More: About Us | Feedback | Privacy


Buy Tata Steel - Motilal Oswal

Friday, June 29, 2007

Motillal Oswal in particularly thorough research report has put a BUY recommendation on Tata Corus Steel with a price target of Rs 739.

They expect consolidated earnings to grow at a CAGR of 26% during FY07-09, driven by overall volume growth and margin expansion in Corus. One year target price of Rs739 is based on EV/EBITDA of 5x FY09E.

Tata Steel is expected to report a fully diluted EPS of Rs 91.9 and Rs 110.9 for FY08 and FY09. You can download the report here.

Read the full article

Published by Webmaster @ 10:18 AM IST.

Citi puts a BUY on United Phosphorous

Thursday, June 28, 2007

Citigroup has put a BUY on United Phosphorous Limited [UPL] with a target price of Rs 380. UPL’s acquisition of 2 brands from Dupont is another step to augment its product basket by inorganic means.

UPL is the only Indian play on the global crop protection market, with around 80% of
revenue coming from global markets. Citi forecast FY07-10E revenue and net profit CAGRs of 21% and 35%, respectively. Citi believes that P/E vs. earnings CAGR or EV/EBIDTA vs. EBIDTA CAGR is the correct metrics to value companies such as UPL.

Citi expects UPL to report an EPS of Rs 19.31 and 28.77 for for 2008 and 2009. Target price of Rs380 is based of average of FY08Eand FY09E FD EPS estimates.

Read the full article

Published by Webmaster @ 3:14 PM IST.

ABG Shipyard + ONGC + Mphasis - BUY from Citigroup

Wednesday, June 27, 2007

Citigroup research has recommended a BUY on ABG Shipyard, Bharti Shipyard ONGC and Mphasis. We had a BUY on Mphasis much before Citigroup did.

ABG Shipyard and Bharti Shipyard:
Citi raiseed their target price for ABG Shipyard to Rs560 (Rs430 earlier) and Bharati Shipyard to Rs670 (Rs525 earlier) as we roll forward our target multiple for both companies to 12x FY09E PE (15x FY08E earlier), in line with valuations of similar-sized shipyards in the region.[Asia]

Both the companies are expected to report a EPS growth of 50% from 2008-10. Bharti Shipyard is expected to report a fully diluted EPS of Rs 38.53 and Rs 55.87 for FY08 and FY09. While ABG is expected to report EPS of Rs 29.92 and Rs 47.18 for FY08 and FY09.

The target multiple of 12x FY09E earnings for the Indian shipyards also compares favorably with the imputed target P/E (average 12.4x CY08E) of Korean shipyards.

ONGC:
Citi rates ONGC as Buy/Medium Risk (1M) with a target price of Rs1100. Despite near-term uncertainties on subsidy payouts, ONGC's asset valuations have improved with higher net realizations and greater confidence in gas price deregulation.

The target price of Rs 1100 is based on a PER of 11x FY08E P/E (previously 10x) on account of greater confidence in adherence to a subsidy-sharing formula and the company's recent successes in driving volume growth and potential improvement in reserve replacement. The new target price imputes EV/EBITDA of 5.5x FY08E. This is at the higher end of historical trading ranges - PER of 2.1x to 11.3x and EV/EBITDA of 0.8x to 5.6x - but in-line with regional peers.

Labels: , , ,

Read the full article

Published by Webmaster @ 12:12 PM IST.

Kotak on BHEL

Saturday, June 23, 2007

Sorry the BHEL coverage was left out in the earlier post. Kotak is bullish on the prospects of BHEL and has set a price target of Rs 1,550 on the stock.

While there are likely to be strong order inflows in the next two years Kotak believes that XIIth plan with skew towards private sector and supercritical configuration would pose challenges for BHEL. BHEL may lose market share as well as face pressure on margins because of (a) heightened competition, (b) change in project profile and (c) shift of power generation sector to a competitive tariff based bidding regime. With a market share (57% overall market share) and operating margins (18-19%), Kotak arrives at a value of Rs1,550/share, on DCF based target price to Rs1,550 (from Rs1,350 earlier) as we rollover to March 09 basis.

Read the full article

Published by Webmaster @ 11:24 AM IST.

Buy Wipro and BHEL - Kotak Securities

Friday, June 22, 2007

Kotak Securities has maintained an Outperform rating on Wipro and recommended a BUY with a March 2009 DCF price target of Rs 655. [Not March 2008, its 2009 earnings on Discount Cash Flow Model]
Kotak maintains Outperform rating with an end-March 2009 DCF based target price of Rs655/ share. Kotak assume Re/US$ rate of 42 for FY2008, 42 for FY2009 and 41 for FY2010. Wipro is expected to report an EPS of Rs 24.3, Rs 30.4 and Rs 33.4 for Fy2008, 2009 and 2010

Dalal Street Research Analyst Update:
Indian Rupee is expected to average Rs 41 for FY2008 though Citigroup has pegged it at Rs 40.

