Category: Equity Research

Citigroup research has cut the target price estimate for Jaiprakash Associates. After a 50%-plus correction, the stock is close to stress-case value of Rs196. Indeed this is a very bold and conservative move because Citi values JP Associates on business valuations and not private-equity valuations, which is evident from the fact that we value (1) Jaypee Power Ventures at a ~60% discount to P/E valuations, and (2) Jaypee Infratech at a ~37% discount to P/E valuations. (more…)

Tata Communications Limited (TCL), in third quarter revived out of the sequential drop witnessed in Q2’08. The key highlights of the quarter were: 9.8% qoq increase in sales to Rs. 10.4 bn on the back of robust revenue growth of 31.7% of Enterprise and carrier data services. EBITDA rose marginally by 0.9% qoq to Rs. 1,535 mn due to a hike of 107 bps in operating costs and 58 bps in network costs. Enterprise and data services touched EBITDA margin of 91% for the first time. (more…)

Here are the top picks from Motilal Oswal In large Cap, MidCap and Small Cap.
Large Cap:
Tata Steel: Banking on rising steel prices. Trading at EV/EBITDA of 4.4 and P/E of 5.8 for FY09.

Bharti Airtel:Undisputed leader in Indian wireless. Trading at EV/EBITDA 10.7 and a P/E of 19 for FY09 earnings. (more…)

Kotak Sec has initiated coverage on Gujarat Ambuja Exports Ltd [GAEL] with a BUY rating.

GAEL used to sell its entire oil in bulk form to other people who were packing it in small quantities and sell it as their own brand. A couple of years back GAEL started doing 20% branded sales while the rest used to go as bulk sales. Today, the company has already achieved almost 65% branded sales.

The company’s solvent extraction plant at Pithampur is the only plant which does not have facilities for refining oil. Thus, to bridge this gap to capture the entire value chain of refining, packing, and selling as branded product the company is setting up 200 TPD oil refinery at Pithampur. It is likely to incur a capex of Rs.150 mn (more…)

In a report by HSBC released just a while ago, they have reiterated their UNDERWEIGHT rating on Indian utilities. The report says, there is downside from current levels even after the recent correction. Execution delays, non-availability of fuel linkages and power evacuation yet to be discounted by the market. (more…)

ENAM Securities continues to rate Motherson Sumi Systems [MSSL] as an OUTPERFORMER but with realistic returns expectations. MSSL has dominated the domestic wiring harness market with a ~65% market share. Long standing relationships with most OEMs and backward integration for critical components will ensure MSSL’s dominance. Increasing complexity of cars to leading to greater value addition, and higher realizations for MSSL.

Sumitomo wiring systems (SWS) has identified India as a “focused frontier” where they expect growth. India/ Sharjah likely to emerge as a significant sourcing base for Sumitomo over the next 3-4 years. (more…)