Indian Equity Research and Investment Strategy
Edelweiss Equity Research is Bullish on the prospects of Rolta India and Infotech Enterprises both Midcap software companies.
Rolta India Ltd:
All-time high order book and pipeline bids. Order book stands at INR 8.4 bn. All business segments witnessing strong traction. A pleasing guidance issued for the first time in the company’s corporate history guiding towards a 33-35% growth in revenues and 33-36% growth in net profits for
Bharat Heavy Electricals (Bhel) has won an large order for supply and installation of the steam generator and steam turbine packages at the upcoming Vallur Thermal Power Project at Ennore in Tamil Nadu. The orders for the greenfield power project have been placed by NTPC-Tamil Nadu Energy Company (NTEC).
Bhel’s scope of work involves design, engineering manufacture, supply, and erection and commissioning of steam generators, turbine generators, electrostatic precipitators and associated auxiliaries.
IVRCL Infrastructures & Projects announced that the company has been awarded irrigation works of an aggregate value of Rs 320.21 crore in Ajmer and Jodhpur districts, by the public health and engineering department, government of Rajasthan.
Mumbai-based construction firm Gammon India is reportedly entering the hospitality sector by forming an alliance with the US-based Wyndham Hotel Group International, Inc., to develop affordable or budget hotels. The Wyndham Group, which runs more than 6,500 hotels under 10 brands in six continents, is one of the largest hospitality companies in the world.
Gammon India is a Large Scale Infrastructure development company. Net profit of Gammon India rose 87.57% to Rs 28.53 crore on a 30.97% rise in sales to Rs 540.31 crore in Q1 June 2007 over Q1 June 2006.
Tecpro Systems (TSL), engaged in the business of undertaking turnkey projects in Bulk Material Handling Systems including raw material handling systems for power, steel, cement plants etc., propose to enter the capital market with an initial public offering through a book built issue of 7,300,000 equity shares and has filed its Draft Red Herring Prospectus with SEBI. The issue will constitute 22.33% of the fully diluted post issue paid-up capital of the company.
TSL installs conveyor systems and manufactures equipment such as crushers, screens, feeders, conveyor components like Idlers and pulleys and undertakes structural steel fabrication. TSL has received ICICI CNBC Emerging India 2007 award powered by CRISIL in the infrastructure category.
TSL is promoted by Mr. Ajay Kumar Bishnoi, Chairman & Managing Director and Mr. Amul Gabrani, Vice Chairman & Managing Director
Bangalore’s Realty Developer, Puravankara Projects had a weak debut on stock exchange listing at Rs 360, way below the revised offer price of Rs 400. Imagine what would have happened if the stocks were alloted at Rs 525. We thank our IPO Analyst for pro-actively writing against the company’s abnormal valuation and thus helping investors.
The IPO had ended on 8 August 2007 with 1.91 times subscription. The qualified institutional buyers (QIBs) category was subscribed 2.7 times, the non institutional investors category – made up of corporates and high networth investors – was subscribed 0.98 times. The retail individual investors category was subscribed 0.63 times.
The company had revised the price band of the IPO to Rs 400-Rs 450 per share, compared to the previously set price band of Rs 500 – Rs 525 a share, amid volatile secondary market conditions prevailing at that time.
ENAM Securities Research is recommending Peninsula Land as an outperformer with a price target of Rs 719.
Peninsula has applied for necessary approvals to change the land usage for its Dawn Mills property, in Lower Parel, from commercial to an IT Park, thereby doubling the FSI and saleable area to ~1.2mn sq. ft., resulting in a significant upside in our valuations. The selling prices at Sewri currently range between ~Rs 13,000 psf to 14,000 psf (Ashok Gardens project) and at Kurla, between ~Rs 13,500 psf to 14,500 psf (Peninsula Technopark project). The company expects to receive Rs 25-27bn in revenues over the next 3 years from Dawn Mills Project.
ENAM believes that the company is a high quality real estate player in Mumbai with a strong focus on the commercial segment. At CMP of Rs 450, the stock trades at a significant discount of ~29% to NAV of Rs 637.
ENAM’s base Case Target for the Stock is Rs 719 and the bear case target is Rs 550 based on Sum of Parts Evaluation.