Dalal Street

Citigroup Research in its report on ABB has reiterated a BUY with Low Risk and has set a price target of Rs 4,400, 16% upside from current levels.

ANN (India) reported a 4QCY06 PAT at Rs1.35bn (up 43% YoY) was 7% ahead of estimate of Rs1.26bn on faster execution of orders leading to net sales of Rs14.3bn, which was 5% ahead of estimates.

ABB (India) booked Rs14.1bn (up 40% YoY) of fresh orders in 4QCY06, ending the year with an order backlog of Rs33.7bn (up 60% YoY). In CY06, the company booked orders worth Rs56.2bn (up 50% YoY). Strong industrial growth and power capex imply future order inflows.

The power capex cycle will be stronger for longer as the first concrete numbers of the Ministry of Power’s (MoP) generation targets for the XIIth Plan (FY12-17E) at 86.5GW has started trickling in, implying that capacity addition targets in the 10 years from FY07E-FY17E is likely to be 153.5GW.

Target price of Rs4,400 is based on a P/E of 34x FY08E which is a ~50% premium to BHEL, in line with the premium over the last 3 years.

Irrespective of what happens with the CRR, Kotak Securities has retained BUY rating on AIA Engineering with a price target of Rs 1520, 18% upside from current levels. AIA Engineering has reported good Q3FY07 results, which were in line with analyst estimates.

AIA Engg’s expansion plans are on track. The company plans to increase its capacities from 65,000 TPA to 115,000 TPA by end of March-2007 and increase rise further to 165,000 TPA by October-2007. To cater to the demand of mill internals, the company is setting up another 100,000 TPA plant for manufacturing high chrome mill internals.

The company has an order book of Rs 3.7 bn of which 55% is for exports.

AIA Engg is expected to earn EPS of Rs 52, 76 and 101 for FY07, FY08 and FY09 respectively. The price target for AIA Engineering is Rs 1520.