Asia's emerging economies will grow robustly into 2012, led once again by China, although troubles in the United States, Europe and Japan will clip their momentum, the Asian Development Bank said in an updated economic outlook released on Wednesday.
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Showing posts with label Trading Tips. Show all posts
Showing posts with label Trading Tips. Show all posts
September 14, 2011
Buy Reliance Capital; target of Rs 420: IIFL 14-sept-2011
IIFL is bullish on Reliance Capital and has recommended buy rating on the stock with a target of Rs 420 in its September 14, 2011 research report.
“The daily candlestick Chart shows Reliance Capital had been on a strong downtrend for past few trading sessions. Infact, the stock has seen a decline from Rs 433 to a low of Rs 390. Since then, the stock has not re-test this low. The daily RSI is exhibiting strong positive divergences. Moreover, on Tuesday, it formed an Inverted Hammer candlestick formation, it occurs mainly at the bottom of downtrend and is a warning of a potential reversal upward. We expect the stock to witness smart pullback from the current levels. Traders can buy the stock above Rs 404 with stop loss of Rs 397 for target of Rs 420,” says IIFL research report.
“The daily candlestick Chart shows Reliance Capital had been on a strong downtrend for past few trading sessions. Infact, the stock has seen a decline from Rs 433 to a low of Rs 390. Since then, the stock has not re-test this low. The daily RSI is exhibiting strong positive divergences. Moreover, on Tuesday, it formed an Inverted Hammer candlestick formation, it occurs mainly at the bottom of downtrend and is a warning of a potential reversal upward. We expect the stock to witness smart pullback from the current levels. Traders can buy the stock above Rs 404 with stop loss of Rs 397 for target of Rs 420,” says IIFL research report.
Buy Ruchi Soya; target of Rs 112.5: IIFL 14-sept-2011
IIFL is bullish on Ruchi Soya and has recommended buy rating on the stock with a target of Rs 112.5 in its September 14, 2011 research report.
“The sideways consolidation in Ruchi Soya has ended after prices surged above the neckline resistance of inverted head and shoulder which was placed at Rs107. The daily RSI despite entering into overbought position is yet to indicate any negative divergence. Infact a positive crossover from RSI indicates renewed buying momentum even at higher levels. Based on the amplitude of inverted H&S, stock is expected to test levels of Rs 116 in the near term. We recommend buying stock in the range of Rs107-107.5 with stop loss of Rs105 for Target of Rs112.5. (Duration 7 days.),” says IIFL research report.
“The sideways consolidation in Ruchi Soya has ended after prices surged above the neckline resistance of inverted head and shoulder which was placed at Rs107. The daily RSI despite entering into overbought position is yet to indicate any negative divergence. Infact a positive crossover from RSI indicates renewed buying momentum even at higher levels. Based on the amplitude of inverted H&S, stock is expected to test levels of Rs 116 in the near term. We recommend buying stock in the range of Rs107-107.5 with stop loss of Rs105 for Target of Rs112.5. (Duration 7 days.),” says IIFL research report.
Buy Petronet LNG; target of Rs 185: IIFL 14-sep-2011
IIFL is bullish on Petronet LNG and has recommended buy rating on the stock with a target of Rs 185 in its September 13, 2011 research report.
“Petronet LNG has signaled a breakout from the range bound movement (Rs170-178) after formation of bullish piercing line on Monday. Yesterday, it also gave a close above its 10-DMA confirming positive formation. The RSI is also trading with positive bias accompanied with positive crossover which supports buying argument in the counter. We advise buying the stock above Rs 179 with SL of 176 for target of Rs 185,” says IIFL research report.
“Petronet LNG has signaled a breakout from the range bound movement (Rs170-178) after formation of bullish piercing line on Monday. Yesterday, it also gave a close above its 10-DMA confirming positive formation. The RSI is also trading with positive bias accompanied with positive crossover which supports buying argument in the counter. We advise buying the stock above Rs 179 with SL of 176 for target of Rs 185,” says IIFL research report.
Buy Corporation Bank; target of Rs 805: Sushil Finance
Sushil Finance is bullish on Corporation Bank and has recommended buy rating on the stock with a target of Rs 805 in its September 09, 2011 research report.
“Corporation Bank (Corp Bank) in Q1FY12 has posted a net profit of Rs.3.52 bn, a modest growth of 5% YoY, mainly dragged by subdued core operations. • During Q1FY12, NII grew by a mere 1.4% YoY and stood at Rs.7.1 bn, mainly dragged by sharper rise in cost of deposit and faster deposit growth (relative to its Advances growth). Its Advances grew 25% YoY (de-grew 9% QoQ), while Deposits grew at 29% YoY (1% QoQ). Its term deposits profile saw a growth of 35% YoY (8% QoQ) while CASA grew by 13% YoY. However, CASA’s share in total deposits fell sharply by 307 bps YoY & 495 bps QoQ, now forming 21% of the total deposits. • The Bank’s non interest income growth at 9% YoY was slower due to lower recoveries from written off accounts and lower treasury income, although its fee income saw a decent growth of 14% YoY. • Its operating expenses grew by 23% YoY due to amortization of provision on employee pension & gratuity. Its Cost to Income ratio increased in the quarter and stood at 43.7% in Q1FY12 as compared to 37.7% in Q1FY11. • The Bank’s total provisions in Q1FY12 increased by 32% YoY to Rs.1.67 bn. This was largely driven by higher provisions on investment depreciation (Rs.706 mn in Q1FY12 as against Rs.76 mn in Q1FY11), alongwith revised provisioning norms mandated by RBI on NPAs & restructured assets, although its incremental slippages remained contained at 0.2% (not-annualised) of Advances for the quarter. The Bank’s Net Profit saw a marginal growth of 5% and stood at Rs.3.52 bn for Q1FY12.”
“In Q1FY12, NIMs sharply fell by 36 bps YoY & 40 bps QoQ and stood at 2.1%, mainly due to higher mobilization of term deposits and higher cost of deposits, leading to a sharp rise in cost of funds. While the Bank intends to maintain its NIMs at nearer to 3% levels, considering the steep QoQ contraction in NIMs in Q1, pressure in core operations and sharp decline in credit-deposit ratio (740 bps QoQ & 420 bps YoY) during Q1, we have incorporated a 34 bps fall in its NIMs for FY12 to 2.18% (from 2.52% in FY11). • Although NPAs increased in Q1FY12, the Bank witnessed a decline in slippage rate to less than 1% at 0.8% (annualized) during Q1FY12 from 1.1% (annualized) in Q4FY11. The bank witnessed some slippages in the agriculture and other priority sector category, while its restructured loan portfolio stood at 4.1% of advances in Q1FY12. • In absolute terms, Gross NPLs increased by 7% QoQ & 17% YoY and Net NPLs increased by 3.5% QoQ & 49% YoY. In percentage terms, its Gross NPLs grew by 16 bps QoQ but fell by 4 bps YoY and stood at 1.1%, while Net NPLs increased 6 bps QoQ & 9 bps YoY, and stood at 0.5% in Q1FY12. Since the Bank has already migrated to 100% system based NPA recognition, no negative surprises expected from that side going forward. • The Bank has been able to maintain decent provision coverage ratio of 74.9% (incl. technical writeoffs) and the Bank’s CAR (Basel II) stands at a healthy 14.1% with a Tier-I ratio of 8.7%. • The Bank has increased its Base rate & BPLR by 40 bps & 50 bps to 10.65% & 15.00% respectively, effective from 01st August 2011. During Q1FY12, the Bank has opened only 1 new branch. • In FY12, it intends to open 200 branches taking it to 1,561 branches from 1,362 currently.”
“Corporation Bank is one of the leading south based bank with a business size of above Rs. +1.9 trn. The GOI holds 58.5% stake while the other major shareholder LIC holds 25.5% stake. Corp Bank has managed to grow at a decent pace in the past few years and maintained a high quality asset profile. However, in light of challenging credit offtake conditions & considering the steep sequential slide in its NIMs during Q1FY12, we have reduced our biz & NII growth estimates. Going forward, we expect its Advance & Deposit to grow by 19% & 18% in FY12E and 17.9% & 16.8% in FY13E, while its Net Profit to grow at 1% in FY12E & at 13% in FY13E. The Bank currently trades at an attractive valuation of 0.8x FY13E ABV & 4.1x FY13E Earnings. We believe the stock can trade at 1.4x P/ABV given its sustainable 20% ROE. We maintain BUY with a revised price target of Rs.805,” says Sushil Finance research report.
