Stocks you can pick up this week

Motherson Sumi System
Research: Merrill Lynch
Rating: Buy
CMP: Rs 96

Merrill Lynch initiates coverage on Motherson Sumi Systems (MSSL) with a ‘buy’ rating due to the following reasons: (1) 23%+ compounded annual growth rate (CAGR) in EPS during FY07-FY10E and sustainability of 20%+ earnings growth over a longer period; (2) 560 bps expansion in return on equity capital (RoCE); and (3) new business ventures.

Expansion of the rubber components business following the recent acquisition of Empire Rubber in Australia and beginning of commercial production of mobile phone plastics parts business in H2 FY08 are the key growth drivers, apart from the 22% CAGR in wiring harness revenues. There is significant possibility of earnings surprise on account of: (1) management guidance of 43% CAGR in earnings being significantly higher than expectations; and (2) likely benefit of 18% fall in copper prices in the next six quarters, compared to Merrill Lynch’s assumption of flat prices. The stock is trading at 11.97x FY09E EV/EBITDA — a discount of 15% and 31%, respectively, compared to Mico and Cummins India, despite better growth prospects and good track record. At management-guided EPS of Rs 9.8 in FY10E, the stock trades at 9.7x earnings.

Sesa Goa
Research: Buy
Rating: Goldman Sachs
CMP: Rs 2,111

GOLDMAN Sachs initiates coverage on Sesa Goa with a ‘buy’ rating. Sesa Goa is India’s largest exporter of iron ore in the private sector and is a direct play on iron ore price negotiations. With sustained tightness in the iron ore market, it will be a direct beneficiary of higher iron ore prices. High margins, attractive returns, debt-free balance sheet, strong free cash flow generation and cash pile of Rs 220 per share are added positives. The non-iron ore businesses will benefit due to a robust outlook on pig iron and met coke prices. Reining in logistics costs will remain a key focus area. Additionally, after the completion of the ongoing open offer, the new promoters, Vedanta Resources, may deploy surplus cash reserves. Sesa Goa is likely to deliver 40% earnings CAGR over FY07-FY09E on the back of a bullish iron ore price outlook and modest volume growth. Potential announcements on strategic use of the cash pile or expansion plans, post completion of the open offer by Vedanta Resources, can provide upside triggers. At 2.8x one-year forward EV/EBITDA — which is at a 50% discount to global mining companies — the stock is attractively valued.

Tata Motors
Research: Citigroup
Rating: Buy
CMP: Rs 694

Citigroup has put a ‘buy’ recommended on Tata Motors. The management guidance points to a modest revival in truck sales in H2 FY08E, which implies that overall sales for FY08 will be flat or may register modest growth. Truck operators’ profitability remains healthy, despite rise in interest rates. Freight rates continue to remain stable. The company will deploy Rs 8,000 crore over the next three years to launch new platforms in passenger cars and trucks.

The small car remains on schedule and will be launched in mid-CY08 (H1 FY09E). The management has said Tata Motors will start the process of demerging its subsidiaries by end FY08E, but this is still at a nascent stage. Brand, technology and markets are the key decision variables. Cost pressures (steel accounts for 45% of input costs) will continue to affect margins. Cost reduction exercise is nearly complete — the company has achieved Rs 970 crore of its stated Rs 1,000-crore cost-cutting exercise. Hikes in CV prices (~1-1.5%) undertaken in early FY08 will mitigate (but not offset) the impact of cost pressures.
Binani Cement
Research: JP Morgan
Rating: Overweight
CMP: Rs 79

JP Morgan initiates coverage on Binani Cement (BCL) with an ‘overweight’ rating. BCL appears to be at the cusp of aggressive volume growth. Cement production is likely to witness a CAGR of 44% over FY07-09. Increasing volumes, coupled with robust prices (in the current year) should drive 44% EBITDA growth and 40% EPS growth in FY08, as per JP Morgan’s estimates. In FY09, aggressive volume growth is likely to help offset the negative impact of an estimated 6% YoY decline in cement prices. A near 10% CAGR in domestic demand and benefits of consolidation should provide a higher floor to domestic prices, relative to previous cycles. BCL’s valuation looks compelling — the stock is trading at a near 40% valuation discount to mainstream cement players.

