Stock vews on Suzlon, Dishman Pharma, 3i infotech

Prabhudas Lilladher on Suzlon - Target Rs 113

Prabhudas Lilladher has maintained its accumulate rating on Suzlon Energy with a target price of Rs 113 in its research report.

"Suzlon Wind (excl. Hansen & REPower) de-grew by 44%% YoY to Rs 11.6 billion in Q1FY10 as it sold only 123MW as against 338MW in Q1FY09. Since Suzlon is actively looking to sell in part or the entire stake in Hansen, we have done a SOTP, wherein we have assigned a value of Rs 23 per share (20% discount to market price) for its entire Hansen stake. Also, the target P/E of 10x FY11E earnings for the consolidated entity (Suzlon Wind and REPower) gives us a target price of Rs 113. We maintain an ‘Accumulate’ on decline rating," says P Lilladher's research report.


Reliance Money on Dishman Pharma - Target Rs 221

Reliance Money has maintained its buy rating on Dishman Pharmaceuticals & Chemicals Ltd with a price target of Rs 221 in its report.

"Dishman Pharmaceuticals reported below expected revenues by declaring 4% fall to Rs 2281 million primarily due to lower take-off of Eprosartan (which normally contributes around 17% of total revenue) by Solvay as it was undergoing a inventory rationalization (that resulted in 40% fall in Dishman’s domestic CRAMS operation).With a stronger operational and financial outlook, we maintain our positive stance on Dishman."


Sushil Finance on 3i infotech - Target Rs 116

Sushil Finance has recommended a buy rating on 3i infotech with a target of Rs 116 in its report.

"Given the current uncertain and challenging environment, 3i infotech has delivered a muted performance during Q1FY10. However, the Company is much better placed as compared to many of its peers and it has a good business balance in terms of geographical spread & portfolio of offerings. The recent acquisition of JP Morgan Treasury Services’ National Retail Lockbox Business (NRLB) by its subsidiary, Regulus Group is also a strategic move and expected to help 3i achieve operational efficiencies and drive value within its Transaction Services Revenue chain."

Stock views on Suzlon Energy, KEC International, Mphasis

Anagram Research on Suzlon Energy - Target of Rs 60
Anagram Research has recommended a buy rating on Suzlon Energy with a target price of Rs 60 in its research report.

"In the last 2 years, Suzlon has traded in the range of 16 to 65 times its earnings. Whereas Vestas and Gamesa have traded in the range of 25 to 73 and 24 to 42 respectively. Historically the companies in the wind energy market have traded at high P/E levels primarily due to expected high growth of the industry. Furthermore the recent decline in the stock price of Suzlon presents an excellent opportunity for investment in the company."

"We believe Suzlon will continue to command high P/E on account of better growth prospects, well placed among peers & due to planned backward integration leading to higher margins in the future. We believe most of the bad news has already been factored in the stock price. While the long term story for the Wind Energy sector is intact and Suzlon has done well to survive amongst adversity. We recommend BUY rating on the stock with a target price of Rs 60 in 12 month period," says Anagram's research report.


Bonanza on KEC International - Target of Rs 147

Bonanza has recommended investors to buy KEC International on dips near 105-110 levels, for a target of Rs 147 in its research report.

"A RPG group company KEC is leading tower & transmission line EPC contractor. The Power sector is its main customer. It has order book of Rs 5000 crore, out of which over 70% is from overseas. It is executing orders in 15 countries presently. Given the visibility in earnings the scrip looks a good mid-term investment pick. At CMP, it trades at about 5.5 PE based on FY 09 Estimated EPS of Rs.21.7. Investors can buy on dips near 105-110 levels i.e. 5X PE, for a target of Rs 147 i.e. at PE multiple of 7," says Bonanza's research report.


Emkay Global on Mphasis - Target of Rs 240

Emkay Global Financial Services has maintained its buy rating on Mphasis with a price target of Rs 240 in its research report.

"Mphasis’s strong parentage of HP-EDS has helped it sustain high growth rates in the recent past and we believe that would continue to provide strong support in a tough demand environment. We highlight that Mphasis’s ITO business’s growth is driven by restructuring of EDS’s existing ITO contracts as the new contracts incorporate significant offshore ramp up in Infrastructure outsourcing."