“Corporation Bank (Corp Bank) in Q1FY12 has posted a net profit of Rs.3.52 bn, a modest growth of 5% YoY, mainly dragged by subdued core operations. • During Q1FY12, NII grew by a mere 1.4% YoY and stood at Rs.7.1 bn, mainly dragged by sharper rise in cost of deposit and faster deposit growth (relative to its Advances growth). Its Advances grew 25% YoY (de-grew 9% QoQ), while Deposits grew at 29% YoY (1% QoQ). Its term deposits profile saw a growth of 35% YoY (8% QoQ) while CASA grew by 13% YoY. However, CASA’s share in total deposits fell sharply by 307 bps YoY & 495 bps QoQ, now forming 21% of the total deposits. • The Bank’s non interest income growth at 9% YoY was slower due to lower recoveries from written off accounts and lower treasury income, although its fee income saw a decent growth of 14% YoY. • Its operating expenses grew by 23% YoY due to amortization of provision on employee pension & gratuity. Its Cost to Income ratio increased in the quarter and stood at 43.7% in Q1FY12 as compared to 37.7% in Q1FY11. • The Bank’s total provisions in Q1FY12 increased by 32% YoY to Rs.1.67 bn. This was largely driven by higher provisions on investment depreciation (Rs.706 mn in Q1FY12 as against Rs.76 mn in Q1FY11), alongwith revised provisioning norms mandated by RBI on NPAs & restructured assets, although its incremental slippages remained contained at 0.2% (not-annualised) of Advances for the quarter. The Bank’s Net Profit saw a marginal growth of 5% and stood at Rs.3.52 bn for Q1FY12.”
“In Q1FY12, NIMs sharply fell by 36 bps YoY & 40 bps QoQ and stood at 2.1%, mainly due to higher mobilization of term deposits and higher cost of deposits, leading to a sharp rise in cost of funds. While the Bank intends to maintain its NIMs at nearer to 3% levels, considering the steep QoQ contraction in NIMs in Q1, pressure in core operations and sharp decline in credit-deposit ratio (740 bps QoQ & 420 bps YoY) during Q1, we have incorporated a 34 bps fall in its NIMs for FY12 to 2.18% (from 2.52% in FY11). • Although NPAs increased in Q1FY12, the Bank witnessed a decline in slippage rate to less than 1% at 0.8% (annualized) during Q1FY12 from 1.1% (annualized) in Q4FY11. The bank witnessed some slippages in the agriculture and other priority sector category, while its restructured loan portfolio stood at 4.1% of advances in Q1FY12. • In absolute terms, Gross NPLs increased by 7% QoQ & 17% YoY and Net NPLs increased by 3.5% QoQ & 49% YoY. In percentage terms, its Gross NPLs grew by 16 bps QoQ but fell by 4 bps YoY and stood at 1.1%, while Net NPLs increased 6 bps QoQ & 9 bps YoY, and stood at 0.5% in Q1FY12. Since the Bank has already migrated to 100% system based NPA recognition, no negative surprises expected from that side going forward. • The Bank has been able to maintain decent provision coverage ratio of 74.9% (incl. technical writeoffs) and the Bank’s CAR (Basel II) stands at a healthy 14.1% with a Tier-I ratio of 8.7%. • The Bank has increased its Base rate & BPLR by 40 bps & 50 bps to 10.65% & 15.00% respectively, effective from 01st August 2011. During Q1FY12, the Bank has opened only 1 new branch. • In FY12, it intends to open 200 branches taking it to 1,561 branches from 1,362 currently.”
“Corporation Bank is one of the leading south based bank with a business size of above Rs. +1.9 trn. The GOI holds 58.5% stake while the other major shareholder LIC holds 25.5% stake. Corp Bank has managed to grow at a decent pace in the past few years and maintained a high quality asset profile. However, in light of challenging credit offtake conditions & considering the steep sequential slide in its NIMs during Q1FY12, we have reduced our biz & NII growth estimates. Going forward, we expect its Advance & Deposit to grow by 19% & 18% in FY12E and 17.9% & 16.8% in FY13E, while its Net Profit to grow at 1% in FY12E & at 13% in FY13E. The Bank currently trades at an attractive valuation of 0.8x FY13E ABV & 4.1x FY13E Earnings. We believe the stock can trade at 1.4x P/ABV given its sustainable 20% ROE. We maintain BUY with a revised price target of Rs.805,” says Sushil Finance research report.
September 12, 2011
Hold Kotak Mahindra Bank; target of Rs 530: KRChoksey 26-07-2011
KRChoksey has recommended hold rating on Kotak Mahindra Bank with a target of Rs 530, in its July 20, 2011 research report.
“Kotak Mahindra Bank, posted strong consolidated earnings of Rs 419 crore which grew 27% y-o-y but down 15% q-o-q driven by strong lending operations and steady profitability in life insurance. Asset management, Investment banking and securities businesses continued to be under pressure due to lower volumes and poor yields during the quarter. On standalone basis, NII increased 17.7% y-o-y but down 8.6% q-o-q driven by strong loan growth of 39.5% y-o-y. NIM (calc) contracted 24bps q-o-q to 4.44% due to rise in cost of funds and 300bps contraction in CASA ratio. Non-interest income saw strong traction led by core fee income despite treasury losses due to adverse movement in bond yields. Net profit grew 34.8% y-o-y and 1.3% q-o-q driven by core operating performance ahead of our estimate of Rs 231 crore. Improving asset quality, moderate OPEX growth and lower NPA provisioning boosted profitability during the quarter.”
“NII grew by 17.7% y-o-y and flat on q-o-q basis to Rs 568 crore. The reported margin declined by 30bps q-o-q to 5.0% however it was partly off set by 393bps q-o-q improvement in loan to deposit ratio. NIMs continued to be under pressure due to rise in cost of funds and modest liability franchise as calc. margin contracted by 24bps q-o-q. We believe margin will continue to be under pressure in the next couple of quarters and building in 10bps margin compression in FY12. Non- interest income grew by 40.6% y-o-y to Rs 229 crore driven by core fee income; however after adjusting for processing fee on retail loans, it declined by 7.9% q-o-q. Subdued recoveries coupled with significant treasury losses dragged the growth in non-interest income. We are factoring in 27% CAGR in fee income over FY11-FY13e driven by retail and corporate businesses. The earnings of securities business halved y-o-y to Rs 23 crore, down 36% q-o-q as margin pressure persists, in line with industry trends. The market share in volume declined by 20bps q-o-q to 2.7% primarily because of fall in market share in F&O segment. IB was subdued with 32% y-o-y decline in income and muted profitability. AMC business reported decent profit of Rs 9 crore, flat on y-o-y. We believe capital market linked businesses especially broking and asset management business will continue to see cost rationalization & business restructuring and will remain under pressure in next 8-12 months.”
“Life insurance continued to show steady growth in earnings (Rs 46 crore) with lower business volume. Gross premium income declined by 8.4% y-o-y to Rs 511 crore. We believe life insurance business will continue to grow in profitable manner, going forward. The GNPA inched up marginally in absolute terms growing by 2% q-o-q to Rs 616 crore, down 21% y-o-y; it stood at 1.16%, down 7bps q-o-q reflecting comfortable asset quality as the bank has not seen any significance deterioration in asset quality so far. We expect stable asset quality notwithstanding some pressure from retail portfolio particularly personal loans and CV segments and build in 36bps and 51bps credit in FY12 and FY13 respectively against 40bps in FY11.”
“The bank performed strongly on lending side however, capital market linked businesses remained weak during the quarter. Robust loan growth outlook, aggressive branch expansion strategy, building quality liability franchise and best-in-class margins will drive earning growth in medium term. We expect standalone earnings to grow 26.2% CAGR over FY11-FY13 driven by strong loan and healthy fee income growth. Sharper-than expected margin contraction, slowdown in auto financing and weaker business cycle for capital market businesses are key headwinds for the stock performance in near term. At Rs 490, the stock is trading at 15.3x consolidated FY13 earnings and 2.6x consolidated FY13 book. The stock has outperformed the market by 10% in last three months, resulting into unfavorable risk- reward, hence we downgrade our investment rating on the stock from BUY to HOLD with a target price Rs 530 based on SOTP valuation,” says KRChoksey research report.
September 09, 2011
Tariff hike impact to be seen over 1 year: Idea Cellular 9th-Sep-2011
The telecom sector recently underwent a tariff hike, a complete opposite of the tariff war that was brewing in the sector a few months back. But have customers accepted this hike? According to Himanshu Kapania, managing director of Idea Cellular, the rate hike will impact customers over a one year period, not immediately. “Most of the existing subscribers continue to be at the existing tariff rates” he said to CNBC-TV18 in an exclusive interview. He adds that the overall impact of the tariff won’t be higher than 4-5%.
Kapania goes on to say that any further hike in tariff depends on the long term revenue growth. “The key performance indicator that we measure as a company is absolute revenue growth. If we continue to have unabated growth, then there may be a little tweaking of rate possible” he said. However, if any of these factors gets affected, the company will be wary to make any further experimentation.
In terms of the company’s penetration in the 3G space, Kapania said that they currently service 95 million customers. “But we should be able to cover close to about 250 to 300 million customers by the end of the year” he added.back
Kapania goes on to say that any further hike in tariff depends on the long term revenue growth. “The key performance indicator that we measure as a company is absolute revenue growth. If we continue to have unabated growth, then there may be a little tweaking of rate possible” he said. However, if any of these factors gets affected, the company will be wary to make any further experimentation.