IDBI Bank
Research: ICICI Direct
Rating: Outperformer
CMP: Rs 131

ICICI Direct initiates coverage on IDBI Bank with an outperformer rating. IDBI Bank has transformed itself from a development financial institution (DFI) to an active participant in the booming banking and financial services space.

The amalgamation of United Western Bank with IDBI Bank has given the latter the much-needed branch network to enhance its retail presence. This, coupled with unlocking of value in its investments, is expected to lead to a surge in earnings. ICICI Direct expects earnings to witness a CAGR of 19% over FY07-09E to Rs 885 crore. IDBI Bank has a huge investment portfolio of quoted and unquoted equity stocks. It can unlock the value from these stocks and boost its profitability.

The value of the quoted and unquoted equity book is Rs 52 per share of IDBI Bank. The bank is expected to improve its core business gradually with net interest margins (NIMs) expanding from 0.48% in FY06 to 0.74% in FY07 and further to 1.07% by FY09E. At the current price around of Rs 130, the stock is trading at 1.3 its FY09E adjusted book value (ABV) and 10.6x its FY09E EPS of Rs 12.2. Based on a theoretical book value multiple of 0.9x its FY09E ABV, the value of its core banking business comes to Rs 87 per share. Its huge investment portfolio is valued at Rs 52 per share and subsidiaries at Rs 17 per share.

Godavari Chemicals & Fert
Research: IDBI Capital
Rating: Buy
CMP: Rs 129

Godavari Chemicals and Fertilizers — promoted jointly by Andhra Pradesh State Co-operatives (APSC) and the Indian Farm and Fertilizer Co-operative (IFFCO) — is one of the frontline players in the fertiliser segment in the South. It is now a part of Chennai-based Murugappa group, which acquired the stake of the Andhra Pradesh government in the process of disinvestment through Coromandel Fertilizers. Godavari is one of the leading producers of DAP and has a market share of 9% across India, while it has a 73% share in Andhra Pradesh.

During FY07, it increased the sale of traded products like water-soluble fertilisers, micronutrients and G-Sulphur. It has an approximate capacity of 1.2 million metric tones (mt), with a proximity to seaport and good infrastructure. Production during FY07 was highest at 11.35 lakh tonnes, when the average output increased to 72 mt per hour against 65 mt per hour. However, production was hit due to constraints of phosphoric acid supply. The company will expand its capacity by 4.25 lakh mt by June ’09. It has also completed construction of 10,000 mt atmospheric ammonia at Kakinada. Godavari Chemicals has put up a good show for Q1 FY08 with regard to operating and net profits. Its revenue, at Rs 17.3 crore, was down by 35% YoY. PAT was Rs 1.3 crore, against a loss of Rs 40 lakh in the year-ago period. The stock is currently trading at 6x its trailing 12 months EPS of Rs 20.65.

ICICIDirect - Network 18 Fincap

ICICIDirect - Network 18 Fincap

ICICIDirect - EKC , ASK - Suzlon Energy

ICICIDirect - EKC

ASK - Suzlon Energy

Pick of the Week - Gateway Distriparks Ltd

GDL is expected to benefit from improving infrastructure and policy initiatives like entry of private players in the rail freight business. It has also moved up the value chain through acquisitions in the cold storage business and become an integrated logistics solution provider.

Company Background

Gateway Distriparks (GDL) is a one of the major private players in handling, transport and storage of containers, warehousing of cargo and various value added services provided in relation to import and export of cargo in containers. GDL is an Indo-Singapore joint venture and has been promoted by Prism International Pte Ltd. Windmill International Pte Ltd and Thakral Corporation.