"We highlight that the erstwhile EDS management (prior to the HP takeover) had categorically attributed its improved success rate in new deal wins/renewals to Mphasis’s offshore strength and had indicated that those deals had a substantial offshore component. We believe Mphasis remains the ‘Best Demand’ story in a tough macro environment helped by it’s strong HP-EDS parentage. Maintain BUY with a price target of Rs 240," says Emkay Global Financial Services' research report.

Indiabulls Securities views on Patni Computer Systems, Suzlon Energy, Mphasis

Indiabulls Securities on Patni - Target of Rs 123

Indiabulls Securities Research has maintained its buy rating on Patni Computer Systems with a target price of Rs 123 in its research report.

"Patni Computer System (Patni)’s result for CY08 was in line with our estimates. For Q4 CY08, Patni reported 6.7% qoq growth in net sales to Rs 8.5 billion, largely helped by the sharp depreciation of the rupee vis-à-vis the dollar. However, revenues went down by an expected 3.9% qoq, in USD terms, due to the global slowdown. The EBITDA margin declined 874 bps to 10.9%, owing to a weak operational performance during the quarter. Nonetheless, Patni remains an attractive value pick, considering its low EV/EBITDA. Besides, the Company has a high investment portfolio & cash position, which will work as a strong base for its stock price. Although we have reduced our target price (TP) to Rs 123 from Rs 142, we maintain our Buy rating on the stock," says Indiabulls Securities' research report.


Indiabulls Securities on Suzlon Energy - Target of Rs 53

Indiabulls Securities Research has recommended a buy rating on Suzlon Energy with a target price of Rs 53 in its research report.

"Suzlon Energy Ltd. (SEL) reported a strong operating performance during Q3’09. Net sales for the Company (Wind Group and Hansen) increased 56.2% yoy to Rs 49.5 billion, mainly on account of better sales realisations and increased sales volumes. EBITDA increased 64% to Rs 6.4 billion due to a decline in raw material costs and a 21% yoy increase in the average realisation rate."

"Though our near-term outlook for the Company has weakened because of the prevailing slowdown, we believe that the current market price more than factors the negatives. Based on our valuation, we have arrived at a target price of Rs 53 (assuming an 11.2% WACC and a 5% terminal growth rate). Since our target price provides an upside potential of 36% from the CMP, we give a Buy rating," says Indiabulls Securities' research report.


Motilal Oswal on Mphasis - Target of Rs 200

Motilal Oswal has maintained its buy rating on Mphasis with target price of Rs 200 in its research report.

"Mphasis reported QoQ revenue growth of 9.3% at Rs 9.8 billion v/s our estimate of Rs 9.6 billion for the quarter ended January 2009. The company has changed its financial year to Y/E October, in line with HP’s reporting cycle. EBIT margin at 21.5% was up 260bp QoQ. PAT at Rs 2.1 billion grew 15% QoQ with PAT margin expansion of 100bp QoQ to 21.5%. Forex gains were Rs 30.9 million in 1QFY09 v/s Rs 149 million in 4QFY08. Tax rate at 3.2% was lower than 2.8% in 4QFY08."

"Mphasis has displayed impressive execution since the last few quarters with 1] robust operating margin expansion, 2] improvement in billing rates in an environment of high pricing pressure, 3] improvement in utilization. We believe Mphasis would benefit from its strong parentage (HP and EDS) and presence in offshorable service lines like BPO, infra and application maintenance services in the near future. Maintain Buy, target price of Rs 200," says Motilal Oswal's research report.

