!!SAI PARSADAM!!
VIKAS PARSHURAM SAMWATSARE
Domestic demand for compressors has remained muted so far due to slowdown in industrial Capex. Water well segment continues to remain
lackluster. Situation in Europe continues to improve at a moderate pace.
Company shall focus on increasing its market share in overseas Geographies. With its recent acquisitions of Rotair (Italy) and Patton's (USA), management is confident of gaining market share in Europe, USA and Latin America.
Valuation and recommendation
At current price of Rs.96, stock is trading at 14.8x P/E and 8.3x EV/EBITDA multiples on FY14E earnings. In view of the recent un up in stock price, we see limited upside to our target price and therefore downgrade EEL stock to 'Accumulate' from 'BUY' earlier with a DCF based unchanged target price of Rs 102.
Buy Gujarat Intrux Ltd For Target Rs.50.00
Gujarat Intrux Ltd is engaged in the manufacturing & supply of Stainless Steel, Non - Alloy Steel & alloy steel Castings.
* During the Second quarter ended the robust growth in the Net Profit of the company and it is rose by 90.43% to Rs. 14.72 million.
* Gujarat Intrux revenue for quarter increase 93.47% to Rs.140.73 million from Rs.72.74 million, when compared with the prior year period.
* The company has ISO 9001:2008, PED Certificate, AD-2000 Merkblatt WO certificate & DNV approval certificate.
* Gujarat Intrux has achieved remarkable growth in the export sale compare to last year.
* The company’s Profit before interest, depreciation & tax is Rs.24.12 millions as against Rs.13.08 millions in corresponding period of the previous year.
* Net Sales and PAT of the company are expected to grow at a CAGR of 27% and 54% over 2011 to 2014E respectively
.
Outlook and Conclusion
* At the current market price of Rs.44.00, the stock P/E ratio is at 2.54 x FY13E and 2.09 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.17.33 and Rs.21.06 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 27% and 54% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 1.40 x for FY13E and 1.08 x for FY14E.
* Price to Book Value of the stock is expected to be at 0.52 x and 0.41 x respectively for FY13E and FY14E.
* We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.50.00 for Medium to Long term investment.
During the financial year 2011-12, the company has scaled new heights in terms of Sales and Profits & completed basic infrastructure of expansion of plant but due to adverse market position presently capacity remain un utilized but constantly making efforts to capture market. In present situation company is concentrating on such products gives us more profitability. The capacity is increased market position remain favorable to the company can maintain growth in terms of turnover and profit also.
Buy Hindalco Industries Ltd. For Target Rs.160
Company Snapshot
Established in 1958, Hindalco is an industry leader in aluminium and copper. It is the metals flagship company of the Aditya Birla Group and world's largest aluminium rolling company in addition to being one of the biggest producers of primary aluminium in Asia. Its copper smelter is the world’s largest custom smelter at a single location. Birla Copper produces copper cathodes, continuous cast copper rods and other by-products, such as gold, silver and DAP fertilizers. After acquisition of Novelis Inc. in 2007, Hindalco positioned itself among the top five aluminium majors worldwide and the largest vertically integrated aluminium company in India. Its footprints have ventured in 13 countries across the globe.
Investment Rationale
Better than expected results reported by Novelis in Q2FY13
Though Novelis reported a decline in volumes and realization in Q2FY13, the decline was much lower than expected. Shipments for the quarter declined marginally Y-o-Y to 0.754 mn tons and was in-fact marginally up around 1% q-o-q. Except Europe, there was recovery in volumes in all other geographies such as Asia and South America. The major reason for increase in volumes was demand uptick in automotive sector and beverage cans. Novelis continued sequential (q-o-q) improvement in adjusted EBITDA/ton even in Q2FY13 by 6% to US$367 per
Better hopes for Indian operations in 2HFY13
There were certain issues the company was facing in Indian operations which are expected to be resolved in Q3FY13. The power plant in Hirakud, Odisha which was targeted for pollution is said to be back in operation and the smelter production in the same area which was affected in Q2FY13 is also expected to be on stream by the end of Q3FY13. In addition to this, the smelter in Renukoot (Uttar Pradesh) is also expected to be back in operation by Q1FY14. This shows that there is high probability of production revival from Q4FY13 onwards and the full effect of this may come in FY14. The high probability of improvement in production is based on stage-I environmental clearance of Mahan coal block. The company is expecting another quarter to get stage-II clearance, after which it can start mining. Apart from this, Hindalco has started mining at the Baphlimali bauxite mine. Bauxite from this mine will be used for Utkal Alumina which would supply alumina to its Mahan smelter.
Outlook and Valuation
In last one year, Hindalco has significantly underperformed the benchmark indices for numerous reasons like project delays; issues on allocation of mahan block and lower aluminium prices globally. From its present level, possibility of downside in aluminum prices looks remote as it is below global cost curve. After getting done with legal hurdles and putting projects back on track we believe that recovery would continue going ahead and better performance from Novelis will act as a catalyst for further improvement in FY14.
We recommend a BUY rating on the stock with target price of `160. At our target of `160, the exit EV/EBITDA comes at 5.6x, which is lower than other international players where the average EV/EBITDA multiple stands at 6.5x.
Buy Wipro Limited For Target Rs.403.00
Wipro is 4th largest Company in the world in terms of market capitalization in IT services. During the quarter ended, the robust growth of revenue is increased by 23.81% to Rs. 16106.00 million.
