Stock views on Bank Of Baroda, Bajaj Auto

Karvy Stock Broking on Bank Of Baroda - Target of Rs 295

Karvy Stock Broking has maintained its buy rating on Bank Of Baroda with a price target to Rs 295 in its research report.

"We are revising our FY2009 restructured standard assets from Rs 3.8 billion to Rs 30 billion as we believe that BOB's corporate loan portfolio has deteriorated and many of the bank's corporate customers have requested for restructuring their standard loans. As a result our ABV for FY2009 has been revised downwards to Rs 257 from our earlier estimate of Rs 302 and our FY2010 ABV has been revised to Rs 321 from Rs 368. We are downgrading our price target to Rs 295 from Rs 335 to factor the deteriorating economic environment. We continue to maintain our Buy recommendation," says Karvy Stock Broking's research report.

Sharekhan on Bajaj Auto - Target of Rs 640

Sharekhan has maintained its buy rating on Bajaj Auto with a price target of Rs 640 in its research report.

"We believe that due to the tough environment it will not be very easy for BAL to regain its market share despite the new launches. However, with stronger exports, we expect the company to record a sales growth of 9% in FY2010. Though in future the sales performance will be much dependent on the success of its new launches, the company should be able to clock a moderate sales growth from the next quarter onwards. The short-term outlook continues to be weak, with the present BAL brands not performing as well as expected and the company losing out market share to Hero Honda and the other players."

"Overall, the BAL stock may underperform in the short term on account of the uncertainties and concerns discussed in this note. We believe that the valuation gap with Hero Honda is likely to narrow down as things improve from Q1FY2010 onwards. We maintain our Buy recommendation on BAL with a price target of Rs 640," says Sharekhan's research report.

PINC on Bajaj Auto - Target of Rs 669

PINC Research has recommended a buy rating on Bajaj Auto with a target price of Rs 669 in its research report.

"Over the last two years, Bajaj Auto has disappointed the market with declining volumes. However despite lower volumes, we see profitability of the company to improve from the current levels. We upgrade our recommendation on the stock to ‘BUY’ with a target price of Rs 669 discounting FY10E earnings 10x," says PINC's research report.

Stock views on Crompton Greaves, Indian Overseas Bank, Patel Engineering

IIFL on Crompton Greaves - Target of Rs 151

IIFL has recommended an add rating on Crompton Greaves with a target price Rs 151 in its research report.

"We met Crompton’s management post the announcement of share buyback and investment in group company Avantha Power & Infrastructure Ltd (APIL). The management views these initiatives as the best use of cash on the parent balance sheet, as the company has slowed down its own capex plans. These two initiatives would result in cash outflow of Rs 4.51 billion during FY10."

"Deleveraging the subsidiary balance sheets or cash conservation in a downturn would have been a more prudent strategy, in our view. However, the management was sanguine on the outlook of both domestic and overseas power T&D businesses and expressed confidence on the cash generation ability of existing businesses. In our view, more clarity on APIL’s financial details and development plans would be required to improve investor sentiment on the related party transaction. "ADD" target price of Rs 151," says IIFL's research report.

Sunidhi Securities on IOB - Target of Rs 60

Sunidhi Securities & Finance has recommended a buy rating on Indian Overseas Bank with a price target of Rs 60 in its research report.

"Indian Overseas Banks' total business as on December 31, 2008 rose from Rs 1,33,413 crore as at end December 2007 to Rs 1, 62, 575 crore-a growth of 22%. Total deposits grew by 15% to Rs 90, 866 crore from Rs 78, 791 crore. Advances spurted 31% in Q3FY09 to Rs 71, 709 crore from Rs 54, 6222 crore (YoY). As at December 31, 2008 IOB’s CASA (current accounts saving accounts) is marginally down to 29.23% from 30.93% (YoY)."

"During Q3FY09, total income rose 40% to Rs 3204 crore and net profit by 26% to Rs 388 crore. NIM and NP margin stood at 3.14% % and 12.4% respectively. Its balance sheet grew by 31% to Rs 19, 747 crore (YoY). We recommend BUY with a target of Rs 60 in the medium term," says Sunidhi Securities & Finance's research report.

