Infotech Enterprises, IVRCL, Aban Offshore, Gujarat Ambuja Exports

Merrill Lynch in their report on Infotech Enterprises

Infotech proposes to offer 13.1% stake (7.14m fully converted shares) to an entity of General Atlantic Partners. Simultaneously it plans to issue 1.17m shares to a Pratt and Whitney entity to maintain stake at 14.4%. On a full conversion basis it would raise US$73m by issuing 8.3m equity shares at Rs360/share, at market, including 2.72m Compulsorily Convertible Preference Shares, 1.77m equity shares & 3.81m shares as underlying for ADRs. EGM is scheduled for Jun 23, 07. Believe this could spur acquisition plans & help branding. Buy with PO of Rs450.

Emkay on IVRCL

Value of real estate business at Rs 160 per share
IVRCL has 80% holding in its real estate subsidiary IVRCL Prime Urban Developers
Ltd. (IVRPUDL). IVRPUDL has total land reserves of 2298.75 acres (56.63 mn sq.ft
developable land) spread over 20 locations in cities of Hyderabad, Chennai, Bangalore,
and Pune & Noida. Cushman & Wakefield have valued the net value of developable
land after deducting developer’s margins at a NPV between Rs 28,898 million & Rs
31,940 million. We estimate the net present value of the land at Rs 160 per share at
a 10% discount to Cushman & Wakefield’s valuation.

Business Outlook
We believe the IVRCL to be a good long term investment in the construction space
especially in the water segment where the company is a leader, and the stock is
expected to outperform the broader market in the long term. Order backlog for the
company currently stands at Rs 8000 crore which is a YoY increase of 27% of which
water based projects account for about 56%. With growing urbanization infrastructure needs in the water segment is expected to increase which would hold good for the company. IVRCL’s holding in Hindustan Dorr Oliver would enable the company to synergise its engineering capabilities and bid for higher value added projects. IVRPUDL’s IPO would be a trigger resulting into value unlocking for the parent company.

Valuation:
At the current price of Rs 351, the stock quotes at P/E of 26x FY08E and 20xFY09E.
We believe the stock to be a good long-term investment in the construction space.
We value the business of the company on Sum of the parts method.

We recommend a BUY call at the current price of Rs 351 with a target price of Rs
437 which is an upside of 25% from the current levels. At the target price the stock
trades at an EV/EBITDA of 14.4x FY09E & a PE of 25.4xFY09E.

Emkay on Aban Offshore

We initiate coverage on Aban Offshore (Aban) with a BUY rating and a price target of Rs3355. With exploration activity set to rise amid soaring energy prices and acute supply constraints for new rigs in view of the long gestation period of 3-4 years, day rates for offshore drilling rigs, are expected to remian highly remunerative going forward. Aban Offshore, is a direct beneficiary of this buoyant demand for offshore rigs and the firm day rates for them. With 100% acquisition of Sinvest ASA, Aban now boasts of an arsenal of 20 offshore drilling assets. With this, Aban is all set to chart a steep growth trajectory on the back of the highest volume growth globally. Rigs in the standalone entity, which are due for contract renewal by March 2008, are likely to lock in a 3 fold increase in charter rates, giving a significant boost to its earnings. Aban
earnings are expected to register a CAGR of 177% over FY2007-10E with EPS of Rs324 in FY2009E and Rs451 in FY2010E. The stock is discounting its FY2009E earnings by 7.8 and FY2009E EBIDTA by 5.6 X . We initiate coverage on Aban with a BUY rating and DCF based price target of Rs3355.

SSKI on Tata Power

Tata Power's 4QFY07 pre-exceptional earnings were sharply ahead of our estimates at Rs2.93bn, primarily due to lower tax rate and sharply higher other income. However, the reported earnings fell by 33% Rs927mn as TPC passed on surplus profits generated in earlier years of Rs2.24bn to customers during the quarter. TPC, in pursuit of its new growth opportunities, is setting up 250MW thermal power plant & 100MW DG power plant for Mumbai circle and is also exploring nearly 4000MW of thermal power projects in Maharashtra, West Bengal and Uttar Pradesh. Moreover, TPC has recently won the bid for 4000MW Mundra power plant at a levelised tariff of Rs2.26/unit, which we believe would be value accretive over a longer run. Moreover, in order to tie up the coal for the Mundra power plant, TPC has acquired 30% stake in Bumi Resources, Indonesia at US$1.1bn. We believe the acquisition is value accretive for TPC over the long run. TPC is currently trading at 20x FY08E earnings and 7.8x FY08 EV/EBITDA, which we believe are attractive considering its huge cash reserves and focus on the core power business to exploit new value accretive growth opportunities across the entire value chain of power business. We maintain our Outperformer rating on the stock.

Kotak on Gujarat Ambuja Exports

We recently met the management of GAEL and are very positive about the growth prospects of the company. We are introducing our FY09 estimates on higher earnings visibility due to a clear understanding of the expansions plans of the company. In FY09, we expect GAEL to report net sales of Rs.21.1 bn, EBIDTA margins of 9.8% and PAT of Rs.957 mn, thereby translating into an EPS of Rs.6.9 and CEPS of Rs.9.9.

We have also done our one year forward rolling band analysis for GAEL, which revealed that most of the time the stock has traded around 6x one year forward
estimates. Our FY09E EPS of Rs.6.9 suggests that GAEL's fair value is 6 x 6.9,
that is, a price target of Rs.42.