In terms of the company’s penetration in the 3G space, Kapania said that they currently service 95 million customers. “But we should be able to cover close to about 250 to 300 million customers by the end of the year” he added.back
Looking at unlocking value in subsidiaries very soon: IFCI 9th-Sep-2011
Last week, the Reserve Bank of India released the Draft Guidelines for "Licensing of New Banks in the Private Sector". In an interview to CNBC-TV18, Atul Kumar Rai, chief executive officer and managing director of IFCI said, the company is not among any excluded category and is eligible for banking license.
He further said, IFCI is looking at unlocking value in subsidiaries very soon. “IFCI Factors has already filed for draft red herring prospectus (DRHP).”
Rai said, the company has no exposure to state electricity boards.
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He further said, IFCI is looking at unlocking value in subsidiaries very soon. “IFCI Factors has already filed for draft red herring prospectus (DRHP).”
Rai said, the company has no exposure to state electricity boards.
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Buy GMR Infra; target of Rs 38: Emkay 9th-Sep-2011
Emkay Global Financial Services is bullish on GMR Infra and has recommended buy rating on the stock with a target of Rs 38 in its September 8, 2011 research report.
“GMR Infrastructure is expanding rapidly in the energy vertical with the installed capacity set to rise from 823 MW to ~3,600 MW by FY13E and 8,471 MW by FY18E. Strong captive mining assets along with adequate funding are likely to ensure smooth execution. Its ability to tie up future capacity at lucrative rate will determine the success of power vertical. Strong parent balance sheet with ~ Rs 50 bn of Cash & liquid investments which can be utilised in funding equity portion along with Rs 36 bn of operating cash flow over FY12-13E will be sufficient to fund projects till FY13E. While the power vertical is still in investment phase, its commissioned projects are likely to ensure contribution rising to ~54% overall EBITDA by FY14E.”
“DIAL airport, which has been a major overhang on the airport vertical’s profitability due to its sheer size, is now fully operational. Given the momentum in aviation sector coupled with the regulatory backdrop, it is showing signs of turning around by FY16E. The key factor in the DIAL turnaround is the implementation of the regulatory tariff, which is expected to drive its aero revenues and provide revenue visibility. With GMR’s other airports (Male, Turkey and Hyderabad) offering relatively better revenue stability, the turnaround of DIAL from a loss making entity (Rs 2.4bn in FY11) is likely to sway the fortunes of the airport vertical. We expect GMR’s airport vertical to report a PAT of Rs 2.1bn in FY16E. Apart from operational profits, monetisation of land parcels can prove to be the icing on the cake with significant opportunity to realize upfront deposits.”
“GMR is available at a discount to its SOTP fair value with the current valuations ignoring the enormous long term potential of key operating assets like DIAL. The recent corrective phase led by ambiguous regulatory mechanism and sub optimal availability of fuel at gas based power plants offers an opportunity for investors to position such long term plays in the infrastructure universe. Our SOTP based value of Rs 38 offers 27% upside from the present price. Airport assets (incl real estate) form ~49%, Power ~23% and Roads ~10% of fair value. Key risks to our positive ratings are the delays in implementation of tariff mechanism, Non availability of gas based fuel & ability to source long term PPAs at attractive rates,” says Emkay Global Financial Services research report.
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“GMR Infrastructure is expanding rapidly in the energy vertical with the installed capacity set to rise from 823 MW to ~3,600 MW by FY13E and 8,471 MW by FY18E. Strong captive mining assets along with adequate funding are likely to ensure smooth execution. Its ability to tie up future capacity at lucrative rate will determine the success of power vertical. Strong parent balance sheet with ~ Rs 50 bn of Cash & liquid investments which can be utilised in funding equity portion along with Rs 36 bn of operating cash flow over FY12-13E will be sufficient to fund projects till FY13E. While the power vertical is still in investment phase, its commissioned projects are likely to ensure contribution rising to ~54% overall EBITDA by FY14E.”
“DIAL airport, which has been a major overhang on the airport vertical’s profitability due to its sheer size, is now fully operational. Given the momentum in aviation sector coupled with the regulatory backdrop, it is showing signs of turning around by FY16E. The key factor in the DIAL turnaround is the implementation of the regulatory tariff, which is expected to drive its aero revenues and provide revenue visibility. With GMR’s other airports (Male, Turkey and Hyderabad) offering relatively better revenue stability, the turnaround of DIAL from a loss making entity (Rs 2.4bn in FY11) is likely to sway the fortunes of the airport vertical. We expect GMR’s airport vertical to report a PAT of Rs 2.1bn in FY16E. Apart from operational profits, monetisation of land parcels can prove to be the icing on the cake with significant opportunity to realize upfront deposits.”
“GMR is available at a discount to its SOTP fair value with the current valuations ignoring the enormous long term potential of key operating assets like DIAL. The recent corrective phase led by ambiguous regulatory mechanism and sub optimal availability of fuel at gas based power plants offers an opportunity for investors to position such long term plays in the infrastructure universe. Our SOTP based value of Rs 38 offers 27% upside from the present price. Airport assets (incl real estate) form ~49%, Power ~23% and Roads ~10% of fair value. Key risks to our positive ratings are the delays in implementation of tariff mechanism, Non availability of gas based fuel & ability to source long term PPAs at attractive rates,” says Emkay Global Financial Services research report.
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Buy Maruti Suzuki; target of Rs 1418: Motilal Oswal 9th-Sep-2011
Motilal Oswal is bullish on Maruti Suzuki India (MSIL) and has recommended buy rating on the stock with a target of Rs 1418 in its September 5, 2011 research report.
“MSIL's focus is on widening its sales and service network, its key strength. In FY11 it added 191 sales outlets, totaling 993 outlets in 668 cities. It increased service outlets by 206 to 2,946 outlets in 1,395 cities. Over the past four years rural sales contribution increased, contributing ~20% to domestic sales. About 40% of MSIL's sales outlets are in the rural format, with scaled-down investment, enabling viability on lower volumes. To cut exposure to the yen, MSIL increased focus on localization of imported components. MSIL has a three-year roadmap beginning FY13 to cut vendor imports 600-700bp from 14-15% of revenue. MSIL is considering opportunities from FTAs and other arrangements for source substitution of imported technologically complex items.”
“Sales have risen of vehicles powered by alternative fuels due to rising petrol prices. The proportion of diesel (volumes) increased from 60% to 80% among available models (~20% of total volumes). MSIL will increase its diesel-engine capacity (in the SPV Suzuki Powertrain) from 0.25m to 0.29m units by September 2011. It is focusing on promoting CNG cars based on its superior i-GPI CNG technology. Based on its positive volume outlook, MSIL is expanding capacity at Manesar. A second line of 0.25m units has started operations in September 2011 and a third line of 0.25m units will start by September 2012, taking total capacity to 1.9m units. Due to a possible increase in small-car exports and the need to cut risks of production disruption, MSIL plans to set up a 1m-unit capacity plant in Gujarat. It has broad-based exports to dilute the impact of a slowdown in the EU exports.”
“We are downgrading consolidated EPS 7.5% for FY12 and FY13 to INR79.1 and INR93.8 respectively, as we lower FY12 volume estimates to 1.27m units (flat) and estimate EBITDA margin decline of 20bp to 9.3%. The stock trades at 11.6x FY13E consolidated EPS and 7.7x FY13E consolidated EPS. Maintain Buy with a target price of INR 1418 (~10x FY13E consolidated EPS),” says Motilal Oswal research report.
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“MSIL's focus is on widening its sales and service network, its key strength. In FY11 it added 191 sales outlets, totaling 993 outlets in 668 cities. It increased service outlets by 206 to 2,946 outlets in 1,395 cities. Over the past four years rural sales contribution increased, contributing ~20% to domestic sales. About 40% of MSIL's sales outlets are in the rural format, with scaled-down investment, enabling viability on lower volumes. To cut exposure to the yen, MSIL increased focus on localization of imported components. MSIL has a three-year roadmap beginning FY13 to cut vendor imports 600-700bp from 14-15% of revenue. MSIL is considering opportunities from FTAs and other arrangements for source substitution of imported technologically complex items.”
“Sales have risen of vehicles powered by alternative fuels due to rising petrol prices. The proportion of diesel (volumes) increased from 60% to 80% among available models (~20% of total volumes). MSIL will increase its diesel-engine capacity (in the SPV Suzuki Powertrain) from 0.25m to 0.29m units by September 2011. It is focusing on promoting CNG cars based on its superior i-GPI CNG technology. Based on its positive volume outlook, MSIL is expanding capacity at Manesar. A second line of 0.25m units has started operations in September 2011 and a third line of 0.25m units will start by September 2012, taking total capacity to 1.9m units. Due to a possible increase in small-car exports and the need to cut risks of production disruption, MSIL plans to set up a 1m-unit capacity plant in Gujarat. It has broad-based exports to dilute the impact of a slowdown in the EU exports.”
