Emkay assigns buy to Jindal Saw; target Rs 941
MUMBAI: Emkay Global Financial services has maintained ‘buy’ on Jindal SAW for a revised target price of Rs 941. The company’s Apr-Jun 2008 results were inline with the brokerage expectations. Jindal Saw has reported 34.76 per cent growth in net sales from Indian operations on year on year basis. In Apr-Jun 2008, the company reported net turnover of Rs 1,017.5 Out of the total net revenue in Apr-Jun 2008, 59 per cent was from exports and 41 per cent was from sale in India. EBITDA margin of the company during the quarter expanded by 337 basis points on y-o-y basis and thus stood at a firm level of 15.9 per cent. The improvement in the margin is attributed to the selling off of low margin US operation. But in the coming quarter, the margin is expected to be at a lower level of around 14.5 per cent primarily on account of lower margin contributed by fixed price contracts on DI pipes. The substantial rise in prices of coal is expected to impact the margins on DI pipes. Net profit remained strong at Rs 70.2 crore with profit after tax margin of 6.9 per cent. The profit after tax margin declined against Jan-Mar 2008 on account of higher financial expenses of Rs 55 crore. It included Rs 12 crore of translation losses on FCCB and Rs 17-18 crore of losses on options and forward contracts. Jindal SAW has a strong order book of USD 1.12 billion which includes over 55 per cent of exports orders. These orders are to be executed by April/May 2009. Out of the total USD 1.12 billion, USD 760 million are of large diameter pipes, USD 170 million are of DI Pipes and USD 160 million are of Seamless pipes. The capital expenditure plans are running as per schedule. Installation of PQF mill and other equipments in Seamless plant will be completed by September/October 2008. The commercial production in power plant began in phases. The additional 200,000 MTPA of LSAW and 350,000 MTPA of HSAW facilities are expected to start trail run in 2008. The company is incurring a total of USD 200 million on these plans for which the funds are already tied up. The management has not given any update on new businesses. As per previous guidance, the company expects Rs 100 crore of revenue from waterways business and from Jindal Water Infrastructure, the management expects to execute orders upto Rs 325 crore in this year. Emkay believes that the new ventures would strengthen the topline and bottomline and earning per share of Jindal Saw. The new businesses would diversify its business model by de-risking it from raw material price volatility and currency volatility. Currently Emkay has not included any contribution from the new ventures in their estimates. Emkay has already factored in, the impact of rise in important raw material prices like coal, iron ore, etc in their estimates for CY08E and CY09E. On the basis of CY08E and CY09E revised earnings per share of Rs 48.5 and Rs 79.1, the scrip is trading at an attractive PE multiple of 11.6x and 7.1x respectively. The target price includes Rs 145 per share as value of quoted investment (at 50% discount to its market value) and Rs 796. At their target price, the scrip discounts CY09E EPS of Rs 79 by 11.9x.
Monday, August 11, 2008
Bank of India
Macquarie maintains ‘outperform’ on Bank of India
CMP: Rs 290.70 ( 8th Aug 08 )
Target Price: Rs 336
Macquarie believes that Bank of India’s strong results show its relative resilience among government-owned banks to the tough macro environment. The bank remains its top pick among state-owned banks and the broking house maintains ‘outperform’ rating with a revised target price of Rs 336 from the previous Rs 299. It says that the key earnings surprise was strong growth in fees to 58% Y-o-Y driving the 49% Y-o-Y growth in non-interest income. It infers that the bank has been aggressively pushing for fees business, focusing on products such as letters of credit and guarantees.
CMP: Rs 290.70 ( 8th Aug 08 )
Target Price: Rs 336
Macquarie believes that Bank of India’s strong results show its relative resilience among government-owned banks to the tough macro environment. The bank remains its top pick among state-owned banks and the broking house maintains ‘outperform’ rating with a revised target price of Rs 336 from the previous Rs 299. It says that the key earnings surprise was strong growth in fees to 58% Y-o-Y driving the 49% Y-o-Y growth in non-interest income. It infers that the bank has been aggressively pushing for fees business, focusing on products such as letters of credit and guarantees.
Aegis logistics - stock BUY
KR Choksey Shares & Securities assigns ‘buy’ on Aegis Logistics
CMP: Rs 171.60 ( 8th Aug 08 )
Target Price: Rs 207
KR Choksey Shares & Securities has assigned a ‘buy’ on Aegis Logistics with a one-year price target of Rs 207, citing growing domestic consumption of the company’s services. Aegis Logistics mainly concentrates on port handling of liquid petroleum or chemicals and gas storage and distribution. “Given the growing domestic consumption of petroleum and gas in the recent years, Aegis Logistics (ALL) is well placed to grab the increasing opportunities in this sector. As a result of favourable cost, economics of auto gas over petrol and the increasing new entrants of LPG variants of cars in the market, the company is all set to scale up auto gas stations from the current 22 to 100 in the next two years,” the report said.