The company has modern Container Freight Station's (CFS's) at Dronagiri (about 9 kms from the Jawaharlal Nehru Port ), Navi Mumbai and New Manali, Chennai besides an Inland Container Depot (ICD) at Garhi Harsaru (near Delhi ), Haryana and a newly commissioned CFS at Vishakapatam (a joint venture with Suri Group).

In March 2005 the company raised Rs 79.2 crores by way of initial public offer (IPO). GDL offered 1.1 crore shares of Rs 10 each at a premium of Rs 62. In December 2005, GDL raised Rs 384.6 crore by way Global Depository Receipts (GDR) at a price of Rs 230.87 per share.

The company has recently proposed a bonus issue in ratio of 1:4.

Investment Rationale

Container Freight industry to grow at a rapid pace
India container freight business is expected to grow by 4 times in the next 6-8 years to 20,000,000 Twenty Foot Equivalent Units (TEU). To capitalize on the growth opportunity, GDL has enhanced its presence by establishing Container Freight Stations (CFS) and Inland Container Depots (ICD) at strategic locations like Navi Mumbai, Vizag, Chennai, Gurgaon, Faridabad , Haryana, Ludhiana and Kochi . These CFSs and ICDs provide GDL with access to 90% of Container Freight Corridors of India and would enable it to ramp up its revenues going ahead.

Entry into cold storage to derisk business
GDL has acquired 50.1% stake in Snowman Frozen Foods Ltd (SFFL) for Rs 48 crore. The acquisition would enable GDL to forward integrate into the cold storage business and become an integrated logistics player. The acquisition would help GDL to diversify and de-risk its business by providing an additional revenue stream. GDL can also look at exploring business opportunities with other stakeholders like Mitsubishi Logistics Corporation and Nichirei Logistics Group Inc. who hold the balance stake in SFFL.

JV with Concor to transition GDL into an end-to-end rail transportation service provider
The rail freight business was recently opened to the private sector. GDL formed a subsidiary Gateway Rail Freight Pvt Ltd (GRFPL) and acquired an all India operating license from the Indian Railway for an upfront payment of Rs 50 crore. It formed a joint venture with Container Corporation (Concor) to construct and operate a rail linked ICD at Garhi, Harsaru, Gurgaon, which will connect the North Central Region (NCR) with the western ports. GRFPL will hold 51% in the joint venture while remaining 49% will be held by Concor. GDL and Concor will share the rail operations for movement of rakes from the Garhi ICD to ports equally. The joint venture would enable GDL to run rakes from the ICD, which as not allowed under the earlier agreement with Concor. The integrated services from the ICD would enable a strong growth in volumes and help GDL to become an end-to-end container rail transportation service provider. Additionally, GDL will also earn lease rentals from the land leased out to the joint venture.

Better infrastructure and policy initiatives
The Government’s impetus on promoting FDI for construction of small ports at various locations will provide an impetus to Export-Import trade volumes and thus provide a boost to the container freight segment. India’s two major ports JNPT an Chennai, which control 80% of the container freight business are constructing new terminals to decongest the ports. The improved infrastructure and decongestion of the ports would enable GDL to capitalize on the opportunity.

Key Concerns

Low entry barrier
The container freight business is characterized by low barrier to entry. Any player with significant investment capacity can enter the business.

Idle cash balance
The company has Rs 157 crores of fixed deposits. GDL earns an interest of 8.5% on the same. The company has kept this cash balance to finance future acquisitions. GDL’s Return on equity will be impacted till the cash balance is not utilized.

Financials:

GDL is expected to benefit from improving infrastructure and policy initiatives like entry of private players in the rail freight business. It has also moved up the value chain through acquisitions in the cold storage business and become an integrated logistics solution provider. We expect GDL’s consolidated sales to grow from Rs 160.99 crore to Rs 240 crore and net profit to post a 28% growth to Rs 99 crore in Fy08E. For FY09E, we expect the company to report sales of Rs 300 crore and a net profit of Rs 124 crore.

