Add Sujana Towers - SBI Cap Sec
Monday, July 28, 2008
SBI cap securities has initiated coverage on Sujana Towers Ltd [STL] with a BUY rating.STL has the complete integrated manufacturing process right from billets procurement to erection. Its galvanized tower capacity, has gone up from 28000 MT by four fold to 128000 MT and will add another 100000 MT through a Greenfield facility in Chennai.
STL has an unexecuted order book of Rs350 crore to be realized in the next 3-6 months. In addition, it is also expected to receive an EPC contract of Rs200-250 crore during FY09. Nearly 70 percent of the order book inflows are from existing clients.
New Business Initiatives: STL is also exploring the new business initiatives in the fields of highways crash guards, high mast lightings, cable trays, railways electrifications etc. It also expects to benefit from Indian Railways Electrification and CAPEX plans.
Net sales and Net profit of the company are expected to grow at 58 and 56 percent to Rs1388 crore and Rs122 crore respectively in next two years. At current market price of Rs70, the stock is trading at 3.4x and 2.7x of FY09E and FY10E of Rs 20.7 and Rs 25.5 respectively. SBI Caps Recommends a BUY with a Target price of Rs 104.
DalalStreet.Biz View: Sujana Towers was one of the stocks which FIIs exited in May-08. We recommend existing investors to HOLD and new investors to BUY / ADD only sub Rs 60 levels.
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Published by Sunil K @ 8:02 PM IST.
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Sell Indiabulls Financial Services - Goldman Sachs and Citigroup
Indiabulls Financials Q1FY09 profits were down 22% QoQ (+29% YoY). The sharp reduction in profits was largely due to lower IPO funding opportunities, higher cash on books (earning negative carry) and lower loan yields (change in loan mix). Revenues declined 3% qoq at Rs5.6bn; operating income net of interest expense was down 11% qoq to Rs3.3bn owing to
higher financing costs.
The Management has guided a 50-60% loan growth [down from 100% earlier] due to challenging environment. The company is reducing exposure to unsecured loans (15% of loans); increasing exposure to mortgages (50%), commercial credit (20%, backed by real estate / securities) and loans against securities (10%).
The Mgmt has guided EPS for FY09 to be between Rs27-30, much lower than Bloomberg consensus of Rs38 and our estimate of Rs33. Goldman Sachs and Citigroup both have a SELL recommendation on the stock with a price target of Rs 280 and Rs 230 respectively.
DalalStreet.Biz Analyst View: Since this stock is in the hands of strong speculators, we advise existing investors to wait and exit on rally. You may then consider entering strong PSU banks like PNB, BOB or HDFC Bank.
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Published by Sunil K @ 7:47 PM IST.
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IDFC hits the Road Bump
Thursday, July 24, 2008
IDFC is caught in the crosswinds of capital constraints, macroeconomic headwinds and a financial market downturn. But, core fundamentals, management quality and long-term value proposition remain attractive.
In 1Q09, income from investments and investment banking fees declined as capital markets went on a downturn. The ongoing downturn in the capital market will be good for the company's private/project equity business. In the short term, we expect RoI on existing assets to fall, though this should enable IDFC to acquire stakes at much reasonable valuations. The longterm benefits far outweigh the negatives from the expected fall in RoI.
Asset quality remains healthy with zero net NPLs. IDFC management flagged macro headwinds and indicated that it was not going to grow its loan book aggressively.
IDFC is expected to report an EPS of Rs 7.2 for FY09. ABN Amro Equities has set a Target Price of Rs 125, downward revision from Rs 181.IDFC would trade at 17.6x FY09F EPS and 2.4x FY09F book. ICICI Securities has set a target price of Rs 145 on IDFC stock.
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Published by Webmaster @ 11:31 PM IST.
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Buy Riddhi Siddhi Gluco Biols - Kotak
Wednesday, July 23, 2008
Riddhi Siddhi Gluco Biols is expected to report solid performance for the current FY09. Maize starch and its derivatives industry to double in next five years. RSGB with around 25%market share is the leader and is expected to maintain its market share going forward due to recently commissioned expansions at Viramgam and UttarakhandAlthough the maize prices have risen currently we expect the company to pass it on to the consumers especially in the derivatives segment. The company also has maize inventory of around four months which would take care of any sharp rise in maize prices.
The management has identified various export markets for value added starch and thus is committed to making the Viramgam Unit, which has ISO-9001 certification, the export hub for the company.
Continuing its earlier recommendation of May-08, Kotak continues to recommend a BUY with a revised Target price of Rs 350 [Earlier Rs 390.] Revised EPS estimates for FY09 is Rs 43.1. SBI Caps Research estimates Rs 42.6 EPS and has set a Target Price of Rs 340.