Read the full article

Published by Webmaster @ 11:38 AM IST.

Buy - Indian / Taj Hotels from Citigroup

Thursday, June 21, 2007

Citigroup Research Analyst Ashish Jagnani in a research report released just a while ago has put a BUY recommendation on Tata group controlled Indian Hotels Company Ltd. Indian Hotels reported an excellent FY2006-07.

Indian Hotels plans to add five hotels to its portfolio in FY08 – two new hotels at Bangalore (ITPL) and Chennai (Mount Road) and three management contracts for hotels in Vijayawada, Trivandrum and Langkawi Malaysia). In addition, the company plans to increase the number of 'Ginger' Hotels [Budget Hotel Chain from Taj Group] to 30 by March 2009, up from eight at present.

Citi projects strong earnings growth of 21% for FY08E and consider valuations of 17x FY08 P/E, at par with sector, as attractive with a 12-month target price of Rs187 is based on 22x FY08E P/E, a premium to average sector valuations of 18x.

The stock is currently trading at 17x FY08E P/E, toward the median of its three-year historical range of 15-22x P/E, largely on par with domestic peers, which Citi believe is unwarranted given: 1) IHC's market leadership and advantage of large room inventory; 2) The company's premium brand positioning with 'Taj'; 3) Expectation of strong earnings

Historically, Hotel Stocks have been valued on their earnings potential However, one should also consider the value of the properties they own which most analysts don't. A Re-rating in this stock is due for a long time now. Punters Target for the Stock is Rs 200.

Read the full article

Published by Webmaster @ 11:12 AM IST.

Tech Mahindra to join Billion Dollar Club

Wednesday, June 20, 2007

Tech Mahindra is a Mahindra Group and British Telecom promoted company.

Total consolidated revenue was Rs 2929 crore in FY 2007. This was 136% higher compared with FY 2006. Operating profit margin (OPM) expanded 350 basis points (bps) to 25.1%, aided by a dip of 390 bps to 15% in selling, general and administration (SG&A) expenses. Operating profit was up 175% to Rs 736.60 crore. Other income declined 77% to Rs 7.70 crore on account of exchange fluctuations. Profit after tax (PAT) surged 160% to Rs 612.70 crore.

TML wrote off the Rs 524.90-crore upfront discount, treated as extraordinary item (EO). PAT after this EO dipped 63% to Rs 87.80 crore. Also, there was writeback of prior-period tax of Rs 33.90 crore in FY 2007. The resultant net profit after minority interest dipped 48% to Rs 121.60 crore.

Revenue contribution from North America was unchanged sequentially at 19%; Europe's contribution increased to 76% from 73%, and rest of world (RoW) dipped 300 bps to 5%. [This means Tech Mahindra is not impacted like Infosys and TCS because of the fall in USD against INR]

Though TML saw a drop in OPM from 26.9% to 25.4% in Q4 March 2007 over Q3 December 2006, it increased from 21.6% to 25.1% for FY 2007. However, the margin is expected to be stable due to increasing utilisations (currently at a very modest level of 67%), increased offshoring (at 59% in Q4), more hiring of freshers, and SG&A leverage (50-100-bp improvement expected). These levers would provide substantial cushion against margin erosion due to the appreciation of rupee.

The $1-billion British Telecom Global Services (BTGS) deal is expected to commence in May 2007. Sizable revenue from the contract would be realised only end Q3 December 2007. The FY 2008 revenue from this deal could be around US$ 100 million.

In addition to the revenue potential from BTGS, BT is also contemplating jointly bidding with TML for the global rollout of 21 century networks (CN), which could open up larger revenue streams from 21CN (currently the company has over 1,000 resources on 21CN).

Non-BT customers such as AT&T and Alcatel are also expected to pick up momentum. The company has recently added new clients in both the telecom service providers (TSP) and telecom equipment manufacturers (TEM) segments in new geographies such as France, Italy, Australia, New Zealand and Egypt, which could lead to broadbasing of growth over the forthcoming quarters. The company is investing in new businesses such as managed services, BPO and testing, which could also add to the pace of growth from non-BT clients over the next few quarters.