Valuations

GDL with pan-India presence and good connectivity with the major ports is well poised to take advantage of the strong growth in the container freight industry. It would be able to ramp up its volume by entering into newer areas like cold storage and rail transportation services. In addition, the company is actively scouting companies for acquisition, which would trigger further upside in the stock. At the current price of Rs 182 the stock trades at a P/E of 16.3x FY09E EPS of 11.13 (on post bonus dilued equity of Rs 115 crore), which is at 22% discount to the average industry P/E of 20. Given the huge business potential and de-risked business model we rate the stock an OUTPERFORMER with a price target of Rs 220, an upside potential of 20% in the next 6 months.

Technical Outlook

The stock has formed a long-term support at Rs 173,levels. Stock is currently trading above its 200 days moving average . On the weekly charts stock has formed the double bottom formation pattern. The MACD indicators are in the oversold zone and have a bullish crossover. On the weekly charts average volume have increase 6 times compared to the pervious week, which indicate the strong buying was witness at around 179 levels. The RSI indicators have also gained strength and remain in neutral territory. Short Term Averages are on the verge of a positive crossover. Once the stock move above Rs 187 levels, we can see it could further move up to Rs198 levels, closing above this level can further move up the stock to Rs 213 levels very soon. Medium term and long term resistances remain at Rs 193 and Rs 213 levels.

Ramakrishna Forgings, EKC, Centurion Bank of Punjab, BPCL, Offshore Service Providers

Man Financial says Ramakrishna Forgings's topline is higher than
expectations, but faced pressures in the bottom line due to higher
depreciation and tax provisioning. They maintain a BUY with a target of
197

ICICIDirect recommends a BOOK PROFITS on EKC. At the current price of Rs
1063, the stock is richly valued at 20.79x its FY09E earnings per share of Rs 51.12. They believe that investors should book profits.

SSKI recommends OUTPERFORMER on Centurion Bank of Punjab

CBoP has reported Rs280m net profit (9% yoy growth) for Q4FY07 in line with our expectation of Rs282m. Higher standard asset provisioning led by one time hit of Rs198m (as expected) largely offset the benefits of the continued momentum in core income streams . Given its inherent duration mismatch, the bank was vulnerable to rising deposit rates leading to pressure on margins. CASA ratio also declined to 31% (decline of 300 bps QoQ ) considering the rapid balance growth . A latent significant operating leverage continues to be the key attractions of the bank. We have marginally downgraded numbers by 2.5% and 1% in FY08 and FY09 to reflect the higher provisioning. Going forward, we expect 46% CAGR in CBoP's earnings over FY07-09E. Though valuations of 4.2x FY08E and 3.8FY09E Adj P/BV appear expensive, they do not price in the high RoE generating capacity of the retail focused business model and low market cap/assets vis-à-vis peers . Maintain Outperformer.

SSKI Recommends OUTPERFORMER on BPCL

Bharat Petroleum Corporation's (BPCL) Q4FY07 results ¿ net profit of Rs 6.7 bn ¿were in line with our estimates of Rs 6bn. During the quarter, BPCL received Rs 9 bn in the form of oil bonds and Rs 11.84bn as upstream share that more than compensated for the negative impact of total under recoveries of ~Rs18.5bn. We upgrade the stock to Outperformer to factor in an expected improvement in fuel marketing margins driven by lower crude prices. Reiterate outperformer with a price target of Rs431.

Emkay recommends investing in Offshore Service Providers

We believe that fundamentals for offshore service providers remain extremely strong. Adding icing on the cake is the long term nature of contracts, which we believe provides unprecedented visibility of future earnings. We believe that the Indian offshore oil field services are very attractively valued with the group trading at an average two year forward P/E multiple of 8X. We believe a confluence of strong fundamentals, high earnings visibility, attractive valuation and strong possibility of re-rating should ensure superior stock performances by the entire pack of Indian offshore oilfield service providers. We initiate coverage on the sector with a positive view and BUY ratings on all the companies under coverage. Our top picks in the sector remain Aban, Great Offshore and Garware Offshore.