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 ONGC, Shree Renuka Sugars, Suzlon Energy, Tata Power, ESSEL Propack

CITIGROUP on ONGC

CITIGROUP maintains ‘buy’ rating on Oil & Natural Gas Corporation (ONGC) with a target price of Rs 850. Citigroup has adjusted its estimates for ONGC on the back of a revision in its global oil forecasts to $101/bbl ($105/bbl earlier) for ’08E, $65/bbl ($90/bbl) for ’09E, $75/bbl ($90/bbl) for ’10E, $80/bbl ($95/bbl) for ’11E, and long-term crude assumption (’12E onwards) at $85/bbl ($100/bbl). Despite significant weakening in crude prices recently, FY09E net realisations are unchanged at $52.5, given lack of clarity on subsidy-sharing for the rest of FY09 (assumed at Rs 47,000 crore, higher than the cap). However, the continued weakness in the rupee offers some cushion to FY09 estimates. The target price is based on price-to-earnings (P/E) multiple of 7x FY09E. This is at the lower end of ONGC’s historical trading band of 7-12x, which adequately captures: (i) Lack of clarity on subsidy-sharing for the rest of FY09 and FY10-11; (ii) The government’s attitude towards retail price cuts in the next three months; and (iii) Likely policy direction of the next government in FY10.

MERRILL Lynch on Shree Renuka Sugars

MERRILL Lynch has cut its target price for Shree Renuka Sugars by 56% to Rs 71 per share. The reduction is due to: (1) 20% cut in FY09E earnings per share (EPS) on account of higher interest and sugarcane costs; and (2) Cut in price objective (PO) basis to 6x FY09E EV/EBITDA, equivalent to the long-term average of the sector since 1996. The key driver for ‘buy’ rating is the likelihood of 117% growth in FY09E EPS. Merrill Lynch expects FY09 EPS to double on: (1) 54% increase in sugar sales to 0.9 million tonnes, including 0.35 million tonnes from the Haldia sugar refinery; (2) 35% increase in sale of power; (3) Doubling of ethanol sales to 120 million litres; and (4) Jump in cane crushing capacity by 49%. However, Merrill Lynch has cut FY09E EPS by 20%, driven by the likely rise in sugarcane cost to Rs 1,500/tonne in FY09E, compared to the previous assumption of Rs 1,400/tonne. Shree Renuka Sugars may go slow in setting up its proposed Rs 350-crore white sugar refinery at Mundra to avoid a cash crunch following refinancing of Rs 120 crore worth of longterm loans. This could also mean no dilution in equity in FY09E from conversion of 20 million warrants issued to promoters at Rs114 per share, contrary to Merrill Lynch’s earlier assumption.

MORGAN STANLEY on SUZLON ENERGY

WITH the massive downturn in oil prices, delay in renewal of permit to construct (PTC) in the US, and difficulty in financing wind power projects, Morgan Stanley has lowered its growth forecast for the wind energy sector to 5% for ’09E. On the back of low visibility in a slowing market, Morgan Stanley has cut its volume estimate for Suzlon Energy by 17% and 24% in FY09 and FY10, respectively, resulting in a 29% and 40% drop in EPS in that order. Suzlon has decided not to try to exercise the domination and profit transfer agreement with REpower, due to opposition from lenders who will be financing the next rounds of growth for REpower. However, with Suzlon struggling to bag any orders in the past six months, Morgan Stanley believes that the next stage of growth in Suzlon will be powered by REpower’s technology (3-mw, 5-mw and 6-mw turbines), which looks unlikely in the short term. With the cancellation of the rights issue, debt will become the primary source of funding Suzlon’s growth. Morgan Stanley believes that Suzlon is correct in trying to delay the purchase of Martifer’s stake in REpower and cutting back on capital expenditure (capex).

UBS INVESTMENT on TATA POWER

UBS Investment has downgraded Tata Power to ‘neutral’ rating with a target price of Rs 825. UBS has cut its target price by 36% as Tata Power’s stake in two Indonesian coal mines is not value-accretive at the current market price (CMP) of Bumi Resources. In the past three months, Tata Power has corrected 30% and UBS still doesn’t think the valuations are attractive enough in the absence of a clear driver for the stock. In UBS’ view, a long-term coal price of $65/tonne, which is a reasonable assumption, will imply a fair value of Rs 1,300 for Tata Power. However, UBS has arrived at a target price of Rs 825 if it uses Bumi’s CMP of Rs 1,450. The fair value for Tata Power is Rs 1,015, if it uses UBS’ target price on Bumi (Rs 3,000). Bumi’s covering analyst at UBS, Andreas Bokkenheuser, has cut his coal price estimates to $75/79/80 per tonne from $79/112/125 per tonne for CY08/09/10, respectively. After incorporating these changes in UBS’ Tata Power estimates, the company’s revenues are lower by 2-10% over FY09-11E and EPS by 19-46% to Rs 57.6/62.7/84.6 for FY09/10/11E, respectively.

