Angel - PNB, Angel -TCI,B&K - Bharat Forge, B&K - Indus Ind Bank, B&K - Kalpataru Power Transmission

Angel recommends BUY on PNB

We expect the bank to maintain its margins on the back of a high level of CASA. The bank has already taken proactive steps for AS 15 provision for employees. Currently, PNB holds around 38% of its investment portfolio in the AFS category and we expect the share of AFS in the total portfolio to fall further in FY2008. We expect PNB to demonstrate stable performance in NII and Fee-based income, However, further deterioration in asset quality could warrant higher provision in FY2008. We maintain a Buy on the stock with a Target Price of Rs615.

Angel recommends HOLD on TCI

We expect TCI's revenues to grow at a CAGR of 14.8% to Rs1,433cr and earnings to grow at 29.3% CAGR of Rs51cr over FY2007-09E. Overall operating margin of the company is expected to improve from 6.4% in FY2007 to 8.5% in FY2009E on the back of higher margins of 5-7% clocked by the XPS and SCS Divisions compared to its core business of transportation, which enjoys low 2-3% margins. At the CMP, the stock trades at 12.1x FY2009E Earnings and 5x EV/EBITDA. Owing to a huge capital outlay, which will generate positive cash flows over a longer period of time, we have valued the company using the DCF model and have arrived at a 12-month Target Price of Rs77. We maintain a Hold on the stock.

B&K recommends BUY on Bharat Forge

Bharat Forge's (BHFC) results for the quarter were below our expectations as despite capacity ramp-up, margins contracted on a sequential basis. Another disappointment was the lower growth in exports. The lower proportion of dollar exports coupled with ramp-up in capacity utilisation should have led to better margins; however margin expansion continues to elude. Exports have been impacted by severe drop in exports to China. Despite good growth in exports to US, overall exports were only marginally up. At the consolidated level, China joint venture has incurred losses of Rs. 70 mn for April-December 2006 and management is aiming for break-even in the current year. Considering the disappointing performance during the year and lower growth in domestic and subsidiary operations, we are downward revising our FY08E and FY09E consolidated earnings by 7.5% and 2.5% to Rs. 17.9 and Rs. 23.8, respectively. The stock is currently trading at 18.4x and 13.8x our FY08E and FY09E consolidated earnings, maintain BUY.

B&K recommends SELL on IndusInd Bank

IndusInd Bank (hereinafter IIB) has reported a net profit of Rs. 214 mn in Q4FY07 as against a loss of Rs. 624 mn in the corresponding quarter last year. The results were below our estimates both at the top and bottom line due to lower than expected other income and higher operating expenditure. However after seven consecutive quarters of y-o-y de-growth, NII of the bank has shown marginal improvement during the quarter. Operating profits were also up by 50% y-o-y to Rs. 460 mn. However the concerns over business mix and asset quality still remains. Maintain Sell


B&K recommends BUY on Kalpataru Power Transmission

With impressive result for the quarter, Kalpataru Power closed FY07 with 140% jump in net profit, on the back of 81% growth in revenues. Growth was driven by good performance by transmission line segment, leading to strong volume growth and expansion in EBITDA margin (240 bps for the year). Its subsidiary JMC Projects also reported much-improved earnings growth during the year. With increasing share of exports and an order book of Rs. 23 bn, we believe Kalpataru is expected to post strong growth over the next two-three years. While growth in power transmission line continues to be robust, the company's growing presence in civil infrastructure business through JMC and foray into logistics business should provide long-term benefits to shareholders. We have raised EPS estimates for FY08E and FY09E by 3% and 8%, respectively, and maintain BUY with a revised target price of Rs. 1,686.