Mahindra and Mahindra , stock tips
Edelweiss Capital's ‘buy’ rating on Mahindra & Mahindra
CMP: Rs 574.20 ( 8th Aug 08 )
Target Price: Rs na
Edelweiss Capital has initiated coverage on Mahindra & Mahindra (M&M) with a ‘buy’ rating. The brokerage expects the operating divisions of M&M to perform well over the medium term, in terms of growth and profitability. “We expect significant expansion in M&M’s addressable market through its entry into the passenger car. The company has significant value embedded in its investments, covering information technology Tech Mahindra), real estate & infrastructure (Mahindra Gesco), hospitality (Mahindra Holidays), financial services (Mahindra & Mahindra Financial Services), and auto-component (Mahindra Ugine Steel and Mahindra Forgings) sectors,” the report said.
YES Bank - stock tip
IDBI Capital maintains ‘buy’ rating on YES Bank
CMP: Rs 138.35 ( 8th Aug 08 )
Target Price: na
IDBI Capital has maintained a ‘buy’ rating on YES Bank, on expectations of higher growth happen. The brokerage expects the Bank to log strong income growth in the long term. Despite mark-to-market (MTM) depreciation, net provisions have been lower owing to reversals equivalent to MTM depreciation done on investment provisions, the IDBI report noted. The bank has increased its lending and deposit rates recently. The PLR has been raised by 150 bps to 17% while the card rates for deposits have undergone changes in various maturities from 50-75 bps. “We expect the PLR change to immediately have a beneficial impact on the bank’s earnings while the full impact of deposit rate hike should be expected in FY10,” the report said. IDBI has revised net profits for FY09 and FY10 to Rs 2,927 million and Rs 4,394 million, respectively.
CMP: Rs 138.35 ( 8th Aug 08 )
Target Price: na
IDBI Capital has maintained a ‘buy’ rating on YES Bank, on expectations of higher growth happen. The brokerage expects the Bank to log strong income growth in the long term. Despite mark-to-market (MTM) depreciation, net provisions have been lower owing to reversals equivalent to MTM depreciation done on investment provisions, the IDBI report noted. The bank has increased its lending and deposit rates recently. The PLR has been raised by 150 bps to 17% while the card rates for deposits have undergone changes in various maturities from 50-75 bps. “We expect the PLR change to immediately have a beneficial impact on the bank’s earnings while the full impact of deposit rate hike should be expected in FY10,” the report said. IDBI has revised net profits for FY09 and FY10 to Rs 2,927 million and Rs 4,394 million, respectively.
Friday, August 8, 2008
Dish TV - Short term call ( 8th Aug 08 )
Short term call ( 8th Aug 08 )
We recommend a buy in Dish TV India from a short-term perspective. It is clearly visible from the charts of Dish TV India that it had been on a medium-term downtrend between April and July (from a high of Rs 66 to Rs 26). After recording a 52 week low at Rs 26 in early July, the stock reversed and began to trend upward.
This reversal was triggered by a positive divergence in the daily relative strength index. On August 4, the stock jumped 9 per cent breaking through the medium-term down trendline.
Subsequently, on August 7, the stock surged 11 per cent strengthening the up move. We observe heavy volume over the past four trading sessions. The daily RSI has entered into the bullish zone from the neutral region.
The moving average convergence and divergence is on the brink of entering the positive territory.
The stock is trading well above its 21- and 50-day moving averages. We are positive on the stock in the short-term.
We anticipate the stock to move up until it hits our price target of Rs 42 in the approaching trading sessions. Traders with short-term perspective can buy the stock, while maintaining a stop-loss at Rs 35.50.
BL Research Bureau
We recommend a buy in Dish TV India from a short-term perspective. It is clearly visible from the charts of Dish TV India that it had been on a medium-term downtrend between April and July (from a high of Rs 66 to Rs 26). After recording a 52 week low at Rs 26 in early July, the stock reversed and began to trend upward.
This reversal was triggered by a positive divergence in the daily relative strength index. On August 4, the stock jumped 9 per cent breaking through the medium-term down trendline.
Subsequently, on August 7, the stock surged 11 per cent strengthening the up move. We observe heavy volume over the past four trading sessions. The daily RSI has entered into the bullish zone from the neutral region.
The moving average convergence and divergence is on the brink of entering the positive territory.
The stock is trading well above its 21- and 50-day moving averages. We are positive on the stock in the short-term.
We anticipate the stock to move up until it hits our price target of Rs 42 in the approaching trading sessions. Traders with short-term perspective can buy the stock, while maintaining a stop-loss at Rs 35.50.
