India Weekly

India Weekly

Weekly Review - Nov 29 2010

Weekly Review - Nov 29 2010

Weekly Review - Oct 31 2010

Weekly Review - Oct 31 2010

Weekly Recommendations - Sep 13 2010

Axis Bank

* Current market price (CMP): Rs 1,380/ target price (TP): Rs 1,688/ Upside: 22%
* Rationale: The Bank has expanded its network at 33% CAGR since FY2005, doubling its CASA market share to 4.0% by FY2010 (20bp yoy increase in FY2010). Angel Broking expects the bank to continue market share gains of 30-50bp every year driven by strong branch expansion. Fee income contribution across a spectrum of services has been a meaningful 2% of assets (almost twice the level in PSBs) over FY2007-10. The bank`s high credit growth was backed by strong low-cost deposit growth, rather than chasing risky loans using high-cost deposits. Moreover, with the improving economic outlook and reducing corporate leverage, NPA concerns are receding and could provide upside to our earnings estimates (which still factor NPA provisions at 0.5% of assets in FY2011E vs. an average of 0.4% over FY2006-10). The stock is trading at attractive valuations of 2.6x FY2012E P/ABV. Hence, it maintains a `Buy` on the stock with a target price of Rs1,688 (at 3.2x FY2012E P/ABV).

Weekly Review - Sep 11 2010

Weekly Review - Sep 11 2010

Weekly Recommendations - Aug 23 2010

Weekly Recommendations - Aug 23 2010

Weekly Report - Aug 14 2010

Weekly Report - Aug 14 2010

Sensex breaks 3-week losing streak

After falling for three consecutive weeks, the Indian market bounced back this week to register gains led by continuous buying in information technology (IT), telecom and consumer durable(CD) stocks coupled with the hope of European Union bailout for Greece that eased the Euro zone debt concern. Both the domestic benchmark indices regained their crucial levels—the Sensex 16000 and Nifty 4800. The Sensex finished the week 237 points higher after swinging 550 points during the week. Nifty was up 1.44% for the week.

The bulls came to act again; it was all green on sector indices front. On improved investor interest in IT, telecom and consumer durable stocks BSE IT was up by 3.58% followed by BSE TECk that gained 3.35% and BSE CD that surged 2.35% for the week.

In the coming week the market will remain in a consolidation mode till we approach the Railway Budget (due on February 24, 2010) and Union Budget (due on February 26, 2010). How the European Union bails out Greece from the fiscal deficit will also set the trend of Indian market in the coming week.

Weekly Stock Recommendations - Nov 8 2008

Buy BHEL

Buy L&T

Buy Indiabulls Real Estate

Buy JP Associates

Buy ONGC

Long Term Picks - July 12 2008

Buy Chennai Petro

Buy GAIL

Buy LITL

Buy Tata Chemical

Buy ACC

Weekly Recommendations

Birla Ericsson Optical Ltd

Ispat Industries Ltd


MRO-TEK Ltd


NIIT Technologies Ltd


Sanghvi Movers Ltd


Tainwala Chemicals & Plastics (India) Ltd


XPRO India Ltd


Aplab Ltd


Insecticides India Ltd


Khaitan Chemicals & Fertilizers Ltd


KRBL Ltd


NIIT Technologies Ltd


Sanghvi Movers Ltd


Universal Cables Ltd

Geojit Weekly Recommendations

CMC
1040.90
Buy

Denso India
85.10
Buy

Honda Siel Power
254.95
Buy

Indian Hotel
133.70
Buy

Madras Cement
3300.45
Buy

Weekly Stock Ideas

Buy HDFC (1988)
SL 1970 Target 2030, 2040

Buy R Com (555)
SL 547 Target 575, 580

Buy Bharat Forge (316)
SL 310 Target 328, 333

Buy Crompton Greaves (259)
SL 252 Target 273, 277

Buy GAIL (319)
SL 313 Target 332, 336

Weekly Recommendations

Considering the weakness in the market, especially the crash on Friday, we would not like to give any stock recommendations for the coming week. Also, we will have the Railway Budget and the General Budget next week. As there is a big event risk, it would be prudent for investors to stay on the sidelines for a while and wait for some clarity on market direction.

