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Recommendations
Friday, September 30, 2005
Motilal Oswal - Dr. Reddy's Lab
Motilal Oswal recommends Buy On Dr.Reddy's Lab.@ 812 With Target Price 1065
Download here
Thursday, September 29, 2005
Sharekhan Report
Emco
Cluster: Apple Green
Recommendation: Buy
Price target: Rs450
Current market price: Rs421
Healthy order book
At the current market price (CMP) of Rs421 Emco trades at 0.9x EV/order book. Going forward, we expect this trend to continue mainly on account of the huge investment lined up in upgrading the existing power infrastructure as well as in setting up new power facilities. We will review our recommendation and estimates at the time of Q2FY2006 results.
Thermax
Cluster: Emerging Star
Recommendation: Buy
Price target: Under review
Current market price: Rs797
Strong order book
We expect Thermax's earnings to grow at a compounded annual growth rate (CAGR) of 36.8% over FY2005-07, driven by a 20.5% CAGR in the revenues and a modest margin recovery. At the current market price the stock quotes at 1.0x EV/order book. We will review our recommendation and estimates upon receipt of Q2FY2006 results.
Sintex Industries
Cluster: Apple Green
Recommendation: Buy
Price target: Under review
Current market price: Rs690
Raising funds
Sintex Industries, a dominant player in the textiles and plastic businesses, has raised USD50 million (approximately Rs220 crore) through a zero coupon unsecured and un-rated 5-year foreign currency convertible bond (FCCB) issue, with a yield to maturity set at 6.85%..
Wednesday, September 28, 2005
Paradyne Infotech - Capitalmarkets
Paradyne Infotech (Paradyne), promoted by technocrat Anand Sarnaaik, caters to the banking, financial services and insurance (BFSI) segment in the domestic market. Its wholly owned US-based subsidiary, Sundune Corporation, was set up to market and support implementation of its products in the US market. Paradyne holds 99.70% of the equity of Intercon Management Services, a management consultant for industrial, commercial and adminisatrative activities.
The objects of the issue include spreading Paradyne's operation in other parts of India from Mumbai, Bangalore, Chennai and Delhi, expanding the software development center in Mumbai, upgrading the core banking product FinWorQs and human resource product HrWorQ at a cost of Rs 5.19 crore, setting up a data and support centre, upgrading the research & development lab and quality certification to international standards, and investing in subsidiary Sundune Corporation in the US. To enhance the functioning of the marketing and support base, the company intends to make an investment of about Rs 3.75 crore.
Strengths
- Paradyne's performance in the last two years has been good, with sales rising from Rs 35.40 crore in FY 2003 to Rs 68.56 crore in FY 2005 and net profit jumping from Rs 30 lakh to Rs 5.11 crore.
- The company has a balanced business mix in terms of client-wise distribution of revenues, with no significant dependence on a single client.
- The current aggregate order booking (as on 1 September 2005) is around Rs. 12 crore, comprising following major customers: 3D PLM Software (Geometric Software), Amdocs, Department of Income Tax, J M Morgan Stanley, Acer India, BMC Software, Zensar Technologies, Mandvi Bank, Mercator Lines, KPIT Cummins, and Rochem Separations.
Weakness:
- More than 70% of Paradyne's revenue comes from system integration, which is a highly competitive and low profit margin area. The rest of the revenue is derived from software services and managed services.
- The company's business is focused on the BFSI vertical in India. This makes future success highly dependent on IT spending of banks, insurance companies and financial institutions and continuance of demand for its products and services from these industries in India. Therefore, any structural changes in the BFSI vertical may materially affect business. Further, BFSI is a highly crowded space with a large number of players, both small and large, providing software services and products. This translates into a high competitive risk for the company. In addition, the major market is India, which is a geographical risk.
- The quarterly revenue may fluctuate significantly from period to period in future as system integration and products constitute a major revenue stream. Further, the product business is highly exposed to technology risk.
Valuation
Consolidated FY 2005 EPS on post-issue equity of Rs 10.80 crore works out to Rs 4.7. The offer price of Rs 42 discounts this 8.9 times. If the company maintains its current growth tempo and succeeds in its new products, one can expect gains.
Tuesday, September 27, 2005
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Balmer Lawrie & Company
Cluster: Cannonball
Recommendation: Buy
Price target: Rs 481
Current market price: Rs 410
Bright prospects
We remain optimistic about the business outlook of Balmer Lawrie and there is no deviation from our earlier stance on the stock. Our investment arguments about the company remain intact and we have factored in all the possible downside in our estimates. The growth rate that we have assumed for each of the company's businesses is in line with the outlook shared by the company's management in the AGM. We reiterate our Buy recommendation on the stock with a price target of Rs481.
Monday, September 26, 2005
Signs of things to come ?
FIIs SELL finally ..
FIIs turned net sellers in equities worth Rs 325.50 crore($74.60 million) on September 23. They bought equity worth Rs 1018.60 crore and sold equity worth Rs 1344.20 crore.
AurionPro IPO Information
The 30 lakh book built IPO will have a price band of Rs 81-90 per share
aurionPro Solutions will launch its Initial Public Offering (IPO) of30,00,000 equity shares of Rs 10 each through the 100% book buildingprocess with a price band of Rs 81 to Rs 90 per share. The issue opens onTuesday, 27 September 2005 and will close on Tuesday 4 October 2005.
Of the total issue, the company has reserved 250,000 equity shares of Rs 10each for its employees. The book running lead managers (BRLMs) to the issueare Centrum Capital and Karvy Investor Services.
The proceeds of the issue will be deployed to expand currentinfrastructure, increase footprint in overseas markets and growinorganically through acquisition of products and customers. aurionProSolutions is an eight year old specialized software solutions companycatering to the Banking & Financial Services and Insurance (BFSI) sector.
aurionPro's strategy revolves around creating products that are beneficialto banks in enhancing their fee-based income and complementary to theircore banking IT investments. The company's current product range is in thedomain of cash management, treasury and risk management. The company hasbeen able to compile a marquee client list of names such as HDFC Bank, DBSBank, UTI Bank, Centurion Bank, BankServ Inc, Qatar Insurance, and ABN Amroamong other leading BFSI players.
aurionPro has embarked on a journey to attain leadership position in itschosen domain over the next three years by setting specific targets withrespect to size, focus and markets. The company plans to continue enhancingtheir products as per the emerging nature of their domain. The company hasalso continued with its historical offering of web-based IT solutions inthe non-BFSI sectors. This has also helped the company maintain bestpractices in product implementation, offshore delivery and technologyadoption.
The company proposes to list its equity shares on the Bombay StockExchange (BSE) and the National Stock Exchange (NSE). aurionPro Solutionsis an ISO 9001:2000 certified company headquartered in Mumbai, India with asubsidiary each in Singapore and USA.
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