“We are downgrading consolidated EPS 7.5% for FY12 and FY13 to INR79.1 and INR93.8 respectively, as we lower FY12 volume estimates to 1.27m units (flat) and estimate EBITDA margin decline of 20bp to 9.3%. The stock trades at 11.6x FY13E consolidated EPS and 7.7x FY13E consolidated EPS. Maintain Buy with a target price of INR 1418 (~10x FY13E consolidated EPS),” says Motilal Oswal research report.
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Accumulate ICICI Bank; target of Rs 1200: Emkay 9th-Sep-2011
Emkay Global Financial Services is bullish on ICICI Bank and has recommended accumulate rating on the stock with a target of Rs 1200 in its September 8, 2011 research report.
“ICICI Bank maintained its NIM’s guidance at 2.6% for FY12. However the improvement will largely accrue in the second half of FY12 as all the deposits will get fully reprised by October 2011 only. Hence there will be some pressure on the cost of funds in Q2FY12 and early Q3FY12. Moreover, cannibalization of savings deposits towards term deposits will add further pressure to the cost. The bank has increased its base rate by 200bps over last two quarters; however yield on advances has increased by just 70bps during the period. The management guided that all the floating advances get fully reprised by December 2011 only. Hence we may see margin improvement from Q3FY12 onwards.”
“Currently, ICICI banks international loan portfolio contributes 25% to the overall loan book. The margins on this book currently stand a lower 90bps . However, the bank is now acquiring incremental assets at higher spreads, and hence expects its FY12 NIM’s to improve to 1.25%. The bank expect it’s slippage rate to stablise at FY11 levels of 1.2%. The bank draws comfort from the fact that it has only ~5% of its exposure to SME and less than 3% exposure to unsecured retail portfolio, which normally throw concern in a rising rate scenario. Moreover its infra exposure is also relatively lower at 10%, as against 14-17% for other peers. Of the total infra exposure, power exposure is 4.5% with very small exposure to SEB’s.”
“The stock has corrected by ~20% YTD, on concerns of asset quality and overseas exposure. However we believe the concerns are overdone. Moreover at 1.8x/1.6x FY12E/FY13E standalone ABV, valuations do not look unreasonable with improving operating matrix. Maintain ACCUMULATE rating with TP of Rs 1200,” says Emkay Global Financial Services research report.
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Buy Take Solutions; target of Rs 43: Nirmal Bang 9th-Sep-2011
Nirmal Bang is bullish on Take Solutions and has recommended buy rating on the stock with a target of Rs 43 in its September 7, 2011 research report.
“Revenues from Supply Chain (SCM) Segment constitutes almost 49% to the revenues in FY11 of Take. Post WCI acquisition which is in Lifesciences, SCM contribution to revenues has come down to 44% in Q1FY12. 65% of the revenues in FY11 came from the US where Mr. Levey has wide exposure.”.... Nirmal Bang is bullish on Take Solutions and has recommended buy rating on the stock with a target of Rs 43 in its September 7, 2011 research report.
“Revenues from Supply Chain (SCM) Segment constitutes almost 49% to the revenues in FY11 of Take. Post WCI acquisition which is in Lifesciences, SCM contribution to revenues has come down to 44% in Q1FY12. 65% of the revenues in FY11 came from the US where Mr. Levey has wide exposure.”
“Considering huge focus in this segment, Mr Levey’s appointment would bring in a lot more visibility to the SCM business of the company. In addition, his contacts in this industry and geographical knowledge would aid in widening the client base. The company has given guidance of 6-7% QoQ growth for the next 2 to 3 quarters. EBIDTA margins are expected to move up in the range of 22-23% for the company.”
“Take solutions are operating in the non-BFSI segments of SCM and lifesciences where the effect of Global Crisis may not be tough. Post the latest development in the company,we find the stock very attractive which is trading at 4.5x FY12E EPS and recommend a BUY on the stock,” says Nirmal Bang research report
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“Revenues from Supply Chain (SCM) Segment constitutes almost 49% to the revenues in FY11 of Take. Post WCI acquisition which is in Lifesciences, SCM contribution to revenues has come down to 44% in Q1FY12. 65% of the revenues in FY11 came from the US where Mr. Levey has wide exposure.”.... Nirmal Bang is bullish on Take Solutions and has recommended buy rating on the stock with a target of Rs 43 in its September 7, 2011 research report.
“Revenues from Supply Chain (SCM) Segment constitutes almost 49% to the revenues in FY11 of Take. Post WCI acquisition which is in Lifesciences, SCM contribution to revenues has come down to 44% in Q1FY12. 65% of the revenues in FY11 came from the US where Mr. Levey has wide exposure.”
“Considering huge focus in this segment, Mr Levey’s appointment would bring in a lot more visibility to the SCM business of the company. In addition, his contacts in this industry and geographical knowledge would aid in widening the client base. The company has given guidance of 6-7% QoQ growth for the next 2 to 3 quarters. EBIDTA margins are expected to move up in the range of 22-23% for the company.”
“Take solutions are operating in the non-BFSI segments of SCM and lifesciences where the effect of Global Crisis may not be tough. Post the latest development in the company,we find the stock very attractive which is trading at 4.5x FY12E EPS and recommend a BUY on the stock,” says Nirmal Bang research report
Buy HCL Tech; target of Rs 517: Arihant capital markets 9th-Sep-2011
Arihant capital markets is bullish on HCL Tech and has recommended buy rating on the stock with a target of Rs 517 in its September 7, 2011 research report.
“HCL Tech has shown strong all round growth in all service lines in the recent quarters. HCL Tech has been aggressively adding clients in the last 12 months. It’s positioning in the market as a leader in IMS and a credible position in ADM has made it possible for it to bid for larger projects. Only BPO remains a worry in the near term. We can safely expect HCL Tech to better its margins going ahead as a number of levers are still available. Moreover, BPO related losses which has been seeing a downtrend will also help in supporting margins.”....
Arihant capital markets is bullish on HCL Tech and has recommended buy rating on the stock with a target of Rs 517 in its September 7, 2011 research report.
“HCL Tech has shown strong all round growth in all service lines in the recent quarters. HCL Tech has been aggressively adding clients in the last 12 months. It’s positioning in the market as a leader in IMS and a credible position in ADM has made it possible for it to bid for larger projects. Only BPO remains a worry in the near term. We can safely expect HCL Tech to better its margins going ahead as a number of levers are still available. Moreover, BPO related losses which has been seeing a downtrend will also help in supporting margins.”
“IMS has been the driving force of HCL Tech in the recent times. Expected to be the next big thing in the IT domain, HCL’s expertise in IMS will go a long way in helping it to go to the next level. The recent large deals that are coming HCL’s way are a testimony to the fact that among Indian vendors HCL dons the mantle of leadership in IMS. The Axon acquisition has helped HCL to create the largest SAP global partner in the world. It has given HCL Tech the capability to provide high-end service especially in the consulting domain and move up the value chain.”
“The recent outperformance that HCL Tech has been able to put up has given us the conviction that it is only a matter of time before HCL Tech is also considered a Tier-1 player at par with the top 3. Considering its expertise in the fast upcoming IMS services which we expect to be the next best thing in the IT sector, we believe the company will become a serious case for re-rating in the coming times if it continues with its out performance. We believe that the company will be able to post a topline growth of 18.7% and 13.4%, and a bottomline growth of 29.9% and 14.6% in FY12E and FY13E respectively. We have valued HCL at a PE multiple of 16x which is at a discount of 30% to the 23x multiple that we allot for Infosys and TCS and 20% to Wipro (which we value at 20x). We therefore arrive at a target price of Rs.517. We thereby initiate coverage on HCL Technologies with an ‘BUY’ rating,” says Arihant capital markets research report.
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“HCL Tech has shown strong all round growth in all service lines in the recent quarters. HCL Tech has been aggressively adding clients in the last 12 months. It’s positioning in the market as a leader in IMS and a credible position in ADM has made it possible for it to bid for larger projects. Only BPO remains a worry in the near term. We can safely expect HCL Tech to better its margins going ahead as a number of levers are still available. Moreover, BPO related losses which has been seeing a downtrend will also help in supporting margins.”....
Arihant capital markets is bullish on HCL Tech and has recommended buy rating on the stock with a target of Rs 517 in its September 7, 2011 research report.
“HCL Tech has shown strong all round growth in all service lines in the recent quarters. HCL Tech has been aggressively adding clients in the last 12 months. It’s positioning in the market as a leader in IMS and a credible position in ADM has made it possible for it to bid for larger projects. Only BPO remains a worry in the near term. We can safely expect HCL Tech to better its margins going ahead as a number of levers are still available. Moreover, BPO related losses which has been seeing a downtrend will also help in supporting margins.”
“IMS has been the driving force of HCL Tech in the recent times. Expected to be the next big thing in the IT domain, HCL’s expertise in IMS will go a long way in helping it to go to the next level. The recent large deals that are coming HCL’s way are a testimony to the fact that among Indian vendors HCL dons the mantle of leadership in IMS. The Axon acquisition has helped HCL to create the largest SAP global partner in the world. It has given HCL Tech the capability to provide high-end service especially in the consulting domain and move up the value chain.”
