIPCL), with 12-month price target of Rs 130, in its report.

"GIPCL’s proposed 250MW expansion has been delayed, and now the management expects to commission unit-1 in 3QFY10ii as against 1QFY10ii, which is reflected in our forecasts. At CMP, GIPCL is trading at 0.9x FY10ii BV and 10x FY10ii P/E. We maintain 'BUY', with 12-month price target of Rs 130," says IIFL's research report.


Karvy Stock Broking on Opto Circuits - Target Rs 243

Karvy Stock Broking has maintained its buy rating on Opto Circuits, with price target of Rs 243, in its report.


"We maintain our consolidated net sales and net profit estimates for FY10 of Rs 11,140 million and Rs 2,492 million respectively. Although, the company has reported EBITDA margin expansion of 235 basis points in FY09 to 31.7% over previous year, but we maintain our EBITDA margin estimates for FY10 at 28.5%. This will be on account of increase in raw material and administration & marketing cost. The stock is currently trading at a P/E of 12.5x on FY09E EPS of Rs 12.8, and 10.5x on FY10E EPS of Rs 15.2. We maintain our 'BUY' rating on the stock with price target of Rs 243 on 16x FY10E estimated earnings," says Karvy Stock Broking's report.


Reliance Money Sesa Goa - Target Rs 263

Reliance Money has recommended a buy rating on Sesa Goa, with price target of Rs 263, in its report.

"At CMP, the scrip is quoting at an EV/EBIDTA of 1.2x FY11E earnings (Revised Estimate). Considering the rightful canalizing of the cash available yielding better return over what it used to earlier and the improved pricing power due to enhanced volume at disposal, we would like to attribute a better multiple than we had put in our earlier estimates. We recommend a Buy with a price target of Rs 263 at which the scrip will quote at an EV/EBIDTA of 2x," says Reliance Money's report.

Stock Views on RCOM, HPCL, OPTO CIRCUITS

RCOM

CMP: RS 442.25
TARGET PRICE: RS 501

Merrill Lynch has downgraded Reliance Communications from‘buy’ to ‘neutral’on lower than expected earnings due to weak revenues from its fixed wireless division. “The size of PCO (fixed wireless public call offices) revenues comes as a surprise to us,” says Merrill Lynch, adding that the topline and EBITDA was 8% and 11% below its expectations. The foreign brokerage has cut EBITDA forecasts by 10% for the current financial year and by 20% for FY10E “owing to unlikely pick-up in PCO revenues, continuing weak elasticity in mobile min-utes and lower global-biz EBITDA margins, post-Vanco acquisition.” In the first quarter of FY09, RCOM’s overall EBITDA fell 3% QoQ against 8% QoQ EBITDA growth for Bharti, says the report. According to ML, it would be difficult for RCOM to list its tower subsidiary (R-Infratel) and its global business (R-Globalcom) in the current volatile equity environment, owing to complex revenue forecasting and difficult valuation benchmarking. Merrill Lynch has lowered its target price from Rs 725 to Rs 501.


HPCL

ICICI Securities has maintained a ‘buy’ rating on HPCL even after the company reported a recurring loss of Rs 880 crore in the first quarter of the current financial year due to lower than expected subsidy sup-port from the government and upstream companies. The brokerage expects subsidy support to increase over the year as the government has not yet accounted for the Rs 40,000 crore unallocated burden. “Though we continue to believe that the stock may remain subdued in the short term till the government decides the final subsidy burden sharing formula, the company is trading at a significant discount to the replacement value of its asset,” says the report. The brokerage also highlights the fact that risks of further increase in interest costs along with expectations of a fall in refining margins could potentially impact earnings. Positive surprise, however, on higher subsidy sharing by upstream companies and oil bonds could be a boost to stock prices, it adds. Positive news on the E&P front and implementation of subsidy reforms recommended by the Rangarajan Committee could trigger re-rating in the stock, says the report.


OPTO CIRCUITS

CMP: RS 338.35
TARGET PRICE: RS 509

India Infoline has maintained a ‘buy’ rating on Opto Circuits after it reported better than expected results for the first quarter of the current financial year. According to the brokerage, the revenue of the company surpassed its estimate and grew 84% year-on-year. “Even better was the EBITDA margin expansion of 60bps YoY and 284bps QoQ, despite the inclusion of the significantly lower margin Criticare business,” says the report. This, it goes on to add, suggests that the management was able to realise synergies faster than expected. The brokerage has raised its FY09 earnings estimate by 10%. According to the brokerage, the international healthcare business of the company grew 97% in the first three months of the current financial year.