* Wipro has added 53 new customers for the quarter.
* Wipro has entered into a long term strategic partnership with Qatar Airways for developing and implementing IP for cargo management and revenue accounting.
* Wipro Technologies has been positioned as a Thought Leadership "Best-In-Class" in the CEB TowerGroupOutsourcing Technology Analysis Report 2012.
* Wipro launched Prepaid Broadband Solution for US Cable Market.* Wipro received the Oracle APAC CRM Partner of the Year 2012 award.
* Wipro Technologies announced its partnership with the Chennai Runners, as the title and technology sponsor of “The Wipro Chennai Marathon (TWCM) 2012".
* Wipro Technologies has become an SAP® services partner of SAP South Africa.
* The Company’s revenue and PAT are expected to grow at a CAGR of 17% and 9% over FY11 to FY14E respectively.
Outlook and Conclusion
* At the current market price of Rs.363.00, the stock P/E ratio is at 14.58 x FY13E and 13.00 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.24.91 and Rs.27.93 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 9% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 9.43 x for FY13E and 8.40 x for FY14E.
* Price to Book Value of the stock is expected to be at 2.69 x and 2.23 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.403.00 for Medium to Long term investment.
Buy Dena Bank For Target Rs.125.00
Dena
Bank, in July 1969 along with 13 other major banks was nationalized and
is now a Public Sector Bank constituted under the Banking Companies
Act, 1970.
* Bank’s Capital Adequacy Ratio registered at 12.05% as on 30.09.12.
* Current and Savings (CASA) deposits grew by 16.35% to Rs. 228790.30
millions from Rs. 266200.70 millions as at end of Sep 2011.
* Net Profit was Rs. 2396.40 mn as against Rs. 1935.80 mn in the corresponding quarter of the previous year, up by 23.79%.
* Bank has appointed IDBI Intech to suggest strategies and assist in
the implementation of Business Processing Re-engineering exercise.
* Bank has opened 59 new branches during the Quarter & plans to open 100 new branches during FY 2012-13.
* Bank has entered into tie-up with different auto manufactures for financing of 3 wheelers.
* Net Income and PAT of the company are expected to grow at a CAGR of 29% and 25% over 2011 to 2014E respectively.
Outlook and Conclusion
At the current market price of Rs.114.00, the stock P/E ratio is at 4.02 x FY13E and 3.38 x FY14E respectively.
Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 28.37 and Rs.33.74 respectively.
Net Income and PAT of the company are expected to grow at a CAGR of 29% and 25% over 2011 to 2014E respectively.
On the basis of Debt Equity Ratio, the stock trades at 17.64 x for FY13E and 16.43 x for FY14E.
Price to Book Value of the stock is expected to be at 0.76 x and 0.62 x for FY13E and FY14E respectively.
We expect that the company will keep its growth story in the coming
quarters also. We recommend ‘BUY’ in this particular scrip with a target
price of Rs. 125.00 for Medium to Long term investment.
Buy R S Software India Ltd For Target Rs.191.00
R
S Software India Ltd is engaged with the world’s largest payment card
association/ network & working for leading payment processor in US
& UK.* During the first quarter ended the robust growth in the Net Profit of the company and it is rose by 50.48% to Rs. 94.80 million.
* CARE has upgraded RS Software's credit rating from CARE A- to CARE A for shortterm facilities.
* The company allotted 15,50,000 Convertible Warrants on preferential basis to the Promoter @ Rs.51.86 per warrant to be converted into equity shares @ 10/- each at the ratio of 1:1, 3, 90,000 convertible warrants were converted into equity shares.
* R S Software has added 2 clients around long-term contracts with Y-O-Y price escalation clause.
* Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 27% over 2011 to 2014E respectively.
Outlook and Conclusion
* At the current market price of Rs.169.00, the stock P/E ratio is at 5.33 x FY13E and 4.26 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.31.69 and Rs.39.68 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 27% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 1.82 x for FY13E and 1.42 x for FY14E.
* Price to Book Value of the stock is expected to be at 1.56 x and 1.14 x respectively for FY13E and FY14E.
We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.191.00 for Medium to Long term investment.
TV18 BROADCAST
(BSE TICKER-532800@Rs.38/-)
TV18 Broadcast Ltd.’ the group operates news channels - CNBC-TV18, CNBC
Awaaz, CNBC-TV18 Prime HD, CNN-IBN, IBN7 and IBN-Lokmat (a Marathi
regional news channel in partnership with the Lokmat group). TV18 also
operates a joint venture with Viacom, called Viacom18, which houses a
portfolio of popular entertainment channels – Colors, Colors HD, MTV,
SONIC, Comedy Central, VH1 and Nick - and Viacom18 Motion Pictures, the
group’s filmed entertainment business. TV18 and Viacom18 have also
recently launched a strategic joint venture called IndiaCast, a
multi-platform ‘content asset monetization’ entity mandated to drive
domestic and international channel distribution, placement services and
content syndication for the bouquet of channels from TV18,Viacom18 and
other broadcasters. TV18 has also forayed into the Indian factual
entertainment space through A+E Networks | TV18 (Joint venture between
A+E Networks and TV18 Broadcast), which has recently launched a new
channel – HistoryTV18
TARGET
Rs.75/- Rs.200/-
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