!!SAI PARSADAM!!

BIG BOSS

VIKAS PARSHURAM SAMWATARE

Accumulate Axis bank For Target 1440

 

 

The Axis bank's board has announced the capital raising plan which is likely to be book value accretive in nature and would enhance tier-I capital by ~230/350bps during FY13E/14E. As a conscious strategy, Axis bank is aggressively building retail book where competition has heated-up, leading to margin pressure. We believe perceived risk remains at elevated levels with high exposure to infrastructure and other stressed sectors. We retain ACCUMULATE rating on the stock but raise TP to Rs.1440 (2.0x FY14E ABV), as we believe capital raising exercise is likely to provide cushion to its balance sheet in any unforeseen deterioration in the asset quality, going forward.
Capital raising plan is likely to be book value accretive and would enhance tier-I capital by ~240bps.

Valuations & recommendation
We expect Axis bank to report earnings growth of 17.8% CAGR during FY12-14E along with healthy return ratios (RoE: ~20%, RoA: ~1.6%). At the current market price of Rs.1351, the stock is trading at 9.5x its FY14E earnings and 1.9x its FY14E ABV. We retain ACCUMULATE rating on the stock but raise TP to Rs.1440 (Rs.1260 earlier) based on 2.0x its FY14E ABV as we believe capital raising exercise is likely to provide cushion to its balance sheet in any unforeseen deterioration in the asset quality, going forward.
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Buy UltraTech Cement Ltd For Target Rs.2145.00




UltraTech Cement Ltd an Aditya Birla Group cement major, is among the top 10 producers of cement in the world and the largest in India.
* UltraTech Cement has more than 200 sales offices across the country, which handles a combined load of around 14,000 orders per day.
* During the quarter, the robust growth of Net Profit is increased by 97.21% to Rs. 5500.30 million.
* UltraTech Cement has entered into a Share Purchase Agreement with the shareholders of Gotan Limestone Khanij Udyog Pvt. Ltd (GKU) and has acquired GKU’s entire equity stake.
* UltraTech Cement is planning to set up additional clinkerisation plants at Chhattisgarh & Karnataka are progressing on schedule & these are expected to be operational from early FY14.
* During the quarter ended, the combined cement and clinker sales was 9.06 MnT (8.94 MnT) while it was 2.39 LmT (2.11 LmT) for white cement and wall care putty.
* Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 42% over 2011 to 2014E respectively.

Outlook and Conclusion
Cement demand is likely to grow over 8% linked to the Government focus on infrastructure development. The surplus scenario is expected to continue over the next 3 years. Any rise in input costs will impact margins.
* At the current market price of Rs.1915.00, the stock P/E ratio is at 15.74 x FY13E and 12.99 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.121.67 and Rs.147.37 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 42% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 10.28 x for FY13E and 8.78 x for FY14E.
* Price to Book Value of the stock is expected to be at 3.24 x and 2.59 x respectively for FY13E and FY14E.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.2145.00 for Medium to Long term investment.

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