BIG BOSS

VIKAS PARSHURAM SAMWATSARE

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Buy ICICI Bank Ltd For Target Rs.394.00

  ICICI Bank closed 0.5% higher in a weak market yesterday, outperforming the benchmark NIFTY by 2.3%. We expect the bank to report healthy growth in balance sheet along with strong growth in operating profit. Over the last few years, the bank has proven its competitive advantages over other private banks through higher fee income generation capability, well-managed assets quality and better managed other financial business subsidiaries. ICICI Bank is well placed to capitalize on the expected improvement in the economic cycle, as it has leadership position in both retail and corporate banking segments. We have a BUY recommendation on the stock with a SOTP based Target Pr ice of Rs394, wherein the standalone bank has been valued at 2x FY17E Adj. BV of Rs352 and the subsidiaries fetch Rs42/share after factoring in holding company discount of 20%.
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Buy AIA Engineering Ltd For Target Rs.1340.00

AIA Engineering Ltd. manufactures and markets a wide range of High Chromium consumable wear parts (mill internals) which are used in the process of Crushing/Grinding in the Cement, Mining, Thermal power & Aggregate Industries.
*  Net profit for the Dec quarter ramps up by 73.70% yo- y of Rs. 1150.43 mn against Rs. 662.32 mn, when compared with the prior year period.
*  During the Dec quarter of FY15, Net sales were at Rs. 5143.11 mn compared to Rs. 5262.24 mn during the corresponding quarter last year.
*  Operating profit increased by 31.92% to Rs. 1755.31 mn for the 3rd quarter of FY15 when compared to Rs. 1330.60 mn for the corresponding quarter of previous year.
*  Earnings per Share for the company were Rs. 12.20 compared to Rs. 7.02 in Q3 FY14, registered 73.70% growth.
*  Other income grown by 81.93% y-o-y of Rs. 233.01 mn in Q3 FY15 as compared to Rs. 128.08 mn in Q3 FY14.
*  During Q3 FY15, Profit before Tax increased by 69.75% to Rs. 1565.13 mn from Rs. 922.01 mn over the corresponding quarter of the previous year.
*  The Company has entered into a Manufacturing Agreement with Steelcast Limited, Bhavnagar.
*  Net profit grown by 54.96% to Rs. 3182.55 mn for the end of 9M FY15 from Rs. 2053.78 mn for the end of 9M FY14.
*  Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 32% over 2013 to 2016E respectively.

QUARTERLY HIGHLIGHTS (CONSOLIDATED)
Results updates- Q3 FY15,
The company’s Net profit for the Dec quarter ramps up by 73.70% y-o-y of Rs. 1150.43 mn against Rs. 662.32 mn, when compared with the prior year period. Net sales were at Rs. 5143.11 mn compared to Rs. 5262.24 mn during the corresponding quarter last year. Reported earnings per share of the company stood at Rs.12.20 a share during the quarter, registering 73.70% increase over previous year period. Profit before interest, depreciation and tax is Rs. 1755.31 million as against Rs. 1330.60 million in the corresponding period of the previous year.

OUTLOOK AND CONCLUSION
*  At the current market price of Rs. 1196.60, the stock P/E ratio is at 25.34 x FY15E and 22.97 x FY16E respectively.
*  Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs. 47.23 and Rs 52.10 respectively.
*  Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 32% over 2013 to 2016E respectively.
*  On the basis of EV/EBITDA, the stock trades at 15.21 x for FY15E and 13.90 x for FY16E.
*  Price to Book Value of the stock is expected to be at 5.22 x and 4.49 x respectively for FY15E and FY16E.
*  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. 1340.00 for Medium to Long term investment.
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 Buy Centum Electronics Ltd For Target Rs.835.00

Centum Electronics Ltd was established in 1993 to provide microelectronic circuits, frequency control products and complex manufacturing solutions to international and domestic electronics companies.
*  Net sales of the company registered to 16.19% increase and stood at Rs. 1302.84 million in Q3 FY15 against Rs. 1121.33 million in the corresponding quarter last year.
*  For Q3 FY15, net profit Jumps to Rs. 111.96 million from Rs. 99.08 million for the Q3 FY14, Registered a growth of 13% y-o-y.
*  Operating profit grew by 31.61% y-o-y of Rs. 303.89 million in Q3 FY15, against Rs. 230.90 million in corresponding quarter of previous year.
*  Profit before tax (PBT) at Rs. 254.87 million in Q3 FY15 compared to Rs. 181.57 million in Q3 FY14, registered a growth of 74.28% y-o-y.
*  The company has declared an interim dividend of Re. 1.00/- per share on face value of Rs. 10.00/- each for the financial year 2014-15.
*  In Q3 FY15, Revenue from Electronic manufacturing services division is Rs. 622.72 million, an increase of 3% compared to Rs. 605.75 million in Q3 FY14.
*  Centum Electronics has received new orders worth Rs. 1000.00 mn from an Indian Defence Enterprise.
*  For nine months ended of FY15, the company registered a growth of 16.19% in Net sales to Rs. 3637.21 million from Rs. 3130.50 million for nine months ended of FY14.
*  Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 90% over 2013 to 2016E respectively.

QUARTERLY HIGHLIGHTS (CONSOLIDATED)
Results updates- Q3 FY15,
Centum Electronics Ltd is a globally recognized electronics company with strong presence in the Defence & Aerospace, Space, Industrial, Medical and Telecom industry segments. The company has reported its financial results for the quarter ended 31st December, 2014.
The company has achieved a turnover of Rs. 1302.84 million for the 3rd quarter of the financial year 2014-15 as against Rs. 1121.33 million in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs. 303.89 million, increased by 31.61% over corresponding quarter of previous year. In Q3 FY15, net profit was at Rs. 111.96 million compared to Rs. 99.08 million in Q3 FY14. The company has reported an EPS of Rs. 8.94 for the 3rd quarter as against an EPS of Rs. 8.01 in the corresponding quarter of the previous year.

OUTLOOK AND CONCLUSION
*  At the current market price of Rs.761.00, the stock P/E ratio is at 24.23 x FY15E and 21.72 x FY16E respectively.
*  Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.31.41 and Rs.35.03 respectively.
*  Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 90% over 2013 to 2016E respectively.
*  On the basis of EV/EBITDA, the stock trades at 9.49 x for FY15E and 8.44 x for FY16E.
*  Price to Book Value of the stock is expected to be at 5.73 x and 4.65 x respectively for FY15E and FY16E.
*  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.835.00 for Medium to Long term investment.
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ALL TIPS ARE SHORT TERM
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ALL RIGHT  SAI PARSDAM 2014-15