Indian Equity Research and Investment Strategy
Supreme Infrastructure India, an infrastructure development company primarily engaged in civil construction activities, has listed at Rs 187.50, a premium of 73.61% premium over its offer price of Rs 108 on the NSE.
You can now check the allotment status of Maytas Infra IPO.
You can also read about the Reliance Power IPO ir-regularities by promoter family, Anil Ambani.
Kotak has upgraded the stocks of Container Corporation of India Ltd [CONCOR] and Gateway Distriparks Ltd after the Q2 results.
CONCOR:
You can see the Q2 results flash in our earnings news section. Here is the rationale behind the upgrade. Accommodating for lower average realizations, lower operating margins, higher other income and lower then expected average tax rates, Kotak revises earnings estimates and expect the company to report EPS of Rs.125.0 in FY08E and Rs.145.1 in FY09E as against earlier estimates of Rs.126.7 and Rs.149.3, respectively.
At Rs.1885, the stock trades at 3.0x book value, 13.0x earnings and 11.4x cash earnings based on FY09E. Concor has a tremendous advantage in terms of its scale of operations consisting of volume of traffic, network of terminals across the country, strong base of low cost assets like hi-speed wagons and containers, which would ensure its No.1 position in India in the visible future for transportation of containers through rail. Kotak reiterates BUY on Concor with a revised price target of Rs.2875.
Gateway Distriparks Ltd: GDL
Q2FY08 results of Gateway Distriparks were above expectation on the revenues side. However, the margins have disappointed us. On the profitability side, the results were below expectations.
On a consolidated basis net sales for Q2FY08 were at Rs.640.3 mn, up 67.8% on YoY basis and up 32.5% on sequential basis. EBIDTA for Q2FY08 was at Rs.255.5 mn, up 16.6% YoY and up 15.9% on sequential basis. Consolidated PAT for Q2FY08 was at Rs.188.8 mn, down 10.4% YoY and up 1.6% on sequential basis thereby translating into quarterly EPS of Rs.1.6 and quarterly CEPS of Rs.2.2.
Gateway Rail Freight Ltd, subsidiary of GDL, has acquired its first own container train and subsequently it deployed two of its own rakes on the domestic route. The cold chain business of the company through Snowman Frozen Foods has done well as the revenues grew by 10.1% on sequential basis to Rs.71.4 mn.
Expect GDL to report EPS of Rs.7.2 in FY08E and Rs.9.5 in FY09E, as against earlier estimates of Rs.8.2 and Rs.10.7, respectively. Revised Target price is Rs 170.
Jubilant’s 2QFY08 results were very strong, with a robust trend in revenues as well as profitability. The high margin PLSPS business (especially CRAMS) was the key growth driver and now contributes c60% of revenues.
2QFY08 was stronger than expected, with sales growth of 33% YoY (16% organic) & 169 bps expansion in EBIDTA margins leading to a
49% increase in recurring PAT. Reported PAT was buoyed by forex translation gains (Rs289m). CRAMS was the key growth driver while the legacy industrial and performance products business benefited from lower molasses prices.
Citi raised FY08E, FY09E and FY10E net profit estimates by 41%, 5% and 3% respectively. The company is expected to report an EPS of Rs 17.37, 22.11 and 27.00 for FY08, 09 and 10 respectively. Citi also raised the stock target price by 8% to Rs 415/share.
Tata Consultancy Services (TCS) is entering into an agreement with Nielsen company, the world’s leading provider of consumer and media information services, for outsourcing a portion of Nielsen’s information technology (IT) and operations functions worldwide.
Under the ten-year deal, valued at US $1.2 billion, TCS will assume responsibility for important IT and operational processes and help Nielsen integrate and centralize multiple systems, technologies and processes on a global scale. TCS also will assume responsibility for certain finance and human resource business processes, which will be executed on new BPO platforms built by TCS.
The implementation of next generation technology platforms and processes will enable faster & enriched information service delivery for Nielsen. TCS will also set up an innovation lab with Nielsen to help the customer conceptualize the next generation of business solutions far its end clients globally.
Read Dalal Street Analysts Exclusive Coverage on TCS stock after Q2 Results.
Though the IT pack is out of the HOT favorites amongst investors, Kotak favors Infotech Enterprises a Midcap IT company.
The company exhibited sustained volume growth during the quarter. The results were broadly in line at the EBITDA level. A higher other income component resulted in modestly above estimate profits. Revenue visibility remains strong for FY08 and encouraging for FY09. ‘Offset clause’ can bring in potentially large business in the defense and aerospace areas.
Infotech is cash-rich post the recent private placement. Strategic acquisitions are possible in the near term.FY08 and FY09 earnings are estimated at Rs.16.1 per share and Rs.20.9 per share, respectively, based on fully diluted equity. Kotak recommends a BUY on the stock with a price target of Rs.354.
Larsen & Toubro (L&T) has bagged four contracts valued at Rs 452 crore for projects in Andhra Pradesh. Engineering, procurement & construction (EPC) contract worth Rs 226 crore has been secured from National Thermal Power Corporation (NTPC) for design, engineering, supply and installation of 2 x l600 TPH coal handling plant, for Simhadri super thermal power project, stage-II (2×500 MW).
The bulk materials handling business unit of L&T’s construction division bagged this contract against international competitive bidding. The project is to be completed in 39 months. This project is being executed as a part of NTPC’s expansion plan for the Simhadri. STPP, enhancing the installed capacity from 1000-mega watt (MW) to 2000 MW, by adding 2 units of 500 MW each.
A Rs 93 crore order for engineering, procurement and construction of an underground drainage scheme for Nizamabad Township. The project involves laying 470 km of sewer pipelines, sewage treatment plant and pumping system, to be completed in 24 months.