Karvy on Patel Engineering - Target of Rs 305

Karvy Stock Broking has maintained its buy rating on Patel Engineering Company with a price target of Rs 305 in its research report.

"Patel Engineering has bagged an order worth of Rs 7.99 billion from the Narmada Valley Development Authority for Bargi Diversion Project in joint venture with SEW Construction Ltd. The company's stake in the project would be around 60% which will translate the order inflow of Rs 5 billion. The project would be executed in three years and provide the EBIDTA margin of around 15%. We have excluded the real estate value from our valuation due to no clarity on development plans and revise the price target downward. We have valued the core business of the company using EV/EBITDA methodology by providing 20% discount to its historical trough multiple of 5.5x. We re-iterate our BUY rating with downgraded price target of Rs 305," says Karvy Stock Broking's research report.

Sharekhan views on Tata Tea, Sun Pharmaceutical, Crompton Greaves

Sharekhan on Tata Tea - Target of Rs 853

Sharekhan has maintained its buy rating on Tata Tea with a price target of Rs 853 in its research report.

"In line with the strategy, Tata Tea, together with European Bank of Reconstruction and Development (EBRD), has decided to acquire a 51% stake in Grand, a leading player in the Russian economic beverage segment. Tata Tea (through one of its overseas subsidiaries) and EBRD will hold a 33.2% and a 17.8% stake respectively in the company. The balance 49% stake will remain with the founding promoter of the company (Dr Alexander E Borisov)."
"With tea volumes growing moderately in the domestic and international markets, we expect Tata Tea’s new initiatives, such as the launch of green and herbal tea, the foray into non-carbonated beverage segment and the entry into new geographies, to drive growth at the consolidated level going forward. However, in the near term, the company’s profitability would remain under pressure, as the prices of its key raw materials (especially raw tea) shall remain firm. At the current market price, the stock trades at 8.7x its FY2010 earnings estimate and EV/EBIDTA of 3.2x. We maintain our Buy recommendation on the stock with a price target of Rs 853," says Sharekhan's research report.

Sharekhan on Sun Pharmaceutical - Target of Rs 1295

Sharekhan has maintained its buy rating on Sun Pharmaceutical Industries with a price target of Rs 1,295 in its research report.

"Sun’s domestic business has clearly outpaced the industry by registering a +17% growth in M9FY2009 vs a 12-14% industry growth in the same period. With a strong field force, a robust pipeline of new launches, strong product portfolio and a firm foothold in the domestic market, Sun expects its domestic formulation business to continue to outpace the industry growth of 10-12%. At the current market price, Sun Pharmaceutical Industries is valued at 12.6x FY2009E and 14.1x FY2010E fully diluted earnings. Uncertainty on the Taro acquisition and Caraco’s warning letter would remain as an overhang on the stock and cap the near-term upside. We maintain our Buy recommendation on the stock with a price target of Rs 1,295," says Sharekhan's research report.

Sharekhan on Crompton Greaves - Target of Rs 157

Sharekhan has maintained its buy rating on Crompton Greaves with a price target of Rs 157 in its research report.

"Crompton Greaves Ltd (CGL) has emerged as a strong power T&D product and service provider in the past few years, thanks to the acquisitions made globally. The stake purchase in APIL will squeeze the company’s plan to make any further acquisitions in the near term. Further, the diversification into the power business may be remunerative only in the longer term as any meaningful returns may flow in only after three to four years. This will suppress the company’s RoE in the near term, thereby exerting pressure on the stock’s valuations.
We remain positive about CGL’s business and operational efficiencies as CGL has performed consistently on these parameters. We have revised our price target for the stock to Rs 157 (9xFY2010E earnings) mainly to capture the lower returns expected after the investment in APIL. We are maintaining our Buy recommendation on the stock as its current valuation of 6.1x FY2010E earnings per share (EPS) is attractive. However, the stock may underperform in the near term as the proposed investment in a group company is sentimentally negative for the stock," says Sharekhan's research report.