“The recent outperformance that HCL Tech has been able to put up has given us the conviction that it is only a matter of time before HCL Tech is also considered a Tier-1 player at par with the top 3. Considering its expertise in the fast upcoming IMS services which we expect to be the next best thing in the IT sector, we believe the company will become a serious case for re-rating in the coming times if it continues with its out performance. We believe that the company will be able to post a topline growth of 18.7% and 13.4%, and a bottomline growth of 29.9% and 14.6% in FY12E and FY13E respectively. We have valued HCL at a PE multiple of 16x which is at a discount of 30% to the 23x multiple that we allot for Infosys and TCS and 20% to Wipro (which we value at 20x). We therefore arrive at a target price of Rs.517. We thereby initiate coverage on HCL Technologies with an ‘BUY’ rating,” says Arihant capital markets research report.
September 07, 2011
Buy ICICI Bank; target of Rs 910: IIFL
IIFL is bullish on ICICI Bank and has recommended buy rating on the stock with a target of Rs 910 in its September 7, 2011 research report.
“ICICI Bank has retraced almost 50% of weekly ‘morning star’ pattern on Tuesday’s trading session and closed near day’s high. This has terminated the consolidation phase in the counter and the stock is on its way to attempt the neckline of inverted ‘head and shoulder’ pattern which it broke earlier. The maximum potential upside is seen at Rs1000 on an up move above Rs 935 in the near term. We recommend buying stock in the range of Rs 880-882 with stop loss of Rs 868 for target of Rs 910.(Duration 5 Days),” says IIFL research report. .... IIFL is bullish on ICICI Bank and has recommended buy rating on the stock with a target of Rs 910 in its September 7, 2011 research report.
“ICICI Bank has retraced almost 50% of weekly ‘morning star’ pattern on Tuesday’s trading session and closed near day’s high. This has terminated the consolidation phase in the counter and the stock is on its way to attempt the neckline of inverted ‘head and shoulder’ pattern which it broke earlier. The maximum potential upside is seen at Rs1000 on an up move above Rs 935 in the near term. We recommend buying stock in the range of Rs 880-882 with stop loss of Rs 868 for target of Rs 910.(Duration 5 Days),” says IIFL research report.
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“ICICI Bank has retraced almost 50% of weekly ‘morning star’ pattern on Tuesday’s trading session and closed near day’s high. This has terminated the consolidation phase in the counter and the stock is on its way to attempt the neckline of inverted ‘head and shoulder’ pattern which it broke earlier. The maximum potential upside is seen at Rs1000 on an up move above Rs 935 in the near term. We recommend buying stock in the range of Rs 880-882 with stop loss of Rs 868 for target of Rs 910.(Duration 5 Days),” says IIFL research report. .... IIFL is bullish on ICICI Bank and has recommended buy rating on the stock with a target of Rs 910 in its September 7, 2011 research report.
“ICICI Bank has retraced almost 50% of weekly ‘morning star’ pattern on Tuesday’s trading session and closed near day’s high. This has terminated the consolidation phase in the counter and the stock is on its way to attempt the neckline of inverted ‘head and shoulder’ pattern which it broke earlier. The maximum potential upside is seen at Rs1000 on an up move above Rs 935 in the near term. We recommend buying stock in the range of Rs 880-882 with stop loss of Rs 868 for target of Rs 910.(Duration 5 Days),” says IIFL research report.
Buy Ahmednagar Forgings; target of Rs 160: Sunidhi Sec
Sunidhi Securities is bullish on Ahmednagar Forgings and has recommended buy rating on the stock with a target of Rs 160 in its September 5, 2011 research report.
“Incorporated in 1977 and taken over by Amtek Group in 2003, AFL is a manufacturer of forging and machined automotive components, cold forged parts and high tensile fasteners. AFL’s six manufacturing facilities are located at Ahmednagar, Chakan, Kurli in Maharashtra and Solan in Himachal Pradesh. Its product range includes closed die steel forgings for the automobiles sector and its product range includes connecting rods and caps, shafts and camshafts, transmission components, crankshafts, gears, forks, levers, hubs, spiders, assorted forgings and steering parts. With the expansion of 60, 000 tonnes at a cost of about Rs300 crore during FY09-10, the forging capacity of 2, 25, 000 tonnes a year, makes AFL one of the largest players in the forging industry. AFL’s products go to the automotive, defence and railway sectors.”....
Sunidhi Securities is bullish on Ahmednagar Forgings and has recommended buy rating on the stock with a target of Rs 160 in its September 5, 2011 research report.
“Incorporated in 1977 and taken over by Amtek Group in 2003, AFL is a manufacturer of forging and machined automotive components, cold forged parts and high tensile fasteners. AFL’s six manufacturing facilities are located at Ahmednagar, Chakan, Kurli in Maharashtra and Solan in Himachal Pradesh. Its product range includes closed die steel forgings for the automobiles sector and its product range includes connecting rods and caps, shafts and camshafts, transmission components, crankshafts, gears, forks, levers, hubs, spiders, assorted forgings and steering parts. With the expansion of 60, 000 tonnes at a cost of about Rs300 crore during FY09-10, the forging capacity of 2, 25, 000 tonnes a year, makes AFL one of the largest players in the forging industry. AFL’s products go to the automotive, defence and railway sectors.”
“Ahmednagar Forgings has produced excellent results for Q4FY11. Sales have gone up by 37.1% to Rs250.3 crore from Rs Rs182.6 crore in Q4FY10. Despite higher provision of 9.5% for depreciation, 47.8% in interest and 12.1% for tax, net profit advanced by 35.8% to Rs26.9 crore (Rs19.8 crore). OP and NP margins fell to 25.9% and 10.7% from level of 27.9% and 10.8% previous year in the corresponding period. Q4FY11 EPS stood at Rs7.3 Vs Rs5.4 in Q4FY10. During FY11, net profit surged 69.5% to Rs108.6 crore on 43.2% higher sales of Rs908 crore. This is despite 15.3% higher provision for depreciation, 17% increased interest cost and 49% higher tax provision. EPS for FY11 stood at Rs29.5. According to the performance report by the Association of Forging Industry, the Rs17,800-crore forging industry in India has registered a growth of over 119%, from 1.05 million tonnes in FY09 to 1.8 million tonnes in FY10 and further to 2.3 million tonnes in FY11. Going forward, the forging industry should grow at about 25 per cent in the next fiscal says AFI. Capacity utilisation has been growing considerably and production is expected to reach about 4 million tonnes by 2015.”
“At the CMP of Rs107, the share is trading at a P/E of 3.4 on FY12 EPS of Rs31.9. We lower our BUY target of Rs170 to Rs160 in the medium term. In view of concern due to higher interest rates affecting the automobile industry, we have lowered our EPS estimates to Rs31.9 from our earlier estimate of Rs37.6 for FY12,” says Sunidhi Securities research report.
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“Incorporated in 1977 and taken over by Amtek Group in 2003, AFL is a manufacturer of forging and machined automotive components, cold forged parts and high tensile fasteners. AFL’s six manufacturing facilities are located at Ahmednagar, Chakan, Kurli in Maharashtra and Solan in Himachal Pradesh. Its product range includes closed die steel forgings for the automobiles sector and its product range includes connecting rods and caps, shafts and camshafts, transmission components, crankshafts, gears, forks, levers, hubs, spiders, assorted forgings and steering parts. With the expansion of 60, 000 tonnes at a cost of about Rs300 crore during FY09-10, the forging capacity of 2, 25, 000 tonnes a year, makes AFL one of the largest players in the forging industry. AFL’s products go to the automotive, defence and railway sectors.”....
Sunidhi Securities is bullish on Ahmednagar Forgings and has recommended buy rating on the stock with a target of Rs 160 in its September 5, 2011 research report.
“Incorporated in 1977 and taken over by Amtek Group in 2003, AFL is a manufacturer of forging and machined automotive components, cold forged parts and high tensile fasteners. AFL’s six manufacturing facilities are located at Ahmednagar, Chakan, Kurli in Maharashtra and Solan in Himachal Pradesh. Its product range includes closed die steel forgings for the automobiles sector and its product range includes connecting rods and caps, shafts and camshafts, transmission components, crankshafts, gears, forks, levers, hubs, spiders, assorted forgings and steering parts. With the expansion of 60, 000 tonnes at a cost of about Rs300 crore during FY09-10, the forging capacity of 2, 25, 000 tonnes a year, makes AFL one of the largest players in the forging industry. AFL’s products go to the automotive, defence and railway sectors.”
