HSBC is overweight on the prospects of BHEL. BHEL still dominates, with 55% share of incremental orders and 69.4% share of thermal. Increase earnings estimates by 5.6% and 10% for FY09e and FY10e respectively, based on the strong order inflow.
BHEL to outperform the market due to strong order book and potential success in supercritical projects. BHEL to continue to trade at a MACC range of 8.4-10.3% vs. earlier estimate of 8.0-11% MACC range, due to increase in revenue visibility post FY10e. Based on this, increased target price to INR2500 and Maintain Overweight rating.
It may be possible for HDFC to cut rates on the entire stock of floating rate loans. The 28.7% disbursal growth in the quarter ended June was a little higher than in preceding quarters. Target price of INR 2173, up from INR1985 previously, is a weighted average where the DCF is assigned a weight of 50% and the PE and P/B derived forecasts are assigned weights of 25% each. HDFC has risen 33.9% after end of June compared with an 18.8% rise in the Sensex and 19.1% in the Bankex. Rating methodology requires a minimum potential return of 6.3% to rate a non-volatile Indian stock Neutral. The potential return on HDFC is well below this threshold and hence HSBC continue to rate the stock Underweight.