TML is expected to register sales and net profit of Rs 4604.84 crore and Rs 926.5 crore, respectively. On a fully diluted equity of Rs 130 crore and face value of Rs 10 per share, EPS comes to Rs 71.2. The share price trades at Rs 1504. P/E works out to 21.1. As the company has fully written off upfront discount given on the BTGS deal, OPM from this deal will be better than market expectation.

Merill Lynch also has a BUY on Tech Mahindra with a Price Target of Rs 2,125.

Read the full article

Published by Webmaster @ 7:25 AM IST.

Buy Pancea Biotech - Kotak and DSP Merill Lynch

Tuesday, June 19, 2007

Kotak Securities and DSP Merill Lynch have put a BUY recommendation on Panacea Bio tech with a price target of Rs 513.

Panacea's net sales rose 55.4% driven by 64% growth in vaccine sales and 32% growth in formulation sales. The Novartis-Pancea joint venture has registred a 100% growth in sales. Net Profit after tax rose sharply 149% to Rs 1.48 bn against Rs 529 mn. EBITDA margins expanded to 27.8% against 22.1% in FY06. The company reported fully diluted EPS of Rs 22.4

For FY08 and FOY09, Kotak expects Panacea to report EPS of Rs 31 and Rs 35 respectively. Kotak and Merill Lynch both maintain a BUY with a price target of Rs 513.

Read the full article

Published by Webmaster @ 10:19 AM IST.

Buy Tata Steel - ABN Amro

Monday, June 18, 2007

The Steel stocks are all on fire. Sharekhan and HDFC upgraded JSW steel to a BUY. Now ABN Amro has put a BUY on Tata Steel with a price target of Rs 700.

Tata Steel's bold move to acquire Corus will lift its profits sufficiently to overcome equity dilution. ABN expects its strategy of pursuing high-value, high-growth markets, while growing its low-cost production base, to deliver strong returns. Tata Steel's consolidated profits will increase 89% in FY08, while EPS on a fully-diluted basis will rise 25%. In ABN's opinion, the market has focused on the potential 41% increase in issued shares, but may have underestimated the earnings contribution Corus can offer.

Tata Steel will deliver an average EPS CAGR of 23% over FY08-10, with sales volumes boosted by the Corus acquisition plus further expansion of its facilities and given a robust steel price outlook in Europe and India. ABN Amro reiterates Buy rating on the stock, with an increased price target of Rs 700, based on 2x FY08E P/B.

Tata Steel's projections by ABN Amro.
Tata Steel is likely to report full year revenue of Rs 1173388 1188933 1232227 million for FY08 FY09 and FY10. Fully diluted EPS is expected to be around Rs 93.3, Rs 110 and Rs 113 for the corresponding years.

One should not be surprised even if the stock surpasses Rs 700.

Read the full article

Published by Webmaster @ 8:44 AM IST.

Buy JSW Steel - ShareKhan and HDFC

Friday, June 15, 2007

Their are BUY reports coming from HDFC Securities and Sharekhan on JSW Steel. The company has lined up a 2.6x jump in capacity over FY06-10 to 10mtpa, which would arguably make it the second largest steel manufacturer in India.

JSWS embarks on a Rs170bn expansion over the next few years, Sharekhan does not expect debt-equity ratio to cross 1.1x. JSWS has a track record of strong project execution and has also been able to bring down specific investment cost per tonne with each phase of expansion.


At 5.5x FY08E earnings, we see room for further appreciation in the stock price. Notably, JSWS offers significant volume growth over the next few years, and hence is not a pure leverage story on steel prices. However, considering the scale and growth visibility, SSKI analyst believes that the stock deserves to trade at a premium to peers. SSKI / Sharekhan initiates coverage on JSWS with a price target of Rs 729 per share.

JSW Steel is expected to report an EPS of Rs 103.3 for FY08 and Rs 112.5 for FY09.

Note from Dalal Street Business:
JSW Steel is at the top of Holding List of Sr. Fund Manager, Sunil Singhania @ Reliance Fund.

Read the full article

Published by Webmaster @ 11:00 AM IST.

Citi Upgrades Reliance and Ups Target Price

Wednesday, June 13, 2007

In a significant investment update, Citigroup analyst, Rahul singh and Saurabh Handa have upgraded Reliance Industries Ltd to Buy/Low Risk from Hold/Low Risk with a new Target price of Rs 2,005 from Rs 1,450.

They cite the following reasons for the change in Rating. Exploration success leading to switch to traditional multiples for the E&P business. Sustained refining cycle leading to core earnings upgrade (17-19% for FY08-09E) and higher contribution from RPL.

In absence of new refineries in the Middle East, due to cost inflation, which bodes well for RIL's margins in FY08-09E. Besides, RIL's differentials over benchmarks have expanded to US$5-8/bbl over the past five quarters, the primary driver of earnings upgrade.

