PULSE TRACK
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Infrastructure index up 9.5% for November 2006
STOCK UPDATE
Bharat Heavy Electricals
Cluster: Apple Green
Recommendation: Buy
Price target: Rs2,650
Current market price: Rs2,301
BHEL plans to hike capacity to 15,000MW
Bharat Heavy Electricals Ltd (BHEL) has successfully completed its capacity expansion to 10,000 megawatt (MW). The total cost of the capital expenditure (capex) programme was close to Rs1,200 crore. This was undertaken primarily to meet the expected capacity addition of 66,000MW in the 11th Five-Year Plan.
Tata Motors
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,004
Current market price: Rs939
Another month of exhilarating performance
- Tata Motors' December sales numbers were above expectations as the company reported a 37% growth year on year (yoy) in the total sales (including exports) with sales touching 48,792 units during the month.
- The performance was again largely driven by the strong growth in the domestic commercial vehicle (CV) sales, which grew by 50% yoy to 28,179 units in December 2006. The medium and heavy commercial vehicle (M&HCV) sales stood at 17,274 units, growing by 55% yoy while the light commercial vehicle (LCV) sales grew by 43% to 10,905 units.
- The passenger vehicle sales also remained strong during the month, rising by 27% to 16,515 units. The sales of Indica grew by a whopping 52% to 10,588 units during the month. The new Indica V2 Xeta with a 1.2 litre engine at an introductory discount of Rs25,000 continued to lead the volume growth during the month. The scheme, however, has been withdrawn with the start of the new year. The Indigo family registered sales of 2,077 units, declining by 24.6%; however the sales of Sumo and Safari grew by 16% to 3,850 units.
- The company's sales from exports rose by 7% in December at 4,098 units as compared to 3,831 units in the same month in 2005. The cumulative exports grew by 11.6% for the April-December period to 38,733 units from a year ago.
- The cumulative total sales for the current fiscal (April-December period) stood at 406,949 units, rising by 33.1% compared with the total sales in the corresponding period of the last fiscal. The cumulative domestic passenger vehicle sales were up 22.5% to 125,660 units, whereas the sales of domestic commercial vehicles grew by 47.2% to 211,206 units in the same period.
- At the current market price, the stock discounts its consolidated FY2008E earnings by 13.9x. We maintain our Buy on the stock with a price target of Rs1,004