Sharekhan Recommends Aurobhindo Pharma

At the current market price of Rs684, Aurobindo is trading at 14.9x its FY2008E and 12.0x its FY2009E earnings. We initiate coverage on Aurobindo with a Buy recommendation and a one-year price target of Rs914 (an upside of 34% from the current levels). The price target discounts the FY2009E earnings by 16x.

ICICIDirect - TNPL

ICICIDirect - TNPL

ICICIDirect - Himadri Chemicals (Buy: Rs 325, Target: Rs 388)

ICICIDirect - Himadri Chemicals (Buy: Rs 325, Target: Rs 388)

ICICIDirect - Pick of the Week : Bongaigaon Refineries

ICICIDirect - Pick of the Week : Bongaigaon Refineries

ICICIDirect - I-Gate, Jaypee Hotels, Jaiprakash Associates, Jaiprakash HydroPower

Download here

Citigroup - Cairn India, ICICIDirect, Edelweiss - Jet Airways

Citigroup - Cairn India

ICICIDirect, Edelweiss - Jet Airways

Motilal Oswal, Morgan Stanley, ICICIDirect - Q4FY07 Preview

Motilal Oswal - Q4FY07 PreviewMorgan Stanley - Q4F07 Preview

ICCIDirect - Utilities Q4FY07 Preview

Anand Rathi - Daily Fundamental Snippets & ICICIDirect Derivatives

Anand Rathi - Daily Fundamental Snippets

ICICIDirect - Derivatives Strategy

ICICIDirect - Company Update - Sun Pharmaceuticals (Price: Rs 1,057, Performer)

Sun Pharmaceuticals (SUNPHA)

Price: Rs 1,057 PERFORMER

Sun Pharma is a leading domestic pharma company with a strong presence in chronic segments such as cardiology, neurology and diabetology. The
company's turnover has doubled and net profit tripled in the last 4 years. Its net margins have been consistently higher than its peers (the top 10
Indian pharma companies) and it boasts one of the highest operating margins in the sector. It established its first research center, Sun Pharma Advanced
Research Center (SPARC), in 1993. The company has used a combination of internal growth and acquisitions to drive growth. The most important
acquisition was in 1997, that of Detroit-based Caraco Pharm Labs in the US.

The company plans to demerge areas related to new molecular entities and drug delivery systems into SPARC and list the company. The fair value of the
newly formed company works out to US$620 million (around 13% of the current market price). We believe the de-merger and listing of the newly formed
subsidiary will unlock value both for the company and its shareholders.

The stock is currently trading at Rs 1,057, 18.51x FY09E EPS of Rs 57.11 and 23.16x FY08E EPS of Rs 45.63. Given the superior fundamentals in terms of RoNW, ROCE, margins, product mix (95% chronic space) and almost debt-free status, we believe that the stock should trade at a premium to its peers. At
the current levels, its peers are at an average PE of 16.44x FY09E EPS, while Sun Pharma is trading at a premium of 12.60%, at a P/E of 18.51x its
FY09E EPS. We rate the stock a PERFORMER.

Download here

ICICIDirect : Research Report - Sanghvi Movers (Buy: Rs 640, Target: Rs 837)

Sanghvi Movers (SANMOV)

Price: Rs 640 Target: Rs 837

OUTPERFORMER

Sanghvi Movers, India's largest crane-hiring company, is a proxy on the industrial and infrastructure boom in the country. Its aggressive ramp- up in crane capacity has coincided with a severe shortage of cranes globally, which should lead to robust growth in revenue and profits over the next few years. We initiate coverage on the company with an OUTPERFORMER rating.



