Buy Voltas Ltd. For Target Rs. 102. - Mansukh Securities Ltd.

Buy Voltas Ltd. For Target Rs. 102
Valuations & Recommendations

Voltas is trading at P/E of 9.7x of its FY13E EPS of RS. 7.96. Further, despite difficult economic situations, we are expecting that company has significant opportunities to maintain the order inflow especially from the overseas markets. Apart from this, with the launch of new innovative products in core segment and expansion of other products range in white goods segment the company is likely to enjoy encouraging volume growth in near in future. Further, company is also looking to expand its business & distribution networks, which will help to maintain its top line and bottom line growth in longer term. Hence, with the long-term point of view, we recommend to buy the stock for the target price of Rs. 102.

Sell Infosys For Target Rs. 2,084 - Nirmal Bang Ltd.

Sell Infosys For Target Rs. 2,084

High Expectations Come Crashing Down
Infosys’ 4QFY13 results came as a shocker, in the context of high expectations. FY14 guidance in US dollar terms, at 6%-10% YoY, is well below our expectations of 12%-13%. Dollar revenue came in at US$1,938mn, up just 1.4% QoQ (our estimate US$1,987mn). IT volume growth was 1.7%, while pricing declined 0.6%. A major disappointment was on the margins front, with EBITDA margin plunging 199bps QoQ to 26.5%, its lowest-ever level. Net profit rose 1.1% QoQ (above consensus estimate by 3.8%), but only on a lower tax rate. The company’s management referred to pricing pressure in business operations (63% of FY13 revenue) and the need to drive a structural change in the business mix, which entails upfront investments while benefits will accrue over a period of time. The lack of confidence and unwillingness to comment on a likely range for margins is shocking, in our view. We have cut our FY14E/FY15E EPS by 8%/10%, respectively and downgraded our target multiple to 12x from 14x, retaining our Sell rating on the stock with a revised target price of Rs2,084 (Rs2,685), despite the 21% fall today.

Revenue disappoints, pricing pressure comments are cause for concern:
Infosys posted a 1.4% QoQ rise in dollar revenue, at US$1,938mn, well below our estimate of US$1,987mn; volume grew 1.7% QoQ (IT services), while billing rates declined 0.6% QoQ. The company stated significant competitive and pricing pressures in business operations services (63% of FY13 revenue), a serious concern, one likely to have implications on margins in FY14. Clients’ budgets are also likely to be flat-to-lower across-the-board, with a major focus on cost-cutting. Discretionary spending is likely to be subdued in FY14, exerting further pressure on billing rates. Infosys will make incremental upfront investments in the business to drive growth, which are likely to reflect only over a period of time. Clearly, headwinds to growth have far from abated for Infosys and this is a reflection that the strong 3QFY13 performance was without doubt an exception.
Margins at all-time low, lack of confidence shocking:
Infosys reported a steep 199bps QoQ fall in EBITDA margin at 26.5%, an all-time low owing to onsite wage hikes, pricing pressure and rupee appreciation. Of greater concern is the complete lack of confidence shown regards likely FY14 margins, with the company referring to numerous headwinds like lower Lodestone margins, residual impact of FY13 wage hikes, likely higher subcontracting costs in case it gets lower visas than expected, and pricing pressure.
Guidance and outlook extremely hazy, retain Sell:
Infosys has given guidance of FY14 dollar revenue growth at just 6%-10% YoY against expectations of 12%-13%. The outlook remains hazy and lack of confidence on margins is a cause for concern. We have retained our Sell rating on Infosys with a revised TP of Rs2,084 (Rs2,685 earlier), cutting our FY14E/FY15 EPS by 8%/10%, respectively, and downgrading the target PE multiple to 12x from 14x.

Buy Maruti Suzuki India For Target Rs1,629 - Nirmal Bang Ltd

Buy Maruti Suzuki India For Target Rs1,629

Cut Volume Estimates; Retain Buy
We have reduced our volume assumptions for Maruti Suzuki India (MSIL) by 8% for FY14E/FY15E each to factor in the ongoing weakness in demand as well as new product launch by rivals in the passenger car segment. MSIL ended FY13 with a 3% YoY growth in volume led by higher diesel car sales, which helped it in offsetting the high-teen drop in petrol car sales. Of late, diesel car sales growth also witnessed moderation, with the recovery in the industry expected only in FY15, and therefore we have cut overall volume assumptions for FY14E/FY15E by 8% each. Consequently, our earnings estimates stand revised downwards by 7%/5% for FY14E/FY15E, respectively. However, on the positive side, the Japanese yen-Indian rupee (JPY-INR) weakened by 23% since September 2012, which will have a direct impact on the company’s earnings as its net import exposure in JPY terms stands at ~23% of sales. Due to the favorable forex movement, our EBITDA margin estimates have been revised upwards by 50bps/60bps for FY14E/FY15E to 10.0%/10.3%, respectively. We continue to believe that MSIL is one of the best plays for the macro-economic recovery theme and hence we have retained our Buy rating on it with a revised target price of Rs1,629 (14.5x FY15E EPS).