GOLDMAN SACHS on ESSEL PROPACK

ESSEL Propack recorded a net loss of Rs 26.6 crore on a consolidated basis for the first three quarters of ’08, mainly due to operational inefficiencies at its plastic tube operations in Europe and the US, compounded by slower growth in its target markets. A steep increase in polymer prices in H108 had a significant impact on the company’s margins. However, polymer prices have reduced by more than 40% since their July ’08 peaks and the company is set to benefit from this in subsequent quarters. Goldman Sachs foresees the company returning to profitability only in the second half of ’09, driven by a decrease in raw material prices and improved efficiency levels at its overseas subsidiaries. Given the pressure on margins, Goldman Sachs is lowering its 12-month target price to Rs 19 (from Rs 40), which implies a potential upside of 41% from current levels. The target price is derived using a discounted cash flow (DCF) methodology with a cross-check against three shorter duration ratios. The stock currently trades at a ’09 P/E multiple of 7.5x. Goldman Sachs believes current valuations adequately reflect the business prospects of the company and maintains ‘neutral’ rating on the stock.

Stock views on ING Vysa Bank, Suzlon Energy, Balrampur Chini, Shobha Developers

ENAM Securities on ING Vysa Bank - Target RS 240

ENAM Securities has retained its “outperformer” rating on the stock with a price target of Rs 240, following robust second quarter numbers. “ING Vysya registered a 43% year-on-year growth in net interest income to Rs 1.56 billion driven by 26% growth in advance and 43-basis point improvement in NIM to 2.87%. The bank has shown a strong growth in NII over the past few quarters and the fee income growth is also impressive,” the Enam note to clients said. “While the tier-1 capital at 7% is bit of a constraint, the bank can still do well this year, even without raising any additional capital. The stock quotes at one time FY09(estimated) book value and 6.9 times FY09 earnings and is attractively valued,” the note added. While the stock has corrected significantly, given the multiple uncertainties, we believe it is best to stay away at this point, it goes on to add.

Morgan Stanley on Suzlon Energy - Target RS 52.45

Morgan Stanley has “downgraded” Suzlon Energy from overweight to equal-weight while lowering the price target to Rs 52.45 from the earlier Rs 450, citing slowdown in the global wind turbine market and the unresolved technological issues. “We expect a slowdown in the global wind turbine market in C2009, with growth moving down to only 6% from 25% in C2008,” says the report. Further, the foreign brokerage also does not expects Suzlon “to get access to REpower technology in the short term.” Morgan Stanley also feels that with the cancellation of the rights issue of the company, debt will become the primary source of funding the growth at Suzlon. “We believe that Suzlon is doing the right things... trying to delay the purchase of Martifer’s stake in REpower and cutting back on capex,” says the report. However, on our reduced numbers, we still perceive risk to Suzlon’s debt covenants. If the Martifer stake purchase cannot be pushed back, we expect Suzlon to breach its debt covenants, potentially resulting in punitive action from lenders, it adds.

ICICI Securities on Shobha Developers

ICICI Securities has maintained a “buy” on Sobha Developers after the company’s second quarter results were in line with expectations with revenues and PAT dipping 10% Y-o-Y and 13% Y-o-Y to Rs 2.9 billion and Rs 490 million, respectively. The brokerage, however, has downgraded the company’s NAV owing to sluggish sales and stretched balance sheet. According to the brokerage, the company is facing headwinds in the form of downturn in realty and strained balance sheet. “The debt level has increased three times to Rs 19 billion in one year, and new sales and project launches have slowed down. We lower FY09(estimated) NAV estimate to Rs 282/share (target price at Rs 169/share), assuming 25% drop in selling prices and increased timelines by 8-10 years (reducing development pipeline 55-65%). ICICI Securities has also lowered FY09E & FY10E earnings estimates by 51% and 71%, respectively. Sobha’s balance sheet is stretched and any respite through the proposed rights issue of Rs 3.5 billion will be temporary unless housing demand picks up, it adds.

