Sunil Hitech Engineers

As investments in the power sector is gathering pace, there is dearth of companies who can provide engineering services required to build the power plants. Sunil Hitech, which is in the fabrication, erection and commissioning work, has been a key beneficiary of this demand. No wonder, the company currently has an order book of Rs 2,062 crore, which is 3.5 times its 2008-09 revenues and provide visibility for the next two years. As a result of its efforts to move up the engineering value chain, the company has bagged balance of plant (BOP) power projects from Mahagenco and L&T. The advantage of this move is that the company not only qualifies for BOP contracts of up to 250 MW, it can also eye for large size projects in this segment and garner higher revenues. Sunil Hitech’s stock is currently trading at a PE multiple of 8 times which is attractive for acompany, which is operating in a growing industry and is expected to report strong growth in earnings over the next two years. Historically, the company’s stock has been trading in the range of 10-22 multiples, which is higher as compared to its current PE. The gains from an investment in this stock could come from growth in earnings as well as a possible rerating.
With inputs from Sarath Chelluri the company is now moving into other states on the back of its increased scale and bidding capacity. The stock is trading at Rs 187, which discounts its 2010-11 estimated earnings by 5.5 times. The valuations are reasonable for a company which is operating in a fast growing industry. Strong order book, high revenue growth, good margins, robust return ratios, regular dividends and low debt-equity are among key factors that make agood case for investment in this company.

Stock views on Sunil Hitech Engineers, Suzlon, GSK Pharma

Angel Broking on Sunil Hitech - Target Rs 11

Angel Broking has a buy recommendation on Sunil Hitech with target price of Rs 111 in its research report.

"Sunil Hitech Engineers (SHEL), enjoys a strong order book position of Rs 1,298 crore or 4x its FY2008 revenue. This strong order book position provides high revenue visibility for the company over the next two years. Over FY2008-10E, we expect SHEL's net revenue to clock a CAGR of 45% on a robust order book size of Rs 1,298 crore. We expect the company's operating profits to post a CAGR of 37% to Rs 92.4 crore during the mentioned period. Going ahead, we expect the company to post 23% CAGR in net profit on the back of better operational performance and decline in Interest rates. We initiate coverage on the stock, with a Buy recommendation and Target Price of Rs 111, implying an upside of around 76% from current levels," says Angel Broking's research report.

IIFL on Suzlon - Target Rs 50

IIFL has maintained its add rating on Suzlon with a target price of Rs 50 in its research report. "REPower (73.71% owned by Suzlon) has won the largest contract in the offshore wind energy space so far a Euro 2 billion framework contract from RWE Innogy. This contract reinforces REPower’s strength in the offshore market and enhances visibility for its offshore business. However, with installation of its machines scheduled to commence from CY11, we expect no material impact of this contract in the short term, ADD, target of Rs 50," says IIFL's research report

IIFL on GSK Pharma - Target Rs 1265

IIFL has maintained its add rating on Glaxo Smithkline Pharma with a price target to Rs 1265 in its research report. "Glaxo’s 4QCY08 results were marginally below our expectations, mainly on lower EBIDTA margin, which declined 175 bps YoY and 869 bps QoQ to 28.4%. Revenues came in line with our expectation at Rs 3,685 million, up 8.7% YoY but down 19.4% QoQ (the December quarter has been historically weak for Glaxo). For the full year CY08, revenues grew 10.1% on like-to-like basis and adjusted net profit grew 12.1%. We believe that new product launches under patent protection will help Glaxo maintain its growth rates in the foreseeable future.

Glaxo has a lean asset base, with most of manufacturing being outsourced. Hence, the company also stands to gain from falling prices of intermediates and APIs. This, we believe, will help the company maintain its EBITDA margin at CY08 levels, even in the event of a slowdown in the domestic market. We maintain our ADD recommendation and raise our price target to Rs 1265," says IIFL's research report.

Stock Views on CEAT, JK Tyre, Sunil Hitech Engineers, Blue Dart, Unichem Labs

Angel on Ceat - Target of Rs 43


Angel Broking has recommended a buy rating on Ceat with a target price of Rs 43 in its November 21, 2008 research report. "The current global economic situation also hampers the possibility of large scale exports, though the global price is higher by Rs 22 per kg (Bangkok — Rs 87) than the price in the Indian market. But, there is no hurry in the industry, especially the tyre manufacturers, to stock rubber heavily. The Tyre industry strongly believes that the price would further decline and Rs 50 seems to be within reach. We recommend a Buy on CEAT with target price of Rs 43," says Angel's research report.


Angel on JK Tyre - Target Rs 57


Angel Broking has recommended a buy rating on JK Tyre and Industries with a target of Rs 57 in its November 21, 2008 research report. "The current global economic situation also hampers the possibility of large scale exports, though the global price is higher by Rs 22 per kg (Bangkok — Rs 87) than the price in the Indian market. But, there is no hurry in the industry, especially the tyre manufacturers, to stock rubber heavily. The Tyre industry strongly believes that the price would further decline and Rs 50 seems to be within reach. We recommend a Buy on JK Tyre with target price of Rs 57," says Angel's research report.


Karvy on Unichem Labs - Target of Rs 270


Karvy Stock Broking has maintained its buy rating on Unichem Laboratories with a target price of Rs 270 in its November 21, 2008 research report. "We have decreased our formulations exports by 9 % to Rs 900 million for FY09 while we have maintained domestic API revenues of Rs 200 million for FY 09 and FY 10 respectively. We have also marginally decreased our R & D expenses for FY 2009 while we increase our personnel expenses for FY 2010 in lieu of higher increment in next year. In FY 2009 the company's personnel cost are not anticipated to increase much as the company's performance was subdued in FY 2008. We have marginally increased our EPS estimates for FY 2009 by 0.8% to Rs 26.3 and have reduced our EPS for FY 2010 by 3.6 % to Rs 34.8. We maintain BUY rating on the stock with a price target of Rs 270 based on 7.75x (FY 2010E EPS Rs 34.8)," says Karvy's research report.


KRChoksey on Blue Dart - Target of Rs 520


KRChoksey Research has recommended a buy rating on Blue Dart Express with a target price of Rs 520 in its November 19, 2008 research report. "Net sales increased 27.8% y-o-y and 8.6% q-o-q to Rs 265.8 crore driven by increase in the average pricing (15-20% in air cargo charges and 10-15% in the ground network service charges). We recommend a BUY on this stock with target price of Rs 520, which represents an upside potential of 21.8%," says KRChoksey's research report.


KRChoksey on Sunil Hitech Engineers - Target of Rs 127


KRChoksey Research has recommended a buy rating on Sunil Hitech Engineers with a target price of Rs 127 in its November 18, 2008 research report. "Net sales surged by 88.7% (YoY) to Rs 131.1 crore in Q2FY09 as against Rs 69.5 crore in Q2FY08. On back of large scale investment in Power sector, integration of company’s business, core competence of management, strong order book and client base, we recommend a BUY on the stock with the target price of Rs 127," says KRChoksey's research report.