Midcaps.in & 10Paisa.com

S.No.   Scrips                  Code    Rate    Target
1.      WPIL Ltd.               505872  33.55   42.00
2.      Valiant Communications  526775  47.00   59.00
3.      Linc Pen & Plastics     531241  47.60   60.00
4.      Ricoh India Ltd.        517496  49.70   63.00
5.      Apcotex Industries      523694  54.95   69.00

S.No.   Scrips                         Code     Rate    Target
1.      Rishabh Digha Steel     531539   16.10   21.00
2.      Oil Country Tubular     500313  17.00   22.00
3.      Sunflag Iron & Steel    500404  18.45   24.00
4.      Conart Engineers        522231  27.45   35.00
5.      Reliance Capital Vent   532703   28.80   36.00

Mahindra Financial - SSKI

Download here

Motilal Oswal - Prathiba Industries

Download here

IDFC Equitymaster

Download here

Link Corrected

Sharekhan Investor's Eye

Jaiprakash Associates
Cluster: Ugly Duckling
Recommendation: Buy 
Price target: Rs650
Current market price: Rs544

No change in view

Result highlights

• At Rs70 crore the Q4FY2006 net profit (stand-alone) of Jaiprakash Associates Ltd (JAL) is less than our expectation of Rs81 crore net profit. The net profit is lower than expected primarily due to a drop in the margins of the construction division. 
• The cement revenues grew strongly by 23% year on year (yoy) to Rs413 crore, driven by a volume growth of 17% during the quarter. The earnings before interest and tax (EBIT) margin of the cement division improved by 740 basis points to 18.4% during the quarter, driven by a 5% improvement in the cement realisations. Consequently the earnings before interest, depreciation, tax and amortisation (EBIDTA) per tonne for the cement division surged by 31% to Rs545. 
• In Q4FY2006 the margins of the construction division fell by 920 basis points to 19.5% as it executed lower-margin orders during the quarter. 
• With the drop in the margins of the construction business, the overall operating profit margin (OPM) of JAL dipped by 556 basis points to 18%. As a result the operating profit for the quarter declined by 9% to Rs154 crore. 
• During the quarter the other income of the company grew by 20% on account of the funds recently mobilised by the company through a 165-million-euro foreign currency convertible bond (FCCB) issue. As a result, the pre-exceptional net profit for the quarter grew by 21%. The reported net jumped by 150%, as last year there was an extraordinary expense because of a one-time guarantee money paid to raise non-convertible debentures (NCDs) and term loans.

Bull's Eye

Bharat Electronics

Research: Enam Securities
Recommendation: Outperformer
CMP: Rs 1,428 (Face Value Rs 10)
12-Month Price Target: Rs 1700

Bharat Electronics (BEL's) FY06 results were largely in line with the expectations, with net sales up 10.8% to Rs 3,560 crore. EBIDTA rose 19% to Rs 840 crore, on the back of 170bps improvement in EBIDTA margin, reflecting the company's sustained efforts at increasing indigenisation. Net profit rose 19.7% to Rs 580 crore in FY06. BEL's order book at a robust Rs 660 crore (1.5x FY07E sales), as at end FY06, reversed the declining trend of the last two years. Increased contribution of indigenously manufactured products coupled with a reduction in wage costs resulted in a 170bps improvement in EBIDTA margins. The company expects margins to remain stable, despite 10-15% expected upward revision in wages, which is due in January '07. In its civilian business, BEL bagged a major order (Rs 500 crore) from MTNL. BEL is exploring CDMA and GSM opportunities in telecom though consortium approach with OEM's. It has created a separate SBU to improve its market share and expects its civil business to revert to 20% of sales in FY07. Exports stood at Rs 61.1 crore and the company has set an ambitious target of Rs 110 crore in exports for FY07. During the year, the company has been granted patent rights for Electronic Voting Machines (EVMs) and Solar Traffic signaling systems. BEL foresees export potential for EVMs. BEL's management has guided for Rs 4,200 crore, Rs 5,000 crore and Rs 10,000 crore revenues for FY07, FY08 and FY12 respectively. Execution of orders from the army for upgraded versions of its existing radars coupled with anticipated orders for army guns will be a major revenue driver going forward. At the current market price the stock trades at an EV/EBIDTA of 8.5 times FY07E and 6.8 times FY08E, which is at a significant discount to industry average EV/EBIDTA of 16.5 times FY07E.

