Research Calls

Bharti Airtel
Angel Broking recommends a "buy" on Bharti Airtel at Rs 776 with a 12-month target price of Rs 980. The stock trades at a price earnings ratio of 15.8 times estimated FY2009 earnings.

Angel has upgraded its topline forecasts for FY07, FY08 and FY09 by 1.9 per cent, 2.3 per cent and 1 per cent respectively, as the company's reported ARPU's have fallen lesser than estimates, as also stronger than anticipated performance of the other business segments viz Broadband and Telephone and enterprise business.

It has also raised its EPS forecasts by 8.2 per cent, 14.1 and 15.8 per cent respectively. Bharti Airtel's monthly subscriber additional have consistently improved in FY2007. The TRAI move to cut the industry access deficit charge (ADC) by 38 per cent in FY2008 is another positive, which will drive increased minutes of use.

The company’s EBITDA margins have increased at a significantly faster than expected rate and in 9 M FY2007, have soared to 39.7 per cent(up 233 bps y-o-y) on the back of strong operating leverage.

Gateway Distriparks

Sharekhan recommends a “buy” on Gateway Distriparks (GDL) at Rs 160, with a target price of Rs 250. The stock trades at 18.5 times and 13.2 times its expected FY07 and FY08 earnings respectively.

The company’s strategy to become an integrated player by entering into rail-based container movement business will tremendously improve its competitive position in the industry in the long run.

GDL recently formed a 51:49 joint venture with Container Corporation of India (Concor) through its subsidiary Gateway Rail to construct and operate a rail-linked double-stack container terminal at Garhi-Harsaru.

Further, it is also planning to enter the cold storage chain business, which is expected to add significant value to its business going ahead.

Tata Elxsi

Emkay Research recommends a “buy” on Tata Elxsi at Rs 284 with a target price of Rs 381. The stock trades at 12.8 times and 9.7 times its expected FY08 and FY09 earnings. The corresponding EV/EBITDA for the same period is 9.5 times and 7.2 times respectively.

Over the years, Tata Elxsi, has transformed itself from being a low margin system integration and support centric player to a high margin full lifecycle product design service provider.

It has also increased its presence in providing quality animation (2D and 3D), special effects, and gaming services to customers worldwide. The company’s sales and net profit are expected to grow at a compound rate of over 35 per cent and 40 per cent over FY04-FY06.

Balaji Telefilms

Anand Rathi recommends a “buy” on Balaji Telefilms at Rs 127 with a target price of Rs 160/190. The stock trades at a P/E multiple of about 10.8 times its estimated FY07 earnings.

Due to its leadership position, the company could benefit from the structural changes in the delivery model like DTH, IPTV and CAS.

Other upsides to the target price include its forays in the movies segment and focus on non-soap genres like reality shows, animation, ad films, low budget films, mythological programmes, etc.

BT is also focussing on increasing the share of regional languages in its overall content pie and has set up a subsidiary to produce serials for the middle east markets.

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