Cluster: Apple Green
Price target: Rs178
Current market price: Rs97
Annual report review
The key highlights from the latest Omax Auto's annual report are mentioned below.
- FY2006 performance: Omax Auto registered a good top line and exports growth, but the profitability declined due to a rise in the employee and power costs and higher interest cost.
- Efforts to increase efficiencies: The company plans to undertake a number of measures in order to increase its operational efficiencies. The use of low-cost fuel, captive material consumption and increased automation and productivity are expected to achieve the same and aid in improving its margins going forward.
- Export expected to surge: The management has an export target of Rs50 crore for FY2007 as against exports of Rs26.6 crore in FY2006. The current export order book of the company is to the tune of Rs150 crore, which is to be executed within the next three years.
- Capex plans: Omax has aggressive plans to expand capacities across all its units including the units at Dharuhera, Binola and Bangalore. For the current fiscal, the estimated capital expenditure is Rs61 crore.
- Reiterate Buy: At the current levels, the stock discounts its FY2008E earnings by 4.7x and enterprise value (EV) by 3.5x. The stock appears to be attractive at these levels and we maintain our Buy recommendation on the stock with a price target of Rs178.
Price target: Rs1,250
Current market price: Rs1,155
It is solid, not gas
Recently there have been several news reports on Reliance Industries stating that the gas reserves in place in its KG-D6 block could be as high as 50 trillion cubic feet (tcf), almost three times the existing reserves as reported to the directorate of hydrocarbons.
We have revised our price target on the stock to take into account the earnings of the company for FY2008 and the value of Reliance Retail. We believe that with newer and exciting businesses lined for investment, RIL is set to enter another era of strong growth for itself over the next five years. We maintain our Buy recommendation on the stock with a price target of Rs1,250.
Educomp is well positioned to tap the huge potential in the education segment, both in the private and public schools, due to the investments made in developing the digital content. We expect the consolidated revenues and earnings to grow at a CAGR of 82% and 80% respectively over the two-year period FY2006-08. However, the positives appear to be fully priced in with the stock trading at 27.5x its FY2008 estimated earnings of Rs25 per share (on a diluted equity base).