Citigroup - VSNL, BHEL

Citigroup in their report on VSNL say

We maintain our Hold/Medium Risk (2M) rating with a target price of Rs450. Speedy implementation of land sale could provide upside to our target whereas adverse ruling on FLAG compensation could be a negative. However, the concerns relating to reselling of IPLC by operators are unfounded.

Citigroup in their report on BHEL say

Raise target price to Rs3,344 — We are raising our target price to Rs3,344 (from Rs2,764 earlier) given an earnings revision and rolling forward of our P/E multiple (20x) to FY09E. We now expect sales CAGR of 24% to drive earnings CAGR of 27% over FY07-10E with RoEs in the 25–30% range.

Under-performance since January 2007 implies this is a good time for investors to build long-term holdings in the stock as BHEL remains our top pick in the Indian Electric Equipment space.