Thrust on infrastructure to spur demand for cranes: Cranes are an essential component for infrastructure building. The government has unveiled several initiatives to boost infrastructure and investment amounting to Rs 1,400,000 crore have been planned over FY07-12E. We believe this will create huge demand for cranes and Sanghvi Movers will be a major beneficiary.

Dominant player in the crane-hiring business: Sanghvi enjoys a leadership position in the domestic crane-hiring market with an almost 50% market share. It is India's largest crane operator and among the top 5 largest crane hiring companies in Asia. It is ranked 15th globally by Cranes International, a UK based leading magazine tracking the global crane
providers.


Aggressive ramp up in crane capacity: To capitalise on the rising demand, the company has been adding capacities and ramping-up its fleet size. It has lined up capex of Rs 330 crore for FY07-08E, to further boost its fleet by another 60-65 cranes. Of this it has completed expansion of Rs 180 crore in FY07.

Valuations: At the current price of Rs 640, the stock is trading at a P/E multiple of 12.5x its FY07E EPS of Rs 50.9 and 10.7x its FY08E EPS of Rs 59.7. On an EV/EBIDTA basis, the stock is available at 6.3x FY07E earnings and 5.4x FY08E earnings. Given the company's dominant position in the crane-hiring market and the capex boom in India, we believe that the stock
is undervalued. We rate the stock an OUTPERFORMER with a 12-month price target of Rs 837, at 14x FY08E earnings, an upside potential of 40%.

Download here

ICICIDirect - Research Report - UltraTech Cement (Buy: Rs 715, Target: Rs 890)

UltraTech Cement (ULTCEM)

Price: Rs 715 Target: Rs 890
OUTPERFORMER

UltraTech Cement, a subsidiary of Grasim Industries, is one of the leading cement manufacturers in the western and southern regions. The company has undertaken a Rs 2,700 crore capex plan over the next three years (FY07-09) to increase its production capacity. It is also replacing its high-cost naptha-based power plant in Gujarat with an efficient lignite-based plant. The stock is currently available at a attractive enterprise value per tonne of $140 per tonne. We initiate coverage on the company with an OUTPERFORMER rating.

Capex to drive growth: The company has undertaken a Rs 2,700 crore expansion plan over the next three years (FY07-09). It will scale-up its production capacity by 4 million tpa from the current 17 million tpa by Mar FY08. We expect net sales to grow at a CAGR of 25% to Rs 6, 587.15 crore in FY09E from Rs 3,339.33 crore in FY06.

Captive power plant to cut costs: UltraTech's earnings were impacted due to its high power costs. It is now setting up captive power plants at its units in Gujarat and Chhattisgarh. In Gujarat, it will replace its naptha-based power plant by a more efficient lignite-based plant. We expect savings of Rs 170 crore per annum FY09 onwards which would boost the company's EBIDTA margins to 33.8%, in line with other major cement players.

Low cement clinker ratio, more scope for blending: Currently, the company's cement clinker conversion ratio is low at 1.14, below the industry average of 1.45. We expect company will reach to 60-65% of blended cement as against 40% currently of blended cement. This should help it to reduce costs and improve profitability.

Strong presence in fast-growing markets: UltraTech has a strong presence in the southern and western regions. These markets are expected to grow at a faster pace than other regions. With the demand-supply mismatch expected to continue till FY09, the company's additional capacity of 4 million tpa will get easily absorbed.

Valuations: At the current price of Rs 715, the stock trades at an EV/EBIDTA of 6.40x FY08E and 5.03 x FY09E respectively. We have taken the average of various valuations like EV/EBITDA, P/E and P/BV to arrive at a target price of Rs 890. At the target price, the stock would be valued at $140 EV/tonne for FY09E at an increased capacity of 21 million tonnes.

Download here

ICICIDirect - Special report - Best mutual fund picks

Please find attached our special report on the best mutual fund schemes. These schemes have a good performance track record and have also been rated by Value Research.