Merrill Lynch on BALRAMPUR CHINI

Merrill Lynch has maintained an “underperform” rating on Balrampur Chini Mills while lowering the price target from Rs 56 to Rs 43. The brokerage’s revised price target is based six times FY09 (estimated) EV/EBITDA, which is equivalent to the long-term average of the sector since 1996, excluding periods of very low or negative profit. “Our price objective cut is driven by 17% cut in FY09E EPS and 6% cut in our target valuation multiple,” says the report. According to Merrill Lynch, key factors driving the earnings cuts are “4% higher sugarcane costs, 18% higher interest costs and 7% lower sugar sales volumes”. We expect the company’s earnings to remain under pressure due to fall in availability of sugarcane, the key raw material, adds the report.

Stock Views on Balrampur Chini, Suzlon Energy, GE Shipping

HDFC Securities on Balrampur Chini - Target of Rs 126
HDFC Securities has maintained its buy rating on Balrampur Chini Mills with a target of Rs 126 in its October 8, 2008 research report. "We have valued the stock on 7x EV / EBIDTA for CY10E (9.6x CY09E), with a target price of Rs 126, an upside of 90% over the CMP. Our bull case target is Rs 188 (upside of 184%) and bear case target price is Rs 77 (upside of 16% from current levels). We have based our valuation on a) Uptrend in sugar cycle resulting in higher realisation for sugar and by products b) Lower interest and deprecation burden c) Strong EPS growth of Rs 4.7 to Rs 9.8 from CY08E to CY10E at a CAGR of 44%. We maintain our Buy rating and target price of Rs 126 on the stock," says HDFC Securities' research report.

Nirmal Bang on Suzlon Energy - Target of Rs 194

Nirmal Bang has assigned a buy rating on Suzlon Energy with a target of Rs 194 in its October 7, 2008 research report. "We expect Suzlon to report a CAGR of 38.5% during FY08 to FY12E in net sales on the back drop of strong order book position and significant expansion plans of the company. These coupled with unprecedented demand for wind energy will drive growth for the company going forward. We expect Suzlon to report net profit CAGR of 54.7% during FY08 to FY12E. We assign a buy rating on the stock with the target price of Rs.194.0 per share which is 12X FY10 Diluted EPS of Rs 16.16 implying an upside of 52.6% from current levels," says Nirmal Bang's research report.

PINC Research on GE Shipping - Target of Rs 407

PINC Research has recommended a buy rating on Great Eastern Shipping Company with a target of Rs 407 in its October 13, 2008 research report. "Recently, its wholly owned subsidiary Greatship (India) Ltd. (GIL) formed a joint venture with Norway based DOF Subsea (world’s leading subsea project player) to explore opportunities in deep sea projects off the east coast of India. We believe that its expansion will improve the quality of earnings by enhancing the presence of offshore segment to total earnings."

"Based on SOTP calculations, we have arrived at a fair value of Rs 582 per share in FY10. We have further discounted the fair value by 30% to reflect trough valuations. Hence, we initiate coverage with a ‘BUY’ recommendation with a price target of Rs 407 on an 18 month investment perspective," says PINC's research report.

Stock views on IVRCL, Suzlon Energy

Citigroup on Suzlon Energy

Citigroup Global Markets has maintained its ‘sell’ rating on the stock saying the company’s international expansion drive has taken its toll in the form of supply delays; tower shortages in the international markets; key component shortages; and negative effects of foreign currency movements and nacelle custom duty changes in the US. According to Citi, mediumterm like commodity price increases; delays in Suzlon’s WTG capacity ramp-up; the possibility of PTC not being extended; and further provisions for blade damage problems may weigh heavily on the stock’s performance. “The target price is based on 17 times December ’09E EPS (earnings per share), the low end of Suzlon’s 05-08 P/E (price to earnings) range of 17-47 times, given concerns about Suzlon’s S88 WTG,” said Citi in a note to its clients. “The recent EME (Edison Mission Energy) order cancellations and availability issues have taken the stock to its trough valuation of 17 times oneyear forward earnings,” the note said.