Accumulate ABG Shipyard Ltd For Target Rs.350 - Kotak Securities Ltd

Accumulate ABG Shipyard Ltd For Target Rs.350

ABG Shipyard has a strong order book worth about Rs 158 bn, of which Rs 106 bn is unexecuted. The unexecuted order book is 4.5 x FY12 sales, which gives strong revenue visibility for the next three to four years. The company is also well poised to exploit impending growth in the offshore business and defence segment led by: i) credible track record, ii) strong clientele, iii) huge capacity, strong execution pace and technical capability and iv) its success in receiving subsidy from the Government.
We expect the company to maintain its margins at ~25% with earnings to grow ~9% in FY14E and ROE of ~18%. Based on 12x FY14E PE, we value ABG Shipyard at Rs 350/share. We maintain our Accumulate rating on the stock. There are two factors which could lead to underperformance: 1) Weak shipping and shipbuilding market leading to poor inflow of fresh orders in the commercial segment, which we believe would stay atleast for the next 2 financial years. 2) Non receipt of a significant portion of booked subsidy and lack of clarity on the new subsidy policy.
Valuation
We value ABG at 12 x FY14E P/E on the back of robust order book which provides strong revenue visibility. We are considering ex subsidy FY14E EPS of Rs 29 while arriving at the target price as we believe that ABG would receive the subsidy very late in the future (Very difficult to put a timeline for the receipt of the subsidy). This leads to a target price of Rs 350/- for the stock. Orders would be tough to come from the commercial shipbuilding segment. Orders from offshore industry and navy would continue to flow though at a slow pace. Receipt of accumulated subsidy andflow of fresh orders would act as valuation support and would provide upside for the stock.
The target multiple of 12x FY14E earnings is at par with one year forward P/E multiple of Korean and Singapore shipyards which are much larger in scale (catering primarily to vessels such as large crude carrier, containerships, and LNG tankers) and have similar earnings growth over the next few years. For arriving at the target price we have also factored in 1) strong revenue visibility but no new order wins in short term 2) some cancellation of orders especially in the bulk segment 3) Strong potential in the offshore and defence segment and 4) ignores the subsidy factor completely which the company would be receiving sometime down the line.

Buy AuroPharma For Target Rs.188/196 - Nirmal Bang Ltd

Buy AuroPharma For Target Rs.188/196

DAILY CHART
* Momentum Indicator RSI showing a positive cross over in daily chart indicates strength in the stock is keeping a positive closing above the 6/30-DMA from two trading sessions Stock is showing strong signs of revival.
* The stock is keeping a positive closing above the 200-DMA from few trading sessions Stock is showing strong signs of revival and is holding firmly above its 20- average of the Bollinger band daily chart on closing basis
* Daily chart indicates that stock has given a breakout of downward sloping trend line i.e. 162 levels with volumes which indicates an potential up move in coming trading session. Another interesting observation is that stock has formed an inverse head and shoulder pattern which is a bullish indicator and stock is on the verge of giving the breakout of neck line i.e. 165 levels.
* Therefore, traders can buy the stock at 163 and on dips to Rs 155 for a target of Rs 188/196 with a strict stop loss placed below Rs 145.

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Goldman Reduces Iron Ore Forecast as Global Demand Growth Slows

Goldman Sachs Group Inc. cut its estimate for iron-ore prices this year on expectations demand will moderate and steel production will slow in China, the world’s largest buyer.

Iron ore may average $139 a metric ton, compared with a previous estimate of $144, analysts Christian Lelong and Jeffrey Currie wrote in a report today. The bank has a neutral outlook on the commodity and prices may be supported at about $140 by the need for high-cost Chinese mine production to balance the market in 2013, the report showed.

Prices have dropped 7.2 percent in 2013 as China’s industrial output had the weakest start to a year since 2009 and concern rose that curbs on construction in the country will reduce demand for the steelmaking material. Iron ore has peaked and will decline over the rest of the year, Morgan Stanley said March 7, joining analysts from Deutsche Bank AG to Credit Suisse Group AG in forecasting lower prices.

“We expect global seaborne iron-ore demand to revert back to its historical growth rate of 2 percent per annum,” Goldman Sachs said. “Steel production growth has slowed in China and we expect it will remain below GDP growth rates in the future.”

Iron ore with 62 percent content delivered to the Chinese port of Tianjin slipped 0.2 percent to $134.40 a dry ton today, according to the Steel Index Ltd. Swaps are trading at $132 a ton for April, $127.50 for the second quarter and $121.25 for the third, according to SSY Futures Ltd., a broker.