Franklin India Prima Plus
HDFC Top 200
Prudential ICICI Power
Reliance Growth
Sundaram BNP Paribas Select Midcap

Download here

ICICIDirect - Research Report - Finolex Industries (Buy: Rs 68.50, Target: Rs 95)

Finolex Industries (FININD)Price: Rs 68.50
Target: Rs 95OUTPERFORMERFinolex Industries,

India's second largest polyvinyl chloride (PVC)manufacturer, is well placed to capitalise on the demand-supply mismatch inthe domestic PVC industry. It is also planning to foray into the real estatebusiness by developing its 78 acres of land at Chinchwad, outside Pune. Weinitiate coverage on the company with an OUTPERFORMER rating.Demand-supply mismatch: PVC producers in India are currently in a sweet spotas there has been a shift from excess supply to shortage in the last fewyears. For the period 2001-06, capacity addition grew at a CAGR of just 2%,whereas demand continued to surge in double digits at a CAGR of 11%. Thishas resulted in firm PVC prices and high capacity utilisation rates fordomestic manufacturers.Capacity expansions, cost reduction initiatives: Finolex has doubled its PVCresin capacity to 260,000 tpa and is in the process of expanding its PVCpipes capacity from 65,000 tonnes to 85,000 tonnes. It is also undertakingInitiatives like setting up of a 43 MW captive power plant and convertingits jetty into an all-weather jetty, which will expand margins goingforward.Real estate foray to stabilize earnings: The company has 78 acres of land inChinchwad, which it plans to monetize in partnership with a developer. Ithas been in negotiations for the last one-year and we expect an announcementfrom the company shortly. We expect the company to go for a lease modelwherein its share of the income would be Rs 72 crore per year.Valuations: We have used the sum of parts methodology to arrive at a fairvaluation for Finolex Industries. We estimate the value of its core PVCbusiness at Rs 58 per share, value of its 14.5% shareholding in FinolexCables at Rs 12 per share and value of its real estate business at Rs 25 pershare. Our target price works out to Rs 95 per share, which offers a 39%upside from the current price of Rs 68.50.

Download here

ICICIDirect - Pick of the Week: Tata Power Company (Buy: Rs 501, Target: Rs 610)

Tata Power Company (TATPOW)



Current Price: Rs 501 Target Price: Rs 610



Tata Power Company is India's largest private sector electricity generating company with an installed generation capacity of over 2,300 MW. The company has a presence in all areas of power sector generation (thermal, hydro, solar and wind), transmission and distribution. Its thermal power stations are located at Trombay in Mumbai, Jojobera in Jharkhand and Belgaum in Karnataka. The hydro stations are located in the Western Ghats of
Maharashtra and the wind farm in Ahmednagar.
An optimum mix of hydel and thermal capacity enables the company to supply
power at competitive tariffs to its customers. Among its achievements, the
company has to its credit the installation of India's first 500 MW unit at
Trombay, the first 150 MW pumped storage unit at Bhira, and a flue gas
desulphurization plant for pollution control at Trombay. The company's
growth momentum is expected to intensify after it was awarded the bid for
the Mundra ultra mega power project. It is also expanding capacity and has
taken stakes in Indonesian coal companies to secure fuel supplies.

We expect sales to grow from Rs 5,740 crore in FY06 to Rs 7,890 crore in
FY08E. Net profit is expected to rise from Rs 637 crore to Rs 790 crore. We
expect the company to earn a RoE of 14% on its investments in the Mundra
ultra mega power project assuming a 70:30 debt-equity mix. We estimate FY08E
EPS at Rs 40.10 and set a price target of Rs 610. At this price, the stock
will trade at P/E of 15.21x, giving an upside potential of 22% from the
current price of Rs 501 within a 12-15 month time horizon.

Download here

ICICIDirect- Daily Derivatives Strategy

Download here

ICICIDirect - Daily Derivatives

Download here