August, 2007 | Dalal Street

Equity Research

Top picks from Sharekhan

August 6, 20072 min read

Sharekhan Research has released a list of top stock picks. However, we are not comfortable with the entire list and here the ones which we recommend from it.

HCL Technologies:
At the current market price the stock trades at 14.3x FY2008 and 12.5x FY2009 estimated earnings (which is around 33% discount to valuation of Infosys). Target Price Rs 396.

Bharti Airtel Ltd:
At the current market price the stock trades attractively at 26.0x FY2008 and 20.6x FY2009 earning estimates. Target Price Rs 1,100.

HDFC Bank:
At the current market price the stock is quoting at 20.9x FY2009E earnings per share, 8x FY2009E pre-provision profits and 3.1x FY2009E book value. Buy with a price target of Rs 1,355.

ITC:
At the current market price the stock trades at 21.2x FY2008 and 17.5x FY2009 estimated earnings. Target Price Rs 200.

JP Associates:
The company is the largest private sector hydropower player and is currently sitting on a huge construction order book of Rs7,200 crore. Taking cognisance of the governments target of achieving 50,000MW in hydropower electricity by 2012. Target Price Rs 1,061

Maruti Suzuki Udyog:
At current levels, the stock is trading at 11.5x its FY2009E and is available at an EV/EBIDTA of 6.8x. Buy with a price target of Rs 921.

Economy, Markets and Macro Views

Amtek Auto Results – Insight

August 6, 20071 min read

We at Dalal Street Business had first recommended Amtek Auto a year ago. Citigroup had recommended Amtek last month. Amtek’s results were above the street expectations.

Adjusted consolidated PAT (excluding derivative trading gains of Rs215m), rose 35% Y/Y, driven by robust top-line growth (+48% y/y), supported by c30% growth in the parent’s revenues. The result also reflects the impact of consolidation of Benda Amtek and Amtek Siccardi in this quarter. Consolidated EBITDA margins at 17.4% Y/Y, (-10bps Y/Y, -100 bps Q/Q) were affected by input cost pressures.

Stand-alone PAT after excluding derivative gains rose 21% y/y, due to strong growth in revenues. Subsidiary performance has improved substantially QoQ (YoY is irrelevant, given that the consolidation impact of Benda Amtek and Amtek Siccardi was from 1QFY07) – while revenues rose c3% QoQ, EBITDA rose 10% QoQ, driven by a margin expansion of 200bps)

Market Crashes are the best opportunity to BUY this stock. Even today when the entire market is down, Amtek is up 0.5%.

Breaking Corporate India Earnings News

VSNL Likely to Invest More in South Africa

August 6, 2007July 18, 20201 min read

As per reports, Infraco, South Africa’s third network operator, which has been formed to lower the broadband costs, is planning to invest close $700 million to build an undersea cable network. The cable network will connect Africa, America and Europe. Tata group-controlled Videsh Sanchar Nigam (VSNL) may invest close to $200 million for the cable project.

The South African telecom regulator has invited strategic partners to invest in the submarine cable project. Since VSNL has its own undersea cable projects across the globe, it is interested in equity participation in Infraco’s cable project.

Currently, the Tata group, through VSNL and Tata Africa, has a 26% holding in South Africa’s second national telecoms operator, Neotel. The Tata Groups Telecom ventures when clubbed together make them the third Largest Telecom Service Provider in India.

Economy, Markets and Macro Views

Indian Markets Down Again

August 6, 20071 min read

The American Home crisis has gripped the Asian Markets this morning. Hang Seng Index is down 530 points while NIKKEI is down 190 points.

Dalal Street opened down 400 points and is currently down 362 points at 14,775. Major losers in the BSE-SENSEX are ACC, ICICI bank, Bajaj Auto, Hindalco and Reliance Energy. None of the SENSEX stocks are trading in positive category. The ratio of Put to Call Ratio is 1.3 in favour of the Puts.

Long Term Investors can pick in very small quantities of companies with sound management, business and cash flow [More Downside expected]. Do read our Research Section to see what Brokerage Houses have recommended and do not just blindly BUY. Convince yourself with EPS and the growth the company has to offer.

Breaking Corporate India Earnings News

Jindal Saw Conference Call – Notes

August 4, 20071 min read

Financial Highlights:
For the quarter ended Jun’07 Jindal Saw reported a 34% rise in Net sales revenue to Rs 1285.53 crore. The OPM (Operating Profit Margin) increased by 100 basis points to 12.5%. Operating profit for the quarter ended Jun’07 stood at Rs 160.59 crore, which was 45% higher as compared to corresponding previous quarter last year. The ensuing PAT for the quarter ended Jun07 was Rs 82.05 crore which was 99% higher when compared with corresponding previous quarter last year.

The order book is approx. US$ 1.225 billion (Indian book approx. US$ 725 million and app. US$ 500 million at USA branch). The orders are slated to be executed by June 2008.

Targets sales revenue to the tune of Rs 5000- 5200 crore for the year ending Sept’07. The sales target for the year ending Sept’08 and Sept’09 is around Rs 6000-6200 crore and Rs 7200 crore respectively.

Capacity utilisation of Kosikana plant, which is longitudinal plant, is 45-50%.
Capex to the tune of Rs 450 crore upto Sept’08. The total Interest cost for the year ended Sept’07 is expected to be around Rs 120 crore. The Depreciation for the FY 2007-08 would be around Rs 75-80 crore.

Breaking Corporate India Earnings News

Rajesh Exports India’s No 1 investor friendly company

August 3, 20071 min read

Rajesh Exports was rated as India’s No. 1 investor friendly company among India’s all listed companies. The rating was announced by the leading business magazine BUSINESS TODAY. The company achieved this significant milestone ahead of some of India’s highly rated service and manufacturing companies.

The rating was arrived as a result of a comprehensive exercise conducted among all the India’s listed companies including the SENSEX and NIFTY companies.

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