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Apr 05, 2011, 11.56 AM IST
Greshma Research has come out with its report on Fundamental Ideas.
Subex : Subex incorporated in 1992 by Subash Menon based in Banglore is the leading global provider of Operation Support System solutions (OSS) with a mission to empower communication service providers to achieve competitive advantage and deliver new service experiences to subscribers. Subex offers a wide range of solutions namely Revenue Assurance, Fraud Management, Credit Risk Management, Interconnect Billing, Interparty Management, Route Optimization and Cost Management. Subex has partnered with various system integrators and technology vendors like Accenture, Wipro, IBM, Infosys, Siemens, and Tech Mahindra.
Valuation & Outlook: Considering traction in order book, managements expansion plans, globally momentum in ROC platform will improve the earnings quality going forward. At CMP of Rs 58 Subex is trading at P/E of 6.5x at its FY12E EPS of Rs 8.8. Subex Ltd at CMP of Rs 58 is trading at a steep discount of 40-50 percent to its peer. We advise our investors to accumulate the stock at CMP. We are expecting Global telcoís to increase their IT budget and we are fundamentally positive about the sector and expect this industry to grow by 12% CAGR for the next three years on the back of robust IT spending.
Gujarat NRE Coke : Gujarat NRE Coke (GNCL), incorporated in 1986, is the largest producer of metallurgical coal, also known as met coke. It is only Indian company, which has coking coal mines in Australia with a production capacity of more than 500 million tonnes. These mines are owned by GNCL's subsidiary -- Gujarat NRE Minerals. In the coming years, the company has a vision to become one of the largest coking coal producers in Australia. The company also has wind power assets and has set up steel mill plant in Gujarat that recycles steel scrap using wind energy to manufacture TMT bars.
Valuation & Outlook: Gujarat NRE Coke is looking to ramp up its coking coal production from its Australian mines. The production volume would increase by around 55% in FY12. Factoring in the growth prospects arising out of increase in production volumes and traction in product prices, we estimate FY12 EBITDA at Rs 5015 mn. Since the company is on a growing curve with rich asset quality, we value Gujarat NRE Coke at 8.5x FY12 EV/EBITDA and recommend BUY on the counter.
Deccan Chronicle : Deccan Chronicle Holdings Ltd. was incorporated on 6 December 2002 to take over the partnership firm Deccan Chronicle established in 1938. The company operates in the print media business. It publishes the english newspaper daily 'Deccan Chronicle', which is the flagship brand of the company. Other publication by the company includes Andhra Bhoomi in Telugu, Asian Age and Financial Chronicle in English..
Outlook: The presence of print media industry in India is rapidly growing on the back of increase in population and literacy rate which leads to increase the number of circulation and the readership of newspaper in India. Considering traction in advertising revenue going ahead and we also expect online revenue to increase substantially from FY2012 onwards due to lower base effect, we advise investors to buy the stock at CMP of Rs 86. At CMP the stock is trading at a price to earnings ratio of 8.1x at its FY11E EPS of Rs 10.5, other companies in the same industry is trading at an average P/E of 12-15x. We have valued DCHLís IPL business at $370 mn which is approximately Rs 68 per share, which is almost 88% of the CMP. Long term Investors canít afford to miss the stock in their portfolio.
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