UltraTech Cement

Research: CLSA
Recommendation: Buy
CMP: Rs 772 (Face Value Rs 10)
12-Month Price Target: Rs 1020

UltraTech is the most favoured pick in the cement sector as it has the maximum leverage to cement prices. Additionally, it trades at 25% discount to other cement players on asset valuations. The company's efficiency improvement initiatives coupled will reduce the gap between UltraTech's Ebitda/MT and peers from nearly US$6/MT (33%) now to nearly US$2/MT (7%) by FY09. This improvement in asset efficiencies will drive a steady stock re-rating in asset valuation terms. Potentially, a sharp improvement in cement prices in south, post state elections, will be the nearterm trigger for the sector/stock. Significant potential for low cost capacity expansion UltraTech's current 17m MT of cement capacity can be ramped up quickly and at incremental cost of nearly $25/MT. UltraTech's current clinker capacity is 15.5m MT of clinker produce 19.5m MT of cement assuming the average industry conversion factor of 1.25x. To scale up to that, UltraTech needs to add grinding capacities which can be a potential quick and low cost capacity expansion, assuming that the company secures a source of fly ash. In the meanwhile, i.e., before FY09 - the cost saving initiatives will have a limited impact and the benefits will be restricted to conversion from clinker exports to cement sales. During FY06, the company has already reduced the clinker exports by half down to 9% of total volume. Also, potential increase in conversion factor to 1.25x as explained above will bring down per MT production cost by an estimated Rs3/bag. The stock currently trades at FY07 EV/MT of $136/MT or 25% discount to asset valuations to the other large cap cement stocks. The discount will be even larger if compared on the basis of clinker capacity as against cement capacity. CLSA believe that this discount will keep on narrowing as the company's EBITDA/MT improves from less than Rs400/MT now to more than Rs600/MT by FY08.

Coromandel Fertilisers

Research: Angel Broking
Recommendation: Buy
CMP: Rs 95 (Face Value Rs 2)
12-Month Price Target: Rs 125

Coromandel Fertilisers (CFL) is the second largest phosphatic fertiliser player in India and markets approximately 2m tonnes of phosphatic fertilisers. CFL also holds a 45.07% stake in Godavari Fertilisers & Chemicals (GFCL), which is a leading player of phosphatic fertilisers in Andhra Pradesh. CFL has been able to achieve one of the highest operating efficiencies with containment of costs and a raw material to sales ratio of 69.5% in the fertiliser industry where the raw material and fuel costs account for up to 80% of cost of production. CFL has entered into a strategic alliance with South African major Foskor. This would lead to improved availability of phosphoric acid to CFL, a major raw material highly in demand; and help the company to further consolidate its market position in South East coast of India. CFL has an excellent financial track record backed by an improvement in margins; with more than 20% CAGR in earnings during FY03-'06. Besides, CFL has one of the most favourable debt equity ratios of 1.9 amongst its peers. It operates in the phosphatic and complex fertilisers segments, which do not fall under the purview of controlled distribution, initiated by the Government, unlike nitrogenous fertilisers, thus benefiting the company. Considering the various initiatives taken to contain costs together with the ramped up volumes and improved customer focus coupled with bright industry prospects, CFL is expected to maintain the growth momentum. At the current market price, CFL is trading at 8.1 times FY2008E Earnings. Considering the combination of market potential and CFL's growth initiatives, Angel Broking recommends a BUY with a 12-month price target of Rs 125.

Glenmark Pharma

Research: ICICI Securities
Recommendation: Buy
CMP: Rs 340 (Face Value Rs 10)
12-Month Price Target: Rs 483

Glenmark Pharma unveiled two new chemical entities (NCE) last week at the Annual Investor Meet and exuded confidence of closing two out-licensing deals in FY07. Due to the delay in receipt of $34m R&D income, the company has not been able to meet its guidance in FY06; as a result, ICICI Securities revised the earnings forecast downwards by 7% for FY07E. Besides, the management has guided for net profit of $55-60m in FY07 and $70-75m in FY08, implying a CAGR of 85%. The company could earn potential R&D income of $34-54m over the next 12 months. Glenmark remains the best Indian play on drug discovery research and one of the top buys among midcaps in the sector. Glenmark unveiled two more promising NCEs: i) GRC6211 - a Vanilloid receptor (TRP V1) antagonist useful in the treatment of pain, migraine, incontinence and asthma, and ii) GRC10622 - a Cannabinoid (CB-2) receptor against useful in pain treatment. Currently, these compounds are at an advanced stage of pre-clinical studies and Glenmark expects to start Phase-I clinical trials for both NCEs by FY07. The company targets to have six NCEs in human trials by end of FY07. Over the next one-year, we expect the company to: i) outlicense GRC3886 (for the EU market) and GRC8200 (for the US, EU and Japan markets) ii) earn R&D income of $34-54m, and iii) make acquisitions in the EU and LatAm. The stock is trading at FY07E P/E of 17.4x on a consolidated basis.

Motilal Oswal Reports

Union Bank Of India

Shree Cement

PTC India

Thanks Ramesh

Grapevine

FUND buying was seen in ONGC, Reliance Industries, Tata Steel, Mahindra & Mahindra, TVS Motors, India Cement and Bank of Baroda, while Union Bank of India, VSNL, Dr Reddy's, BPCL and GE Shipping witnessed fund selling.