The Sum of Parts Valuation of Reliance Industries Ltd is as follows.

IPCL Rs 29
Reliance Petroleum Rs 243
E&P Assets Rs 631
Organised Retail Rs 125
Total value of investments & other assets Rs 1,027
EV of businesses Rs 826
Net Debt adjusted for key investments Rs (934)
Value of Treasury stock Rs 245

Read the full article

Published by Webmaster @ 9:23 AM IST.

Citi downgrades Infosys Technologies

Monday, June 11, 2007

Citigroup Research analysts have downgraded Infosys Technologies Target price from Rs 2,580 to Rs 2,400. Citi analysts have discussed with the management of Infosys who see robust demand but rising rupee is a concern. Infosys is likely to report an EPS of Rs 80.20, Rs 97.48 and Rs 110.64 for FY2007, FY2008 and FY2009. Thus Citi analyst have revised the target price downwards to Rs 2,400.

In an earlier report released early this morning, Citi analysts see the Indian Rupee stronger against US Dollar which will hurt companies like Infosys and TCS.

Read the full article

Published by Webmaster @ 12:20 PM IST.

Real Estate Industry Reports

Friday, June 08, 2007

In the wake of Mega DLF Real Estate IPO, we at Dalal Street Business felt that it is of utmost importance to educate the Indian investor on how Real Estate has matured as a Industry but still with lot of issues.

Due to DLF-IPO Scam in 2006, the promoters of DLF get a Zero on Transparency issues.

How DLF Cheated Small Investors - Part -1

The DLF IPO Scam on Small Investors - Part 2

Over period of time various Research Houses have recommended various Stocks because of Land Bank saga. JeeZ!!! Also, don't forget the hype which Udayan and Mitali create on CNBC TV 18 on Land Bank Stories, which is utter non-sense. This is no FUC*ING Bollywood. We are here to create some serious wealth and build the Indian economy.

Days are not far from the impending correction in Global Equities as suggested by some J P Morgan Analyst in early Jan-07 [I forget his name, but he is a Desi] Here are some of the Research Reports by very good institutions. We don't care for third rate brokerage houses like Anand Rathi, Karvy, Religare, Anagram etc.

[All the following reports are PDF, Right click on the link, choose "Save As" and download them]
Also read on how to value Indian real estate stocks. Keep your fingers crossed until our research team comes out with its recommendation on DLF IPO.

Read the full article

Published by Webmaster @ 3:12 PM IST.

Citi Maintains a BUY on Indraprastha Gas

Thursday, June 07, 2007

Citigroup in a research report released just a while ago has maintained a BUY on Indraprastha Gas with a price target of Rs 156. Indraprashta Gas is expected to record a 21% annual growth between 2006-09.

Citi projects growth in PNG penetration, with renewed focus as compliance-led skew toward CNG should moderate; (2) regulatory upside potential, with the Delhi government mandate for conversion of new LCVs to CNG; (3) geographical growth in the National Capital Region; and (4) discretionary demand growth.

Indraprastha Gas is expected to report an EPS of Rs 9.18 and Rs 11.06 for FY07 and FY08 respectively. On DCF model Citi recommends a BUY with a price target of Rs 156. Target price for IGL is also based on a Price/Cash Earnings of 11.1x FY07E.

Read the full article

Published by Webmaster @ 3:50 PM IST.

Citi Recommends Telcos for demreged Tower Business

Wednesday, June 06, 2007

Citigroup in its research report continues to be Bullish on the prospects of Bharti Airtel. Citi factors into its price targets the valuations of Telecom Towers these companeis have which are likely to be hived off as separate entities and may also be listed on NSE or BSE.

Bharti Airtel Leads the Pack:
Bharti's towerco has a headstart given: 1) the highest tower market share (~40%), 2) unconditional rollout plans (30,000 towers in FY08), and, most importantly, 3) an MoU with Vodafone that imparts greater visibility on average tenancy and operating margins.

Citi has set a 12-month forward target price of Rs 960 is based on core DCF of Rs 800 and a towerco option value of Rs158.

Reliance Communications:
In the case of RCOM, however, Citi uses EV/EBITDA in the absence of a detailed balance sheet and lack of transperency from Management. 12-month target price of Rs510 is based on 9.6x FY09E EV/EBITDA, at a 15% discount to Bharti’s target multiple (ex- towerco) to reflect the uncertainty regarding the timing of GSM rollout and the associated challenges. Citi also maintains a Medium Risk rating on RCom.

Read the full article

Published by Webmaster @ 3:34 PM IST.