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Published by Komal M @ 11:00 AM IST.
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DLF Buyback a Negative - Stock Downgraded by Credit Suisse
Tuesday, July 15, 2008
DLF's Buyback saga is a negative to the company in the prevailing macro situation. Credit Suisse just a while ago has downgraded the stock from NEUTRAL to UNDERPERFORM. It would have been better had the company utilised its cash to fund upcoming developments.
Real estate developers are seeing slowing demand for both residential and commercial projects - which coupled with difficulties in fund raising from other sources, will likely lead to delays in launches in our view.
The problem is compounded by liquidity worries - developers are becoming hard pressed to fund ongoing developments: debt is available only at high cost, volatility in equity markets is making fund raising impossible and difficult and private equity transactions have dried up due to the loss they have suffered in Realty.
DLF is expected to report an EPS of Rs 43 for FY09. Credit Suisse has set a target price of Rs 342 for DLF based on a 30% discount to FY09E NAV, which implies a downside of ~24% from current levels with a downgrade recommendation on the stock to UNDERPERFORM from NEUTRAL.
Update: Citi has set a target price of Rs 585 on DLF with EPS estimates of Rs 46 for FY2009. Citi's NAV estimate of DLF is Rs 650 / share.
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Published by Komal M @ 3:10 PM IST.
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Infosys Technologies results Below Expectations - Cracks Indian IT
Friday, July 11, 2008
Infosys Technologies well known for building luxury IT campuses on land acquired at cheap prices from various Governments, today reported results for Q1FY09, which are below expectations. Infosys and other Indian IT companies which are mainly dependent on outsourcing were dumped on the bourses in afternoon trading. Infosys led the massive sell off in IT stocks with loss of 7.11%. Infosys reported revenues of $1155m (1.1% qoq), below Street expectations. Margins declined ~210 bps, in line with expectations. The company had forex hedging loss of US$19m.
A sharp decline of ~22% qoq in revenues from the top client came as a negative surprise; Infosys is heavily dependent on BFSI segment which is witnessing global turmoil. Analysts were unhappy because of the self praising management's lack of vision to mitigate such risks in the past 2-3 years.
The management guided that Environment is challenging and some delays in decision making and clients reluctant to spend despite budgets. Moderation in wage hikes is expected going forward. The company is expecting to report a full year EPS of Rs 101 to Rs 102.
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Published by Webmaster @ 4:15 PM IST.
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Strength in Steel amidst Macro Induced Weakness
Thursday, July 10, 2008
The weaker steel demand story is a lot less relevant than the Chinese governments resolve to control steel prices. News of some auto producers in the US not accepting the midyear surcharges has renewed fears on steel demand. Domestic price increases may only be possible from April 09 and the demand may not taper significantly in the near term.Using a higher equity risk premium and a higher risk-free rate, make changes to EBITDA used for valuation from FY10E to rolling four quarters.
Sail:
The PSU which has made a solid comeback is expected to report an EPS of Rs 21.4 and Rs 30.9 for FY09 and FY10 respectively. A target price of Rs 280 is based on 5x FY10 EV/EBITDA.
JSW Steel:
JSW after having consolidated various steel plants under the Jindal group is all set for a superior growth story. The company is expected to report an EPS of Rs 115 and Rs 162 for FY09 and FY10 respectively. A target price of Rs1300 is based on 5x FY10 EV/EBITDA.
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Published by Sunil K @ 9:02 AM IST.
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Midcap Review - Sintex + Titan + Exide + Shriran Transport
Wednesday, July 09, 2008
CNXMCAP index fell 20.2% in June 2008 while Nifty and Sensex were down 17% and 18% respectively. The mid-cap discount to large caps is ~18% currently and in spite of the concerns of inflation related margin pressures and high oil price, there are currently quality companies available at attractive price in the mid-cap space. While none of them may be immune to the immediate effects of a broader market meltdown, the quality investment theses should prevail over a 12 month horizon.
Selected stocks from the Mid-cap space that are good bets for the long term are,
Sintex Industries:
Consensus estimate the organic growth to be about 60%, chiefly driven by 79% growth in its plastic mass housing solutions business (pre-fabs and monolithic). Expected EPS for Fy09 is Rs 28.2 a 70% growth and the stock is trading at P/E of 11x. Going forward 40% growth is sustainable.
Shriram Transport Finance:
The pre-used Commercial Vehicle finance company, has lived up to our conviction in it as a "secular" high growth company whose fortunes seem to be de-coupled from the CV cycle. The asset quality seems to be holding up impressively. It is expected to report an EPS of Rs 33.3 for Fy09 and is currently trading at 10.8x FY09 earnings.