“Ahmednagar Forgings has produced excellent results for Q4FY11. Sales have gone up by 37.1% to Rs250.3 crore from Rs Rs182.6 crore in Q4FY10. Despite higher provision of 9.5% for depreciation, 47.8% in interest and 12.1% for tax, net profit advanced by 35.8% to Rs26.9 crore (Rs19.8 crore). OP and NP margins fell to 25.9% and 10.7% from level of 27.9% and 10.8% previous year in the corresponding period. Q4FY11 EPS stood at Rs7.3 Vs Rs5.4 in Q4FY10. During FY11, net profit surged 69.5% to Rs108.6 crore on 43.2% higher sales of Rs908 crore. This is despite 15.3% higher provision for depreciation, 17% increased interest cost and 49% higher tax provision. EPS for FY11 stood at Rs29.5. According to the performance report by the Association of Forging Industry, the Rs17,800-crore forging industry in India has registered a growth of over 119%, from 1.05 million tonnes in FY09 to 1.8 million tonnes in FY10 and further to 2.3 million tonnes in FY11. Going forward, the forging industry should grow at about 25 per cent in the next fiscal says AFI. Capacity utilisation has been growing considerably and production is expected to reach about 4 million tonnes by 2015.”
“At the CMP of Rs107, the share is trading at a P/E of 3.4 on FY12 EPS of Rs31.9. We lower our BUY target of Rs170 to Rs160 in the medium term. In view of concern due to higher interest rates affecting the automobile industry, we have lowered our EPS estimates to Rs31.9 from our earlier estimate of Rs37.6 for FY12,” says Sunidhi Securities research report.
Accumulate Maruti Suzuki; target of Rs 1313: PLilladher
Prabhudas Lilladher is bullish on Maruti Suzuki and has recommended accumulate rating on the stock with a target of Rs 1313 in its September 7, 2011 research report.
“Maruti Suzuki’s (MSIL) stock price has declined by 15.2% in last 6 months underperforming the broader markets by 6.0%. Increased competition, negative currency impact (Yen appreciated by ~8%) coupled with higher commodity prices led to a severe underperformance. However, given the current valuation of 11.5x FY13E EPS, which is well below the 5yr average of 15.2x 1yr fwd PE, and the expected recovery in volumes in FY13E, we believe the risk: reward ratio for Maruti Suzuki is turning favorable.”....
Prabhudas Lilladher is bullish on Maruti Suzuki and has recommended accumulate rating on the stock with a target of Rs 1313 in its September 7, 2011 research report.
“Maruti Suzuki’s (MSIL) stock price has declined by 15.2% in last 6 months underperforming the broader markets by 6.0%. Increased competition, negative currency impact (Yen appreciated by ~8%) coupled with higher commodity prices led to a severe underperformance. However, given the current valuation of 11.5x FY13E EPS, which is well below the 5yr average of 15.2x 1yr fwd PE, and the expected recovery in volumes in FY13E, we believe the risk: reward ratio for Maruti Suzuki is turning favorable.”
“The strongest indicator that rates have peaked, or are near peak, is seen in the trends in the OIS (Overnight Indexed Swaps) curve. The OIS curve has turned sharply inverted in the last 60 days with longer tenor swaps yielding 100-150bps lower than near-term swaps. This indicates that the bond market now expects rates to come down in the not-toodistant future. With interest rate cycle nearing its peak, we believe the four wheeler space will be the most likely beneficiary of the same. Assuming a 10% discount to the average 1-Yr fwd P/E of 15.2x (last 5 years average) i.e. 13.7x, we arrive at a target price of Rs1,313 based on FY13E EPS a potential upside of 18.8%.”
“We have been maintaining our ‘Reduce’ rating since Feb’10 on account of capacity constraints, competition and appreciating yen. However, at the CMP, the stock is trading at 13.9x FY12E EPS and 11.5x FY13E EPS, which is attractive, given the 20.6% YoY growth in earnings for FY13E. Given the limited downside from the current level and attractive valuations, we are upgrading our recommendation to ‘Accumulate’ from ‘Reduce’ earlier,” says Prabhudas Lilladher research report.
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“Maruti Suzuki’s (MSIL) stock price has declined by 15.2% in last 6 months underperforming the broader markets by 6.0%. Increased competition, negative currency impact (Yen appreciated by ~8%) coupled with higher commodity prices led to a severe underperformance. However, given the current valuation of 11.5x FY13E EPS, which is well below the 5yr average of 15.2x 1yr fwd PE, and the expected recovery in volumes in FY13E, we believe the risk: reward ratio for Maruti Suzuki is turning favorable.”....
Prabhudas Lilladher is bullish on Maruti Suzuki and has recommended accumulate rating on the stock with a target of Rs 1313 in its September 7, 2011 research report.
“Maruti Suzuki’s (MSIL) stock price has declined by 15.2% in last 6 months underperforming the broader markets by 6.0%. Increased competition, negative currency impact (Yen appreciated by ~8%) coupled with higher commodity prices led to a severe underperformance. However, given the current valuation of 11.5x FY13E EPS, which is well below the 5yr average of 15.2x 1yr fwd PE, and the expected recovery in volumes in FY13E, we believe the risk: reward ratio for Maruti Suzuki is turning favorable.”
“The strongest indicator that rates have peaked, or are near peak, is seen in the trends in the OIS (Overnight Indexed Swaps) curve. The OIS curve has turned sharply inverted in the last 60 days with longer tenor swaps yielding 100-150bps lower than near-term swaps. This indicates that the bond market now expects rates to come down in the not-toodistant future. With interest rate cycle nearing its peak, we believe the four wheeler space will be the most likely beneficiary of the same. Assuming a 10% discount to the average 1-Yr fwd P/E of 15.2x (last 5 years average) i.e. 13.7x, we arrive at a target price of Rs1,313 based on FY13E EPS a potential upside of 18.8%.”
“We have been maintaining our ‘Reduce’ rating since Feb’10 on account of capacity constraints, competition and appreciating yen. However, at the CMP, the stock is trading at 13.9x FY12E EPS and 11.5x FY13E EPS, which is attractive, given the 20.6% YoY growth in earnings for FY13E. Given the limited downside from the current level and attractive valuations, we are upgrading our recommendation to ‘Accumulate’ from ‘Reduce’ earlier,” says Prabhudas Lilladher research report.
Buy Selan Exploration Tech; target of Rs 500: Sharekhan
Sharekhan is bullish on Selan Exploration Tech and has recommended buy rating on the stock with a target of Rs 500 in its September 6, 2011 research report.
“In Q1FY2012, the net revenues (adjusted for the petroleum profit) of Selan Exploration Technology (Selan) grew by 42% backed by a stupendous growth (of 46%) in the realisation in line with the crude price movement. However, the volume remained flat year on year (YoY) at 47,217 barrels. Sequentially, the sales grew by 24%, which is a reflection of the growth in both volume (up 10%) and realisation (up 13%). The operating profit margin (OPM) was reported at 73.6%, an expansion of 118 basis points YoY, supported by high realisation. The operating profit grew by 44% YoY to Rs18 crore. Sequentially, the operating profit grew at a significant rate of 64% as expenses declined by 27% while sales grew at 23% quarter on quarter (QoQ). The administrative and employee expenses declined largely over Q4FY2011. ....
Sharekhan is bullish on Selan Exploration Tech and has recommended buy rating on the stock with a target of Rs 500 in its September 6, 2011 research report.
“In Q1FY2012, the net revenues (adjusted for the petroleum profit) of Selan Exploration Technology (Selan) grew by 42% backed by a stupendous growth (of 46%) in the realisation in line with the crude price movement. However, the volume remained flat year on year (YoY) at 47,217 barrels. Sequentially, the sales grew by 24%, which is a reflection of the growth in both volume (up 10%) and realisation (up 13%). The operating profit margin (OPM) was reported at 73.6%, an expansion of 118 basis points YoY, supported by high realisation. The operating profit grew by 44% YoY to Rs18 crore. Sequentially, the operating profit grew at a significant rate of 64% as expenses declined by 27% while sales grew at 23% quarter on quarter (QoQ). The administrative and employee expenses declined largely over Q4FY2011. This could be attributed to the adjustment done at the last quarter of the last year.”
“The management has indicated that it has commercialised two wells from the drilling activity undertaken at the Lohar oilfield. The company aims to drill 18-20 new wells in the next two years, subject to regulatory approval. In terms of its medium-term guidance the management expects to more than double the production to 500,000 to 700,000 barrels over the next two years and has roped in a highly experienced team to manage the operations under the leadership of Andrew Wenk as the president and chief executive officer of the company. He has two decades of experience in the oil exploration industry with stints in companies like Cairn India (Rajasthan block) and Reliance Industries (the Krishna- Godavari basin). Consequently, we have revised our production volume estimates for FY2013 (4.48 lakh barrels, assuming 12 wells get commercialised from the current drilling plan) and accordingly our EPS estimate for FY2013 stands at Rs41.9 (up from Rs38.4 earlier). The FY2012 estimates get revised upwards due to the higher than expected realisation, which is currently Rs28.3, against previous estimate of Rs23.4.”
“Given the company’s aggressive drilling programme, we expect Selan’s net revenues and earnings to grow at a compounded annual growth rate (CAGR) of 47% and 49% respectively over FY2011-13, driven largely by volume growth with an assumption of flattish realisations. At the current market price the stock is available at 4.5x FY2012E and 2.7x FY2013E of EV/ EBITDA multiple. We maintain our Buy recommendation on Selan with a price target of Rs500 (based on EV/ EBITDA FY2013E multiple of 5.5x),” says Sharekhan research report.
