Category: Equity Research

Citigroup which upgraded the stock of Suzlon Energy with a price target of Rs 1,700 in June, has upgraded the stock again with a new target price, on the back of major orders and clear earnings visibility.

Suzlon delivered 1,000MW in 1HFY08 and is set to deliver 1,500+MW volumes in 2HFY08. Delivery of higher volumes in 2HFY08 should lead to better fixed cost apportioning resulting in WTG margins improving to 16.1% levels for the full year.
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Gujarat Apollo Industries Ltd (GAI) is a leading supplier of asphalt road construction equipment with ~30% market share and is a direct beneficiary of the investments in road infrastructure. Rs3,300bn worth of investment (including share of private sector of Rs877bn) is proposed for road infrastructure in the 11th five year plan.

GAI has started its diversification in related areas. It recently tied up with an European Company for manufacturing of 2 models of soil compactors and 3 models of tandem vibratory compactors. It has also concluded exclusive technical know how agreement with a German Company for design and (more…)

Shopper’s Stop (SSL) has reported revenue growth of 38% at Rs2.77bn, EBITDA of Rs134m and PAT of Rs2.3m (decline from Rs80m in Q2FY07). Growth in the business is driven by 200,000 sq. ft. of retail space added since April 2007 and 19% growth in like to like stores. New store addition, addition of new formats [Arelia and Clinque] and service tax on rentals have dragged the profitability in the business with EBITDA margins dipping from 8% in Q2FY07 to 4.8% in Q2FY08.

SSL has added less than 400,000 sq. ft. of retail space in the last two years, as against Pantaloon Retail, which has added 4m sq. ft. SSL has lined up plans to add 8-10 Shopper’s Stop annually over the next four years and also reach 35 Hypercity (more…)

Pidilite Industries Ltd (PIL) has been a pioneer and market leader in the field of consumer and speciality chemicals in India. Its brand Fevicol, Steelgrip, Acron, Dr.Fixit, Fevitite and M-seal are some of the most trusted brands in India.

PIL expanded the Adhesives and sealants range by introducing marble glue and wood (more…)

Citigroup Research has recommended a SELL on Indiabulls and Hindalco Industries Ltd.

Indiabulls Ltd
Under best case assumptions, Indiabulls can potentially be valued at Rs930 per share, with new initiatives [Life Insurance, Asset Management, Institutional Broking, Private Equity, Commodity Exchange etc] at Rs152 per share on FY09 estimates and a value of Rs778 per share for existing brokerage and finance businesses. Are they trying to be another Reliance capital ?

Citi maintain base case estimates, valuation and recommendation (Sell, 3M) (more…)

Merrill Lynch has put a BUY recommendation on Divis Labs. Divis 2Q PAT was 37% ahead of expectations driven by higher sales and a huge surprise in EBITDA margin (42.9% margin vs. MLe of 37.5%) driven by the Custom Manufacturing Services (CMS) business.

Divis high margin trend is largely driven by increasing CMS contribution, which we estimate to grow to 65% of revenues by FY09E vs. ~50% in FY07. ML expects overall margins (more…)