Exide Industries:
Exide reported revenue growth of 52% YoY, driving profit growth of 61% YoY for FY08, as volumes grew by 18-20%. The insurance business under ING Vysya Life reported strong growth of 60% in new premiums during 11MFY08. Insurance business contributes Rs 15 /share. EPS for Fy09 is expected to be Rs 4.0. Add on Correction.
Titan:
Titan reported strong 4QFY08 results with revenue growth of 38% YoY and pretax profit growth of 25%. Strong 4QFY08 results corroborate our view that with higher-end of jewellery contributing c.60% of sales, Titan will be able to partly withstand moderation in gold demand due to sharp rise in gold prices. Tital is expected to report an EPS OF Rs 45 for FY09 and is trading at 27x FY09 earnings. Hold and Add on Correction.
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Published by Komal M @ 10:53 AM IST.
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Lehman overweight on Thermax Ltd
Monday, July 07, 2008
Lehman Brothers continue to retain OVERWEIGHT on Themax Ltd after meeting with the company's management.
Thermax expects strong order-inflow growth in FY09 from cement, steel, and oil and gas sectors. Rising steel prices could impact the company by 50 bps. China facility for chillers will start production from August 2009; the company expects it to break even by FY10.
Thermax has signed a technology transfer agreement for subcritical utility boilers of up to 800 MW. While the company has not disclosed the exact amount payable to B&W for this agreement, the royalties paid would be dependent not on the value of the contracts won, but on the basis of criteria such as tonne per hour delivered.
Lehman expects Thermax to report an EPS of Rs 26.7 and Rs 35.3 for FY09 and FY10 respectively. Lehman has set a Target Price of Rs 563 on the stock.
Dalal Street Analyst View: Being a little bit conservative we have an internal target price of Rs 50 to Rs 475.
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Published by Sunil K @ 9:35 AM IST.
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ABG Shipyard not a Titanic, Board - Anand Rathi
Friday, July 04, 2008
Anand Rathi has reiterated its BUY rating while covering ABG Shipayrd with the Stress Case / Worst Case scenario.ABG recently announced that it has deferred fund raising for Surat II, make us believe the project would be delayed, the same has not been included in Analysis. Further, expect the new capacity being built globally lead to tough competition in the industry. Thus assuming ABG's utilization to fall to 70% FY12 on.
ABG's gross order book applicable for subsidy (from the lapsed scheme) stands at Rs82bn. The government has not yet decided whether to renew the subsidy scheme and has also been dithering over disbursements and approvals from the previous scheme. Assuming things will not improve in the short term owing to current fiscal, taking a conservative approach have excluded all subsidies from estimates, whether it be from the present order book or from the orders to be received.
ABG is expected to report an EPS of Rs 35 and Rs 48 for FY09 and FY10 respectively. ABG is trading at 6.9x FY10e earnings, compared to its global peers which trade in the range of 8-12x. Anand Rathi has set a target price of Rs506 - combining the core business fair value of Rs479 and the ship-repair value of Rs27.
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Published by Webmaster @ 6:21 PM IST.
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Best Dividend Yield Stocks
Thursday, July 03, 2008
With today's Carnage in the Market, Fund Managers are back to the old school of thought, valuation based investing - Dividend Discount Model, etc. We are presenting you with some of the best dividend yielding stocks. However, for an Individual and Retail investor, we do not recommend BUYING them just for this purpose, but you can continue to hold if you already own them.Dividend Yield from Nifty Stocks:
Ambuja Cem. 4.80%
Hind. Unilever 4.55%
ACC 3.96%
ONGC 3.92%
Dividend Yield from Midcaps:
Andhra Bank 7.67%
Allahabad Bank 6.53%
HCL Infosystems 6.17%
Vijaya Bank 6.12%
Bank of Mah. 6.06%
Syndicate Bank 5.77%
Castrol India 5.52%
Ashok Leyland 5.50%
Gateway Distripark 5.24%
Binani Cement 5.11%
Dividend Yield from SmallCaps:
Ador Welding 8.88%
Varun Industries 8.32%
Grindwel Norton 7.83%
Solvay Pharma 7.30%
Wyeth 7.29%
Helios Matheson 7.11%
Varun Ship. Co. 7.11%
JK Paper 6.98%
MIRC Electronics 6.85%
Kindly excuse me for excluding OIL Marketing companies since their stock price may slide substantially, thus destroying your wealth.
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Published by Webmaster @ 3:07 PM IST.
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