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“In Q1FY2012, the net revenues (adjusted for the petroleum profit) of Selan Exploration Technology (Selan) grew by 42% backed by a stupendous growth (of 46%) in the realisation in line with the crude price movement. However, the volume remained flat year on year (YoY) at 47,217 barrels. Sequentially, the sales grew by 24%, which is a reflection of the growth in both volume (up 10%) and realisation (up 13%). The operating profit margin (OPM) was reported at 73.6%, an expansion of 118 basis points YoY, supported by high realisation. The operating profit grew by 44% YoY to Rs18 crore. Sequentially, the operating profit grew at a significant rate of 64% as expenses declined by 27% while sales grew at 23% quarter on quarter (QoQ). The administrative and employee expenses declined largely over Q4FY2011. ....
Sharekhan is bullish on Selan Exploration Tech and has recommended buy rating on the stock with a target of Rs 500 in its September 6, 2011 research report.
“In Q1FY2012, the net revenues (adjusted for the petroleum profit) of Selan Exploration Technology (Selan) grew by 42% backed by a stupendous growth (of 46%) in the realisation in line with the crude price movement. However, the volume remained flat year on year (YoY) at 47,217 barrels. Sequentially, the sales grew by 24%, which is a reflection of the growth in both volume (up 10%) and realisation (up 13%). The operating profit margin (OPM) was reported at 73.6%, an expansion of 118 basis points YoY, supported by high realisation. The operating profit grew by 44% YoY to Rs18 crore. Sequentially, the operating profit grew at a significant rate of 64% as expenses declined by 27% while sales grew at 23% quarter on quarter (QoQ). The administrative and employee expenses declined largely over Q4FY2011. This could be attributed to the adjustment done at the last quarter of the last year.”
“The management has indicated that it has commercialised two wells from the drilling activity undertaken at the Lohar oilfield. The company aims to drill 18-20 new wells in the next two years, subject to regulatory approval. In terms of its medium-term guidance the management expects to more than double the production to 500,000 to 700,000 barrels over the next two years and has roped in a highly experienced team to manage the operations under the leadership of Andrew Wenk as the president and chief executive officer of the company. He has two decades of experience in the oil exploration industry with stints in companies like Cairn India (Rajasthan block) and Reliance Industries (the Krishna- Godavari basin). Consequently, we have revised our production volume estimates for FY2013 (4.48 lakh barrels, assuming 12 wells get commercialised from the current drilling plan) and accordingly our EPS estimate for FY2013 stands at Rs41.9 (up from Rs38.4 earlier). The FY2012 estimates get revised upwards due to the higher than expected realisation, which is currently Rs28.3, against previous estimate of Rs23.4.”
“Given the company’s aggressive drilling programme, we expect Selan’s net revenues and earnings to grow at a compounded annual growth rate (CAGR) of 47% and 49% respectively over FY2011-13, driven largely by volume growth with an assumption of flattish realisations. At the current market price the stock is available at 4.5x FY2012E and 2.7x FY2013E of EV/ EBITDA multiple. We maintain our Buy recommendation on Selan with a price target of Rs500 (based on EV/ EBITDA FY2013E multiple of 5.5x),” says Sharekhan research report.
September 04, 2011
Buy Idea Cellular; target of Rs 126: Sushil Finance
“Idea Cellular Limited (ICL) is a part of Aditya Birla Group and has operating history since 1995. ICL is the 3rd largest operator (Revenue-wise) in the country. The Company is an integrated GSM operator and has Pan-India presence. The Company holds the leadership position in Kerala, Madhya Pradesh, Maharashtra & Uttar Pradesh (W) circles in terms of Revenue Market Share. The Company had recently acquired 3G spectrum for 11 circles, these circles are the Company’s primary sources of revenues and accounted for more than three-fourth of the overall revenues. ICL had rolled-out 3G services during Q1 FY12.....
“Idea Cellular Limited (ICL) is a part of Aditya Birla Group and has operating history since 1995. ICL is the 3rd largest operator (Revenue-wise) in the country. The Company is an integrated GSM operator and has Pan-India presence. The Company holds the leadership position in Kerala, Madhya Pradesh, Maharashtra & Uttar Pradesh (W) circles in terms of Revenue Market Share. The Company had recently acquired 3G spectrum for 11 circles, these circles are the Company’s primary sources of revenues and accounted for more than three-fourth of the overall revenues. ICL had rolled-out 3G services during Q1 FY12.”
“ICL has been putting efforts for improving its brand recognition with novel and aggressive advertising campaigns, strategic brand promotions and product innovations the effects of which is showcased in constant improvement in various parameters. ICL has constantly been increasing its market share in the net additions of the wireless subscribers over the last five quarters. During Q1 FY12, ICL managed to acquire 14.0% of the net additions to the wireless subscribers as compared to 9.9% during Q1 FY11. Moreover, ICL has most benefited from Mobile Number Portability (MNP) which was launched in January 2011. According to data released by the telecom ministry about 13 mn subscribers had switched their operators till the end of June 2011 citing network and tariff issues. ICL gained 0.82 mn subscribers though MNP, highest in comparison to all the competitors. ICL also registered the lowest port-out ratio of 58 customers for every 100 customers porting in amongst the incumbents. Furthermore, the recently commenced Visitor Location Register (VLR) reporting by Telecom Regulatory Authority of India (TRAI) suggests that ICL has been ranked top in terms of active subscribers. According to data released by TRAI, over 92.0% of ICL’s subscribers are active. The amount and efforts incurred on aggressive marketing and advertising strategy has gradually been paying off as the Company manages to strengthen the brand ‘Idea'.”
“ICL started the first quarter of FY 2012 with strong top-line growth and robust performance at the EBITDA level. The Company has constantly been increasing its market share of the net additions of subscribers. Idea now stands at the 4th position in terms of subscriber base and 3rd in terms of revenue market share. Idea has evolved as strong brand over the past couple of years. The rising popularity of the brand has resulted into improved key performance indicators such as net adds market share, percentage of active subscribers and has also benefited from mobile number portability. Moreover, focus on rural markets builds volume visibility for the future. ICL currently trades at EV/EBITDA multiple of 11.6x on FY11 EBITDA of Rs.37,907 mn and 7.1x on FY13E EBITDA of Rs.62,104 mn. We recommend investors to BUY the stock at current levels of Rs.101 for initial target price of Rs.126,” says Sushil Finance research report.
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“Idea Cellular Limited (ICL) is a part of Aditya Birla Group and has operating history since 1995. ICL is the 3rd largest operator (Revenue-wise) in the country. The Company is an integrated GSM operator and has Pan-India presence. The Company holds the leadership position in Kerala, Madhya Pradesh, Maharashtra & Uttar Pradesh (W) circles in terms of Revenue Market Share. The Company had recently acquired 3G spectrum for 11 circles, these circles are the Company’s primary sources of revenues and accounted for more than three-fourth of the overall revenues. ICL had rolled-out 3G services during Q1 FY12.”
“ICL has been putting efforts for improving its brand recognition with novel and aggressive advertising campaigns, strategic brand promotions and product innovations the effects of which is showcased in constant improvement in various parameters. ICL has constantly been increasing its market share in the net additions of the wireless subscribers over the last five quarters. During Q1 FY12, ICL managed to acquire 14.0% of the net additions to the wireless subscribers as compared to 9.9% during Q1 FY11. Moreover, ICL has most benefited from Mobile Number Portability (MNP) which was launched in January 2011. According to data released by the telecom ministry about 13 mn subscribers had switched their operators till the end of June 2011 citing network and tariff issues. ICL gained 0.82 mn subscribers though MNP, highest in comparison to all the competitors. ICL also registered the lowest port-out ratio of 58 customers for every 100 customers porting in amongst the incumbents. Furthermore, the recently commenced Visitor Location Register (VLR) reporting by Telecom Regulatory Authority of India (TRAI) suggests that ICL has been ranked top in terms of active subscribers. According to data released by TRAI, over 92.0% of ICL’s subscribers are active. The amount and efforts incurred on aggressive marketing and advertising strategy has gradually been paying off as the Company manages to strengthen the brand ‘Idea'.”
“ICL started the first quarter of FY 2012 with strong top-line growth and robust performance at the EBITDA level. The Company has constantly been increasing its market share of the net additions of subscribers. Idea now stands at the 4th position in terms of subscriber base and 3rd in terms of revenue market share. Idea has evolved as strong brand over the past couple of years. The rising popularity of the brand has resulted into improved key performance indicators such as net adds market share, percentage of active subscribers and has also benefited from mobile number portability. Moreover, focus on rural markets builds volume visibility for the future. ICL currently trades at EV/EBITDA multiple of 11.6x on FY11 EBITDA of Rs.37,907 mn and 7.1x on FY13E EBITDA of Rs.62,104 mn. We recommend investors to BUY the stock at current levels of Rs.101 for initial target price of Rs.126,” says Sushil Finance research report.