BL Research Bureau
HPCL, Analyst reco
HPCL - 6th Aug 08
CMP:RS 234.20
TARGET PRICE:NA
ICICI Securities has maintained a ‘buy’ rating on HPCL even after the company reported a recurring loss of Rs 880 crore in the first quarter of the current financial year due to lower than expected subsidy support from the government and upstream companies. The brokerage expects subsidy support to increase over the year as the government has not yet accounted for the Rs 40,000 crore unallocated burden.
“Though we continue to believe that the stock may remain subdued in the short term till the government decides the final subsidy burden-sharing formula, the company is trading at a significant discount to the replacement value of its asset,” says the report. The brokerage also highlights the fact that risks of further increase in interest costs along with expectations of a fall in refining margins could potentially impact earnings.
Positive surprise, however, on higher subsidy sharing by upstream companies and oil bonds could be a boost to stock prices it adds. Positive news on the E&P front and implementation of subsidy reforms recommended by the Rangarajan Committee could trigger re-rating in the stock, says the report.
CMP:RS 234.20
TARGET PRICE:NA
ICICI Securities has maintained a ‘buy’ rating on HPCL even after the company reported a recurring loss of Rs 880 crore in the first quarter of the current financial year due to lower than expected subsidy support from the government and upstream companies. The brokerage expects subsidy support to increase over the year as the government has not yet accounted for the Rs 40,000 crore unallocated burden.
“Though we continue to believe that the stock may remain subdued in the short term till the government decides the final subsidy burden-sharing formula, the company is trading at a significant discount to the replacement value of its asset,” says the report. The brokerage also highlights the fact that risks of further increase in interest costs along with expectations of a fall in refining margins could potentially impact earnings.
Positive surprise, however, on higher subsidy sharing by upstream companies and oil bonds could be a boost to stock prices it adds. Positive news on the E&P front and implementation of subsidy reforms recommended by the Rangarajan Committee could trigger re-rating in the stock, says the report.
HDFC Bank, Broker tips
HDFC BANK - 6th Aug 08
CMP: RS 1,184.35
TARGET PRICE: RS 1,400
Indiabulls has maintained a ‘buy’ rating on HDFC Bank as it feels that the bank would revert to its more profitable numbers once Centurion Bank of Punjab (CBoP) is integrated in its existing network. “Sound fundamentals make HDFC Bank a strong performer,” says the report, adding that “despite taking a nominal hit on its net interest margin (NIM) post the merger with CBoP, net interest income (NII) grew by 74.9% YoY and fee income by 37.3% YoY.”
This pulled up net profit by 44.6% and on a proforma basis, by 31.1%. While the bank recorded a 111.60% YoY increase in its non-performing assets, the brokerage feels it is more on account of the merger than due to a deterioration in asset quality, since HDFC Bank’s net NPA ratio stood at 0.5% of net advances this quarter.
CMP: RS 1,184.35
TARGET PRICE: RS 1,400
Indiabulls has maintained a ‘buy’ rating on HDFC Bank as it feels that the bank would revert to its more profitable numbers once Centurion Bank of Punjab (CBoP) is integrated in its existing network. “Sound fundamentals make HDFC Bank a strong performer,” says the report, adding that “despite taking a nominal hit on its net interest margin (NIM) post the merger with CBoP, net interest income (NII) grew by 74.9% YoY and fee income by 37.3% YoY.”
This pulled up net profit by 44.6% and on a proforma basis, by 31.1%. While the bank recorded a 111.60% YoY increase in its non-performing assets, the brokerage feels it is more on account of the merger than due to a deterioration in asset quality, since HDFC Bank’s net NPA ratio stood at 0.5% of net advances this quarter.
Stocks - Analyst recommendations
Stock: Tata Motors ( 7th Aug 08 )
Anand Rathi Securities has initiated a medium term technical ‘buy’ call on Tata Motors. The brokerage suggests buying this stock between Rs 430-440 with a stoploss of Rs 399 for a target of Rs 520. The current market price is Rs 440.
The stock has sustained above its strong resistance levels at Rs 435-440. The 14-day Relative Strength Index indicates the stock is in an oversold zone and the candle stick chart has formed a bullish engulfing pattern.
“We strongly believe that the stock has entered into medium term bullishness with substantial upside,” Anand Rathi says in its report
Anand Rathi Securities has initiated a medium term technical ‘buy’ call on Tata Motors. The brokerage suggests buying this stock between Rs 430-440 with a stoploss of Rs 399 for a target of Rs 520. The current market price is Rs 440.
The stock has sustained above its strong resistance levels at Rs 435-440. The 14-day Relative Strength Index indicates the stock is in an oversold zone and the candle stick chart has formed a bullish engulfing pattern.
“We strongly believe that the stock has entered into medium term bullishness with substantial upside,” Anand Rathi says in its report
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