Buy Bharat Bijlee, target of Rs 2600: PINC

PINC Research has recommended a buy rating on Bharat Bijlee with a 12-month price target of Rs 2600 in its May 13, 2008 research report. "Bharat Bijlee Ltd’s (BBL) Q4FY08 results were better than expectations as net sales rose by 11% YoY to Rs 1.9 billion. OPM was stable at 18.2% and higher volumes helped net profits grow by 7.4% to Rs 312 million. The lower net sales growth was due to capacity constraints and production being hampered as BBL is in the process of expanding capacity from 8,000MW to 11,000 MW, which should be fully operational over the next few months."

"The buoyancy in transformer demand arising from aggressive XIth Plan capacity additions should help sustain realisations. However, with the industry-wide transformer manufacturing capacity also being expanded, stable realisations will prevent any significant expansion in OPM. We believe that the buoyancy is largely being factored in. However, in light of the steep correction, we revise upward our recommendation to ‘BUY’ with a 12-month price target of Rs 2,600," says PINC's research report.

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