Mar 15, 2012, 03.29 PM IST
PINC Research has come out with its high-conviction stock ideas for March 2012. Ashoka Buildcon, HSIL, India Cements, Infosys, Jagran Prakashan, Jyothy Laboratories, Mahindra & Mahindra, MRPL, Nestle India, NIIT Tech, Phoenix Mills, Power Grid Corporation, Tecpro Systems are the stocks from across sectors.
Ashoka Buildcon : BUY, TP-Rs 280 (46% upside): Our FY13 and FY14 earnings estimates are Rs 24.7 and Rs 31.9, 8.5% and 8.2% lower than consensus estimates, respectively. We expect top-line growth of 31.7% and 23% to Rs 19.9bn and Rs 24.6bn in FY13E and FY14E vs. consensus forecasts of 29.7% and 29.1% to Rs 20.9bn and Rs 26.9bn, respectively. We value BOT (on a DCF basis) FY13E equity multiple of 1.1x. Our SOTP-based target price is Rs 280, where BOT is valued at Rs 196 and EPC at Rs 84 (8x FY13E earnings). The stock offers an upside potential of 46% at our SOTP-based target price of Rs 280 vs. consensus target of Rs 266.
HSIL : BUY, TP-Rs 230 (59% upside): Our earnings estimates (EPS) for FY13 and FY14 are Rs 22.5 and Rs 28.5, respectively. Our FY13 earnings estimate is 11% higher than the consensus estimate of Rs 20.3. We have a 'BUY' recommendation on the stock with a target price of Rs 230, which discounts FY12E earnings by 14.0x.
India Cements : BUY, TP-Rs 114 (12% upside): Our FY13 and FY14 earnings forecast are Rs 12.5 and Rs 15.2 respectively. Our FY13 earnings estimate is 19.7% higher than the consensus estimate of Rs 10.5. The stock of the company at 5.2x FY13E EV/EBITDA is at significant discount to the peers. We value the stock at 5.5x FY13E EV/EBITDA to derive at a target price of Rs 114.
Infosys : ACCUMULATE, TP-Rs 3,200 (11% upside): Our revenue estimates for FY13 and FY14 are in-line consensus. For FY13, our EBITDA margin estimate is marginally higher than consensus by 46bps and for FY14 EBITDA margin estimate is marginally lower than consensus by 20bps. Our EPS estimate is in-line consensus for FY13 while lower than consensus by 0.8% for FY14. We have 'ACCUMULATE' rating with a target price of Rs 3,200 based on 18x PER multiple on 18-months forward earnings.
Jagran Prakashan (JPL): BUY, TP-Rs 145 (39% upside): Our FY14 revenue and EPS estimate of Rs 8.8 is 6% and 3% below consensus estimates, respectively. We have a 'BUY' recommendation on the stock with a target price of Rs 145 (18xFY13E EPS).
Jyothy Laboratories : BUY, TP-Rs 212 (16% upside): Our estimates for FY13 are among the highest on the street, led by expectation of better performance of the core business and sustainability of Henkel's profitable performance. We assign 16x to FY13E earnings and add Rs 12/ share NPV on tax saving of Rs 1.2bn @12% discount rate to derive the TP of Rs 212.
Mahindra and Mahindra : BUY, TP-Rs 885 (32% upside): Our FY13 and FY14 earnings forecast are Rs 52.2 and Rs 59.6 respectively. Our FY13 earnings estimate is 6.4% higher than the consensus estimate of Rs 49.7. We value M&M at Rs 885 using SOTP methodology, discounting the standalone business at 13x FY13E earnings.
Mangalore Refinery and Petrochemicals (MRPL): BUY, TP-Rs 88 (29% upside): We expect that full impact of ongoing capex should materialise in FY14 with partial benefit coming in FY13. As a result, our FY13 earnings estimate is ~3% lower while FY14 estimate is ~15% higher than consensus. Delay in refinery-III commissioning beyond Mar'12, problem in crude sourcing from Iran (ME ~90%, Iran ~70%), volatility in crude oil price/ international GRM/ USD-INR exchange rate in the current weak global environment may impact the earnings substantially.
Nestle India : SELL, TP-Rs 3,685 (18% downside): Our estimates and target price are lower than the consensus, led by the expectation of pressure on EBITDA margin and argument of narrowing down of the Nestle's valuation premium. We assign P/E of 30x on the next 12-months earnings to derive a TP of Rs 3,685.
NIIT Technologies : BUY, TP-Rs 300 (22% upside): Our top-line estimate is below consensus by 4.6% for FY13 and by 4% for FY14. Our EBITDA margin estimates are higher than consensus by 127bps for FY13 and by 84bps for FY14. Our EPS estimates for FY13 & FY14 are higher than consensus by 0.9% and 2.2% respectively. We have 'BUY' rating with a target price of Rs 300 based on 7.5x PER multiple on 18-months forward earnings.
Phoenix Mills : BUY, TP-Rs 265 (22% upside): Our EPS estimates for FY13 and FY14 are Rs 11.8 and Rs 17.5 respectively. Our FY13 earnings estimate is 21% higher than consensus estimate of Rs 9.7. We have a 'BUY' recommendation on the stock with a target price of Rs 265 after assigning 15% discount to NAV
Power Grid Corporation of India : BUY, TP-Rs 125 (10% upside): Our FY13 & FY14 PAT estimates are in line with consensus. We value PGCIL on FCFE basis to arrive at a target price of Rs 125 (terminal growth rate 3% and 13% Ke).
Tecpro Systems : BUY, TP-Rs 318 (88% upside): We expect EPS of Rs 35.3 and Rs 45.1 in FY13E and FY14E respectively, almost in-line with consensus forecasts. We maintain our BUY recommendation on the stock with a target price of Rs 318 (9x FY13E).
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Tags: PINC Research, high-conviction stock ideas for March 2012, Ashoka Buildcon, HSIL, India Cements, Infosys, Jagran Prakashan, Jyothy Laboratories, Mahindra & Mahindra, MRPL, Nestle India, NIIT Tech, Phoenix Mills, Power Grid Corporation, Tecpro Systems, Recommendation
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