Macquaire in its latest research report after analyzing the results of Hindustan Zinc’s Q3 performance has put a BUY recommendation on the stock with a 12 month price target of Rs 1160. HZL is one of the best mining assets, and huge possibility to add more reserves – is trading below its NPV of Rs 804 and is one of the cheapest on this basis among its global peers.
Q3 results are not in-line with market expectations but analysts are bullish that HZL will meet their expectations for the full year. Analysts expects an EPS of Rs108 for FY07, which is 8% higher than consensus. The company has already posted EPS of Rs86 in the first three quarters and shall easily surpass expectation, as zinc prices – even after three cuts in a month are near the forecast price of US$3,800/tonne.
12-month price target: Rs1,160.00 based on a PER methodology.
Catalyst: Strong earnings growth, high cash flow and sustainability of higher profits.
Outperform maintained: Given the bullish view on zinc prices in FY08 and expected 50% volume growth in FY09, Macquaire estimates sustained high profitability.
Macquaire in its latest research report is bearish on the prospects of Cairn India and has set a 12 month stock price target of Rs 130, a potnetial for Cairn India to slide 10% from current levels of Rs 145. Macquaire has arrived at Rs 130 based on the sum of parts valuation model.
House of Pearl Fashion is operating in three business streams: manufacturing, marketing and distribution, and sourcing of garments. They currently operate ten modern ready-to-wear apparel manufacturing facilities, of which six are located in North India, One in South India, two in Bangladesh and one in Indonesia.
IPO Details: Issue Size Rs 314 – Rs 359 crores No of shares offered – 5.9 Million shares Price Range for Book Building – Rs 525 -to Rs 600 Fully Diluted Equity after the Issue – Rs 19.68 crore or 1.96 crore equity shares of FV Rs 10.
The company is raising capital to double its current manufacturing capacity. The company manufactures only 25% of the net sales it does and the rest being sourced from different manufacturers. It mainly markets in the UK – 50% and the rest in other European countries and the US.
The company had a sales of RS 448 crores and a PAT of Rs 25.8 crores for Half year ending 2006. The company’s OPM and Net Margins are at 8% and 5.2% which are far lower than that of Gokaldas Exports which has 11% OMP and 7.5% Net Margin.
The IPO is priced in the range of 23-26 times its FY2007 earnings while industry leader Gokaldas Exports is available at 14.3 times its Fy2007 earnings. The valuations look very expensive and their will be no listing gains. Long Term Investors can also avoid the issue.
Global Broadcast News Limited is an English News channel promoted by the promoters of TV-18 and is backed by CNN. The company plans to raise Rs105 crores.
IPO Details: Offer Price: Rs 230 to Rs 250 / share each of face value Rs 10 Post IPO Equity : Rs 27.1 crores or Rs 26.7 crores Number of Shares offered: 45,65,217 or 42,00,000 depending on the pricing. This is the first such issue where amount to be raised is fixed. Greedy Promoters ?
Background of Global Broadcast News – GBN: GBN started operations in June-2005. It has an average marketshare of 30% in the English News channel segment trailing NDTV which controls 36% of the market. GBN is banking on the growth in advertisement of news channels where English news channel is the fastest growing segment with 30% YoY growth. GBN is also banking on the implementation of CAS regime. GBN’s CNN-IBN is now a pay channel with a fees of Rs 5 / subscriber / month.
GBN = CNN IBN + 49% of IBN 7 a.k.a Channel 7 (Hindi News Channel) + 15% in Web 18. I really don’t understand the need to float a separate company, just for these two channels when TV-18, which is in the business of content generation could have done it under the listed entity.
Financials of GBN India: For the 10 Months FY ended 2006, GBN reported revenues of Rs 6.53 crores and a net loss of Rs 46.53 crores. For Half year ended Sept-30-2006, Revenues were 25.90 crores and a net los of Rs 25.80 crores.
Revenue and Profit Estimations for FY 2007. Revenues – Rs 70 crores Net Loss – Rs 33 crores
Revenue and profit Estimates for FY-2008. Reveneus – Rs 105 crores [50% growth YoY] PAT – Rs 22 crores Expected EPS – Rs 8.1 or Rs 8.23. The shares are being offered at a forward P/E of 29 and 30.
GBN Recommendation for IPO Investors: The issues is very aggressively priced and takes into account the rosy picture of growth in Indian English News Channel. At issue price of Rs 250, GBN will have a market cap of Rs 675 crores which is very high. Investors with high risk appetite who are willing to hold for long term are advised to apply. As a Small investor I will skip the issue as it is too small and allotment will be by lottery. Instead hold your money for PSU IPOs which will have some appreciation on table for investors. Also India’s worst registrar, Intime is managing the issue so allotment and refund is a big problem 🙂
Goldman Sachs which has initiated coverage on India’s laregst company, Reliance Industries Ltd has upgraded it to BUY from Neutral with a 12 month price target of Rs 1660.
They value Reliance on sum-of-the parts methodology based on peak cycle valuation of 5.5X FY2008E (March) EBITDA for refining, near-peak cycle valuation of 6.0X FY2008E EBITDA for the petrochemical business, and DCF for the E&P and organized retail ventures to arrive at our target price of Rs1,660.
The sum of parts valuation of Reliance Industries’s individual business segments are valued as follows.
Infosys Technologies Ltd has announced its results for the quarter ending Dec-31st, 2006. The results have no surprises and are mostly in-line with expectations. Most brokerage houses were expecting a Q3 net profit of Rs 982 crores except Karvy which was expecting 993 crores and Infy has reported 982 crores.