Sharekhan - Investor's Eye

NIIT Technologies  
Cluster: Ugly duckling
Recommendation: Buy 
Price target: Rs296
Current market price: Rs228

NIIT Tech's UK acquisition
NIIT Technologies has acquired a 51% stake in the UK-based ROOM Solutions (RS), which is a niche player in the insurance space. RS clocked annual revenues of $25 million in the last fiscal and is profitable on the net level. It has an employee base of 120 professionals. 

RS offers software solutions in the policy administration, risk management and business intelligence areas to a host of insurance companies in the UK and the other developed markets. Some of the reputed names on its client list are Atrium, Ace Global, AIG, Munich Re, Zurich and Excel.

Mutual Funds Rated

See here

Sharekhan - Investor's Eye

MRO-TEK
Cluster: Apple Green
Recommendation: Buy 
Price target: Rs113
Current market price: Rs87

Steady performance

Result highlights

• MRO-TEK reported a tepid growth of 5.8% in its net sales to Rs31.3 crore during the fourth quarter ended March 2006. The delay in procurement by some of its key clients resulted in a lower-than-expected growth in the revenues.
• However, the continued improvement in its profitability resulted in a 26.7% growth in its operating profit to Rs6.1 crore. The operating profit margin (OPM) has improved by 320 basis points to 19.6% as compared to the corresponding quarter last fiscal.
• The decline in the depreciation charges and the tax rate also aided its earnings growth with the bottom line growing by 123.7% to Rs5.1 crore. After including the prior period adjustments, the net profit grew by 95.5% to Rs4.7 crore.
• On a full year basis, the net sales grew by 21.5% to Rs139.8 crore and the earnings (before extraordinary items and adjustments) grew by 43.4% to Rs17.6 crore. The OPM has improved by 4.7% to a healthy level of 17.7% in FY2006.
• For the full year, the company has given a total dividend of 45% or Rs2.25 per share (including the interim dividend of 25% and the final dividend of 20%) as compared to 25% given in FY2005. 
• At the current price the stock trades at 8.3x its FY2007E and 6.6x its FY2008E earnings. We maintain our Buy call on the stock with a price target of Rs113. 

 

Shree Cement
Cluster: Cannonball
Recommendation: Buy 
Price target: Rs1,400
Current market price: Rs1,050

Outstanding results

Result highlights

• Shree Cement's Q4FY2006 results are way ahead of our expectations primarily because of a higher-than-expected realisation and a lower-than-expected increase in its costs. 
• The net sales for the quarter grew by a smart 38% to Rs225 crore, primarily driven by a huge 22.6% growth in the cement realisation. With the commissioning of its new 1.2-million-tonne cement plant, the company's cement volumes registered a growth of 12.6% to 9.3 lakh tonne. 
• The operating profit margin (OPM) for the quarter improved by a staggering 1,000 basis points to 39.6%. Consequently the operating profit (adjusted for the one-time charges borne in both the quarters) grew by a whopping 86% to almost Rs90 crore in Q4. 
• The earnings before interest, depreciation, tax and amortisation (EBIDTA)/tonne for the quarter jumped by a whopping 95% year on year (yoy) and by 28% quarter on quarter (qoq) to Rs961. The same is the highest in the industry.
• With the repayment of its debts, the company's interest cost declined by 52%. Consequently its pre-exceptional net profit jumped by a staggering 123%. The reported net profit trebled to Rs60 crore from Rs20 crore in Q4FY2005.
• In view of its recently announced capex plan, we are introducing our FY2009 earnings estimate for Shree Cement: Rs111 per share. At the current market price of Rs1,050, the stock is discounting its FY2008E by 11.8x and its FY2008E EBIDTA by 8.2x. It trades at an enterprise value of US$156 per tonne of cement for FY2008. However with a capacity of 8 million tonne in FY2009, the EV/tonne works out to a very attractive US$103. For a company that generates an EBIDTA of Rs960 per tonne (the highest in the industry), such valuations are attractive. We maintain our Buy recommendation on the stock with a revised price target of Rs1,400. We have valued Shree Cement's FY2009 cement capacity of 8 million tonne @ US$160 per tonne and discounted the same back to arrive at our one-year price target

Bank of India - Motilal Oswal

Download here

Thanks Ramesh

Sasken - Citigroup

Download here

Motilal Oswal Reports

Eicher Motors

I-Flex

Vijaya Bank

Shoppers Stop

Ultratech Cement

Andhra Bank

IDFC


Thanks Ramesh

Trading Call

Date: 08/05/2006 | Company Name: INVRCONS | Call Type: Go Long
Stop Loss/ Reversal: 292.0000
Buy/Sell Price Rs.: 305.00
Current Price Rs.: 315.20
Potential P/L%: 0.5500
Target: 330
Remark:
Investment Argument: Go long in the stock with a stop loss of Rs292 (intra-day) for a target of Rs330.