Month: July 2007

ICICI Securities expects Saregama to once again dominate the Indian music industry and replicate its dominant performance which it showed for decades. Given the robust growth in the high margin business like publishing and home video coupled with effectively utilization of the music library ICICI expects Saregama to command improved valuations given its high earnings visibility. At the current price of Rs 302, the stock at a P/E of 21.15x FY08E EPS of Rs14.28 and 16.77x FY09E EPS of Rs 18.01. ICICI rates the stock as an OUTPERFORMER with a price target of Rs 405, 22.5x FY09E.

The company is expected to report an EPS of Rs 14.28 for FY08 and Rs 18.01 for FY09. You can download and read the entire report. [PDF]

Kotak Sec research group has put a BUY on Container Corporation of India Limited [CONCOR] with a price target of Rs 3,000. Potential upside of 35% from current levels.

Container traffic expected to touch 20 mn TEUs by 2015:
In FY07, Indian ports handled 5.4 mn TEUs as against 4.6 mn TEUs in FY06, thereby recording strong YoY growth of 17.1%.

Headroom for raising traffic till rail freight corridor becomes operational:
Currently, Concor runs approximately 16 to 17 trains in a day. On an average, it runs two trains to Mundra port, one to Pipavav and the remaining between JNPT and Delhi ICD. It is expected to go up to 22 and ultimately to a maximum of 25 trains per day on the current network of Indian railways.

Foray into end-to-end logistics services:
Concor has successfully forayed into offering end-to-end logistics solutions to its customers for domestic cargo. The company has tied up with various service providers like road transporters and coastal shipping companies to offer the entire gamut of logistics services.

Cold chain project:
Concor has already commenced commercial operations of its cold chain project in a phased manner. The entire cold chain project is being carried out under a wholly owned subsidiary named Fresh and Healthy Enterprises Ltd, incorporated in February 2006.

Auto carrier project:
Concor is moving ahead with its auto transportation project. The company has developed a special design of wagons to carry cars across the country on the Indian Railway network, primarily to bring down the cost incurred on transportation.

Financials of Container Corporation of India Limited:
Kotak maintains earnings estimates for FY08 and expect Concor to report net sales of Rs.38.3 bn, EBIDTA margin of 30.3% and PAT of Rs.8.2 bn, thereby translating into an EPS of Rs.126.7 and CEPS of Rs.144.3.

In FY09, Kotak expects Concor to report net sales of Rs.45.3 bn, that is, sales growth of 18.3%, EBIDTA margins of 30.0% and PAT of Rs.9.7 bn, that is, YoY growth of 17.9%, thereby translating into an EPS of Rs.149.3 and CEPS of Rs.169.9.

Morgan Stanley is underweight on GMR Infrastructure. Research firm continue to believe that the company has one of the best long-term stories in the infrastructure development sector in India but is underweight on GMR in the Short to Medium Term.

GMR handed over contracts on both the construction and operations side (advertisement at Delhi and duty free at Hyderabad) in the quarter. The market is focused on the potential value creation from the monetization of a 45 acre (5.9 million sq ft) hospitality district at Delhi Airport. GMR expects to finalize the developer for this land parcel by September 2007.

Valuations remain high; Morgan Stanley retains Underweight call on the company due to lack of earnings visibility and doubts over consistency of maintaining the same.