Geojit Weekly Recommendations

Stock Recommendation for the week February 19, 2007 to
February 23,
2007

Scrip Name
Price
Recommendation

Biocon
438.70
Buy

Esab India
385.80
Buy

Hindustan Construction
127.95
Buy

Indian Hotel
151.90
Buy

SE Asia Marine
224.85
Buy

Thanks Kiran

Weekly Recommendations

Recommendations for the week from Geojit



Stock Recommendation for the week February 5, 2007 to February 9, 2007



Scrip Name Price Recommendation

Biocon 420.50 Buy

Indian Hotel 156.80 Buy

SE Asia Marine 187.35 Buy

VSNL 505.45 Buy

Zee Entertainment 339.55 Buy

Thanks Kiran

Stocks you can pick up this week

KPIT Cummins
Research: Prabhudas Lilladher
Recommendation: Outperformer
CMP: Rs 587 (Face Value Rs 5)
12-Month Price Target: Rs 650

The company is set to achieve its targeted revenue of $100 million by FY07. From less than 10 customers a few years ago, to over 80 now, the company has done well in bagging some of the well-known names in the manufacturing and banking & financial services (BFS) verticals. It has also widened its scope in terms of service offerings — apart from IT solutions, it offers a variety of services such as consulting, engineering and business process outsourcing (BPO). The company’s revenue (at Rs 320 crore) and PAT (at Rs 32 crore) recorded a CAGR of 58.3% and 50.2%, respectively, between ’04 and ’06.

According to the company’s FY07 guidance, it is set to post a 34-40% growth in revenue and 51-61% growth in profit. Revenue for FY07 will be in the range of Rs 9.8-10.2 crore, while PAT will be in the range of Rs 1.1-1.2 crore.

Over the past eight quarters, the company has seen a 9% CQGR in revenue, primarily due to robust growth in volumes. Overall, the company’s future scenario appears to be fairly strong. At the current market price, the stock trades at 17.1 times and 11.6 times the expectations of its FY07 and FY08 earnings.

Provogue
Research: Karvy Stock Broking
Recommendation: Outperformer
CMP: Rs 380 (Face Value Rs 10)
12-Month Price Target: Rs 466

Established as a strong fashion brand, Provogue is now engaged in aggressively expanding its retail reach. Along with increasing its retail space, the company is increasing the number of store formats and product lines under the brand name ‘Provogue’.

It has also entered into multi-brand large format retailing under the brand name ‘Promart’. Leveraging on its retail expertise, the company’s wholly-owned subsidiary, Prozone, has adopted a business model to develop and actively manage malls.

The company has signed up six malls in tier-II cities, which are likely to be operational over the next three years. Prozone intends to bridge the gap between traditional property developers and modern retailers.

Liberty International, one of UK’s largest real estate companies with property investments of over £7.5bn, has entered into an agreement to take 25% stake in Prozone with an equity contribution of Rs 200 crore, thereby valuing Prozone at Rs 800 crore.

The DCF value for Prozone is estimated at Rs 130 per share. Valuing Prozone at Rs 130 per share, the core business of the company is available to Karvy at Rs 250, which is 14.8x FY08E. Karvy expect 51% EPS growth over FY07 and FY08. Based on 20x FY08E, the value of the core business stands at Rs 336 and DCF value of Prozone stands at Rs 130.

Thermax
Research: Edelweiss
Recommendation: Buy
CMP: Rs 367 (Face Value Rs 2)
12-Month Price Target: NA

Thermax’s Q2 FY07 results were in line with expectations in terms of revenues and above expectations in terms of profitability. On a consolidated basis, the company’s revenue grew by 21.2% y-o-y to Rs 520 crore. Sales from the energy segment grew by ~81% y-o-y, contributing 84% to the sales of the standalone entity in Q2 FY07.

EBITDA grew by ~140% y-o-y to Rs 72.1 crore, while net profit grew by ~147% y-o-y to Rs 53.7 crore on a consolidated basis for the quarter. The energy segment contributed ~90% and the environment segment contributed ~10% to the order book in the quarter.

On a standalone basis, the order book backlog was ~Rs 2,700 crore for Q2 FY07, with a similar breakup between the energy and environment segments as in the consolidated entity.

The consolidated order intake for the energy division was ~Rs 1,600 crore for the quarter, showing a growth of ~38% for Q2 FY07 and a strong growth ~179% for H1 FY07 y-o-y. With significant presence across various industry verticals, coupled with better operational efficiency than industry standards, Thermax remains one of Edelweiss’ top picks in the industrial machinery space.

3i Infotech
Research: Emkay
Recommendation: Buy
CMP: Rs 180 (Face Value Rs 10)
12-Month Price Target: Rs 232

3i Infotech has acquired 51% stake in US-based Professional Access for $12 million and will acquire the balance stake over two years. Professional Access specialises in the area of e-commerce for BFSI and retail segments. It has close to 500 employees with an offshore development centre in India.

It is a profitable company with PAT margin of 10% and annual revenue of $24 million. This acquisition will benefit 3i Infotech in the following ways: (a) Enter and penetrate the US market; (b) Tap large base of marquee clients such as Citibank, JP Morgan, Goldman Sachs and Duke Energy; (c) Access to global delivery centres and (d) Increase deal ticket size in the range of $5 million.