Buy Sterlite Tech; target of Rs 53: Nirmal Bang
Nirmal Bang is bullish on Sterlite Technologies and has recommended buy rating on the stock with a target of Rs 53 in its September 2, 2011 research report.
“Sterlite Technologies Ltd (STL) is India’s only fully integrated optical fiber manufacturer and the fifth-largest globally. The company is also the third-largest global manufacturer of power conductors and is a leader in the local market with 25% market share....
Nirmal Bang is bullish on Sterlite Technologies and has recommended buy rating on the stock with a target of Rs 53 in its September 2, 2011 research report.
“Sterlite Technologies Ltd (STL) is India’s only fully integrated optical fiber manufacturer and the fifth-largest globally. The company is also the third-largest global manufacturer of power conductors and is a leader in the local market with 25% market share.
“The company has embarked on a capacity expansion for its power conductors and optical fiber business units. In the power conductor segment, it has increased capacity from 75000 Mtpa in FY07 to 160000 Mtpa in FY10 and is further expanding to 200000 Mtpa by FY12. This would make STL the world’s largest integrated manufacturer of power conductors. In the optical fiber segment, the company is increasing its capacity to 20 mn kms from its current 12 mn kms. This would make STL among the largest global manufacturers of optical fibers by FY12. The impact of these expansions will be seen in FY13. STL has ventured into bidding for independent power transmission projects and has won a BOOM project of East North Interconnection mega transmission whereby it will get fixed revenues every year. This would provide additional revenue stream after 3-5 years. This project has achieved financial closure and is on schedule. The company has 2 other BOOM projects under this portfolio for which it is targeting the financial closure in FY12.”
“In 2010, the global demand for optical fiber cable reached 182 mn fiber-km and this is expected to cross 200 mn fiber-km in 2011 on the back of developed country’s efforts to build FTTx networks. Chinese demand saw a flat growth in the previous year. This year, however, all the 3 telecom operators in China together have come up with investment plans of US$ 50 billion for building 3G mobile network and construction of FTTx networks. Sterlite has formed a JV with a Chinese firm with 75% ownership and is in a very good position to capture this demand.”
“STL is a leader in the areas of its operations and the end user industries – Power and Telecom are seeing robust growth. We expect revenues to grow by 22% to Rs.2762 cr and PAT to move up by 14% to Rs.160 cr in FY12E. At CMP, the stock is trading at 9.6x of FY12E EPS of Rs.4.08. We assign a multiple of 13x to its FY12E EPS to arrive at price target of Rs.53 and assign a BUY recommendation on the stock,” says Nirmal Bang research report.
back“Sterlite Technologies Ltd (STL) is India’s only fully integrated optical fiber manufacturer and the fifth-largest globally. The company is also the third-largest global manufacturer of power conductors and is a leader in the local market with 25% market share....
Nirmal Bang is bullish on Sterlite Technologies and has recommended buy rating on the stock with a target of Rs 53 in its September 2, 2011 research report.
“Sterlite Technologies Ltd (STL) is India’s only fully integrated optical fiber manufacturer and the fifth-largest globally. The company is also the third-largest global manufacturer of power conductors and is a leader in the local market with 25% market share.
“The company has embarked on a capacity expansion for its power conductors and optical fiber business units. In the power conductor segment, it has increased capacity from 75000 Mtpa in FY07 to 160000 Mtpa in FY10 and is further expanding to 200000 Mtpa by FY12. This would make STL the world’s largest integrated manufacturer of power conductors. In the optical fiber segment, the company is increasing its capacity to 20 mn kms from its current 12 mn kms. This would make STL among the largest global manufacturers of optical fibers by FY12. The impact of these expansions will be seen in FY13. STL has ventured into bidding for independent power transmission projects and has won a BOOM project of East North Interconnection mega transmission whereby it will get fixed revenues every year. This would provide additional revenue stream after 3-5 years. This project has achieved financial closure and is on schedule. The company has 2 other BOOM projects under this portfolio for which it is targeting the financial closure in FY12.”
“In 2010, the global demand for optical fiber cable reached 182 mn fiber-km and this is expected to cross 200 mn fiber-km in 2011 on the back of developed country’s efforts to build FTTx networks. Chinese demand saw a flat growth in the previous year. This year, however, all the 3 telecom operators in China together have come up with investment plans of US$ 50 billion for building 3G mobile network and construction of FTTx networks. Sterlite has formed a JV with a Chinese firm with 75% ownership and is in a very good position to capture this demand.”
“STL is a leader in the areas of its operations and the end user industries – Power and Telecom are seeing robust growth. We expect revenues to grow by 22% to Rs.2762 cr and PAT to move up by 14% to Rs.160 cr in FY12E. At CMP, the stock is trading at 9.6x of FY12E EPS of Rs.4.08. We assign a multiple of 13x to its FY12E EPS to arrive at price target of Rs.53 and assign a BUY recommendation on the stock,” says Nirmal Bang research report.
Buy IndusInd Bank; target of Rs 278: SKP Securities
SKP Securities is bullish on IndusInd Bank and has recommended buy rating on the stock with a target of Rs 278 in its September 2, 2011 research report.
“Indusind Bank is the seventh largest private sector bank in terms of business. Incorporated in 1994 by Mr Srichand Hinduja of the Hinduja group, it is one of the fast growing new generation private sector banks with a distribution network of 326 branches and 633 ATMs. The bank witnessed a turnaround from its waning performance after Mr. Romesh Sobti took charge as the Managing Director and CEO of the bank in February 2008.”
“The bank earns 12.5-13.5% yields on its CV portfolio, while the new products-loan against property, credit cards and used commercial vehicle are expected to yield ~13-15%, ~26% and ~17% respectively. In order to achieve its objective of growth along with profitability the bank is planning to achieve a 50:50 ratio between its CF and CCB loan book by FY14E. We expect, Indusind Bank’s loan book to grow by 27% CAGR between FY11 and FY14E and expect its loan book to increase from Rs. 262 bn in FY11 to Rs. 536 bn in FY14E.”
“We expect the branch network to increase to 410 in FY12E, 525 in FY13E and 640 by FY14E. The bank plans to leverage on its expanded branch network and primarily enhance its CASA deposits. We expect CASA deposits to grow at 38.2% CAGR from Rs. 93.3 bn in FY11 to Rs. 246.04 bn in FY14E. We expect CASA ratio to increase from 27.2% in FY11 to 34.8% in FY14E. The bank’s approach is to fund its fixed rate CF portfolio which yields higher returns with low fixed cost CASA, thus maximizing margins. As a corollary of increased branch network and visibility the CASA per branch is likely to improve and SA growth is likely to be higher than CA growth.”
“At CMP, the stock trades at 2.5x, 1.9x and 1.6x P/BV of FY12E, FY13E and FY14E respectively. We have valued Indusind Bank based on residual income model at CMP and arrived at a target price of Rs. 278 yielding a potential upside of 13%, valuing the stock at 2.1x, 1.9x P/BV on FY13E, FY14E BVPS of Rs. 130 and Rs. 150 respectively,” says SKP Securities research report.
back“Indusind Bank is the seventh largest private sector bank in terms of business. Incorporated in 1994 by Mr Srichand Hinduja of the Hinduja group, it is one of the fast growing new generation private sector banks with a distribution network of 326 branches and 633 ATMs. The bank witnessed a turnaround from its waning performance after Mr. Romesh Sobti took charge as the Managing Director and CEO of the bank in February 2008.”
“The bank earns 12.5-13.5% yields on its CV portfolio, while the new products-loan against property, credit cards and used commercial vehicle are expected to yield ~13-15%, ~26% and ~17% respectively. In order to achieve its objective of growth along with profitability the bank is planning to achieve a 50:50 ratio between its CF and CCB loan book by FY14E. We expect, Indusind Bank’s loan book to grow by 27% CAGR between FY11 and FY14E and expect its loan book to increase from Rs. 262 bn in FY11 to Rs. 536 bn in FY14E.”
“We expect the branch network to increase to 410 in FY12E, 525 in FY13E and 640 by FY14E. The bank plans to leverage on its expanded branch network and primarily enhance its CASA deposits. We expect CASA deposits to grow at 38.2% CAGR from Rs. 93.3 bn in FY11 to Rs. 246.04 bn in FY14E. We expect CASA ratio to increase from 27.2% in FY11 to 34.8% in FY14E. The bank’s approach is to fund its fixed rate CF portfolio which yields higher returns with low fixed cost CASA, thus maximizing margins. As a corollary of increased branch network and visibility the CASA per branch is likely to improve and SA growth is likely to be higher than CA growth.”
“At CMP, the stock trades at 2.5x, 1.9x and 1.6x P/BV of FY12E, FY13E and FY14E respectively. We have valued Indusind Bank based on residual income model at CMP and arrived at a target price of Rs. 278 yielding a potential upside of 13%, valuing the stock at 2.1x, 1.9x P/BV on FY13E, FY14E BVPS of Rs. 130 and Rs. 150 respectively,” says SKP Securities research report.
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