Prabhudas Lilladher on IVRCL

Broking house Prabhudas Lilladher has maintained its ‘buy’ rating on the stock saying stock is attractively valued at 14.5 times FY09 (estimated) earnings and 11.2 times FY10E earnings at the current market price. “We expect the company to register a CAGR (compound annual growth rate) of 32% and 25% in revenues and PAT (profit af-ter tax), respectively, for FY08-10(estimated),” said the broking house in a note to its clients. According to the broking outfit, a substantial order book growth would be the primary driver of revenues for the company. “The order book as on May 2008 stood at Rs 12,200 crore (year on year growth of 71%) as against Rs 7100 crore. On account of focus on cash contracts, IVRCL enjoys a healthy order book position amongst the peers,” the note said. IVRCL has improved upon its Sales/WC (working capital) ratio at 1.9 times as against 1.7 times in FY07 and is expected to maintain the same, says the broking house.

Stock Views on DLF, Suzlon Energy, Sesa Goa, GAIL

DEUTSCHE Global Markets view on DLF - Ratings Hold

DEUTSCHE Global Markets Research has downgraded its ratings on DLF to “hold” because of weakening demand, falling property prices and tight financial markets. The firm has reduced its revenue forecasts for the company for the next two years to 19% and 25% owing to delay in execution of the projects, lower product prices across verticals, and deterioration in product mix in favour of low-margin mid-end housing. Increase in construction costs and other expenses (staff, SG&A) due to new launches, says Deutsche Global, has lead to significant margin compression. Hence the firm has cut profit estimates of the company by approximately 24% and (approx.) 29% for the next two years. Deutsche has reduced the NAV (net asset value) per share from Rs 700 to Rs 532.

MERRILL Lynch on SUZLON ENERGY - Rating Buy

MERRILL Lynch has maintained its “buy” rating on Suzlon saying the company remains on track for material scale-up in operations across the wind turbine value chain. Suzlon, says the Merrill note, has pre-poned its purchase of Martifer’s 22.48% stake in REpower for a pre-determined price of 270 million pound sterling. “This acquisition shall consolidate Suzlon’s holding in REpower to (approx.) 90%, enough to press for a domination agreement, which is key for integrating REpower and derive synergy benefits from a unified product and market strategy,” the note said. Merrill has valued Suzlon’s wind business at 18.5 times estimated 1-year-forward earnings, at Rs 296 per share. “This is conservative given it is 20% and 25% discount to its current PER (price to earning) and peers respectively. Suzlon’s 71.3% stake in Hansen is valued at Rs 76 per share at 10% discount to the price objective of 330 pence,” the note added.

CITI Investment on SESA GOA - Rating Sell

CITI Investment Research has initiated coverage on Sesa Goa with a “sell” recommendation saying that most positive triggers for the stock are already priced in. The future iron ore price hikes, says Citi, are expected to be substantially lower relative to FY09 and risks of government intervention to contain inflation remain as downside risks for the stock. At the price target of Rs 145, the note says, Sesa Goa would trade at 3.8 times 12-month forward PE (price-to-earning). “The PE multiple is at a discount to global majors (forward PE of around 7-9 times), justified given their relative size, diversified product mix and higher market cap,” the Citi note said. Sesa Goa, says Citi, has significant growth plans and is part of an industry with strong pricing power.

ICICI Securities on GAIL - Rating Buy

ICICI Securities has maintained its “buy” rating on the stock saying the company will benefit from gas grid expansion and improved visibility on gas supply. Post-commencement of NGG (national gas grid) operations, says ICICI Securities, GAIL’s returns may settle below its recent average as the future growth will likely be skewed toward annuity earnings from transmission. “Assuming the absence of growth in the existing business beyond FY11E, GAIL’s RoCE (return on capital employed) is likely to be 16.4% in FY16E versus 14.8% in FY09E,” the note said. ICICI Securities expects GAIL’s EBITDA CAGR (compound annual growth rate) at 12.3% and net income CAGR at 8.6% over FY08-11E, driven by gas transmission business, expected to grow at 16% revenue CAGR through FY08-11E (estimated).