Rhyme’s acquisition will be EPS accretive for 3i Infotech from Q3 FY07 and Professional Access’ acquisition will be EPS accretive from Q4 FY07. With the continuation in growth, Emkay expects the company to post a CAGR of 60% in revenues and 60% in profit over FY06-08E.

Emkay expects forward EPS of Rs 14.3 and Rs 21 for FY07E and FY08E respectively. At current market price, the stock is trading at 13.1x and 8.9x FY07E and FY08E EPS respectively.

Usha Martin
Research: India Infoline
Recommendation: Buy
CMP: Rs 174 (Face Value Rs 5)
12-Month Price Target: Rs 228

Usha Martin posted strong results for Q2 FY07 with its performance improving on a sequential basis, while registering robust growth on a y-o-y basis. The sequential earnings growth was led by margin improvement, while the y-o-y earnings growth was driven by flattish interest, depreciation and lower taxes.

For H2 FY07, the company expects further improvement in operational performance with strong volumes and higher benefits from iron ore integration. The current FY07 valuations are similar to commodity steel makers like Tata Steel and SAIL, despite the company’s character of an alloy/special steel-maker, producing high value-added products like wires and wire ropes.

India Infoline feels the key reason for this is the company’s relatively lower margins, with lesser backward integration.

However, with increasing mineral integration over the next two years and relatively superior pricing power for its product portfolio, India Infoline expects significant upgrade in valuations. India Infoline believe the stock will trade at 7 times (factoring 0.5x multiple re-rating) FY08E EPS. i.e. Rs 228 one-year forward, representing 34% appreciation from current levels.

Stocks you can pick this week

ICICI Bank
CMP: Rs 874.80
Target Price: Rs 1,085

Brokerage house Macquarie Securities has upgraded its price target for ICICI Bank by 27% to Rs 1,085. Macquarie has cited increased visibility on its capital requirements and, partly, receipt of branch licences from the RBI as the key reasons for the upgrade. The brokerage has pegged at the value of ICICI Bank’s subsidiaries at Rs 195 per share. “We also see a slowdown in opex (operational expenses), especially given the trend of lower payments to outsourced agents for loan sales,” the Macquarie note to clients said.

Tech Mahindra
CMP:Rs 1113.60
Target Price: Rs 1,280

Merrill Lynch has initiated coverage on Tech Mahindra (TML) with a ‘buy’ rating and a price target of Rs 1,280. The brokerage has forecast a 27% CAGR between FY07 to FY09, driven by accelerating IT spend by top client BT (British Telecom) and rapid ramp up by AT&T, another key client. Merrill is of the view that the company can command a premium, compared with peers, given its domain focus, higher margin and returns.

MTNL
CMP: Rs 132.30
Target Price: NA

ICICI Securities has downgraded MTNL to 'hold' and lowered earnings estimates, citing margin pressures on account of the recent tariff revision for local and national long distance calls, and also the higher-than-expected dip in realisations from its mobile service business. The brokerage has accounted for income tax refunds over FY07 to FY09 as extraordinary income. "Accordingly, we value core operations at Rs117/share, tax-related upside at Rs30/share and surplus real estate at Rs27/share," the brokerage said.

S Kumar's Nationwide
CMP: Rs 77.65
Target Price: NA

Citigroup has reaffirmed its sell rating on S Kumar's Nationwide, citing rich valuations and pressure on operating margins. "Although the growth outlook for the company appears robust, at valuations of 13x FY08E (price earning ratio of 13 times estimated FY08 earnings), a 44% premium to the sector appears excessive, and we believe most of the growth is priced in," the Citigroup note on the stock said. The brokerage is of the view that the company's margins will stagnate ahead due to higher overheads on aggressive rollouts of stores and expansions.

Punjab National Bank
CMP: Rs 534.15
Target Price: Rs 660

Brokerage house Motilal Oswal Securities has retained its 'buy' target on Punjab National Bank with a price target of Rs 660, citing its low non-performing asset ratio as one of the key factors. "With slippages likely to remain low, NPA recoveries can provide upside to our estimates," the brokerage said in a note to its clients.

Gujarat Ambuja Cement
CMP:Rs 136.05
Target Price: NA

Brokerage house First Global Research is now betting on Gujarat Ambuja Cement as it feels the stock is more attractively valued compared to ACC. "The margin gap between GACL and ACC has not changed over the last four quarters, although the valuation gap has definitely narrowed and, in fact, GACL appears to be less expensive than ACC," the brokerage said in a note to clients. According to First Global, ACC is trading at a price earning ratio of 17 times estimated FY08 earnings, while GACL is available at a forward PE of 14.