5 stocks to watch out post earnings: Emkay

HPCL : Government has forced upstream companies to share higher subsidy burden resulting in higher profitability for OMC’s during the quarter. But there is the still uncertainty hovering on subsidy sharing mechanism for FY12E under recovery, which remains the key overhang on the stock. However at CMP of Rs.355 valuation looks attractive at 0.76 FY13E P/BV. We have rolled over our valuations to FY13E with target price of Rs.463 (1x P/BV), maintains BUY rating on the stock.

Gujarat State Petronet : We have reduced our target price to Rs.120 (Rs.135 earlier) due to lake of clarity on future volume growth for the company. The current volume growth for FY12E and FY13E is already priced in but due to expected reduction in KG D6 gas from current level of 50mmscmd would raised the concern on the future volume growth of the company. At CMP of Rs.97 stock trades at 9.3x FY13E EPS and 1.8x FY13E P/Bv, we maintain our BUY rating on the GSPL with the revised target price of Rs.120.

Aban Offshore : Aban’s stellar numbers for the quarter could have led to earnings upgrade (for both our as well as street numbers) but for the delayed deployment of Aban Abraham. The Drill ship is slated to commence operation in mid June 11 as compared to May11 earlier, leading to a 4.6% downgrade in FY12 EPS to Rs95 and lowering of our target price by 4.9% to Rs646 (Rs680 earlier). We introduce our FY13 estimates with an EPS of Rs115.6. We would like to highlight that currently only 2 rigs (Aban-V&II) remain idle for Aban. This provides strong cash flow visibility for Aban, which in turn would lead to accelerated de-leveraging. We see Aban D:E reducing sharply from current levels of 6.1 to 3.5 for FY13, helping stock outperformance. Stock valuation of 5.7X PER and 6.5X EV/EBITDA to support downside. Maintain ACCUMULATE - target price Rs 645.

Mphasis : We retain REDUCE on Mphasis with a revised target price of Rs 400 , based on 11x Oct’12E earnings (V/s Rs 450 earlier) and are clearly surprised by the positive stock move after the current results especially in the backdrop of stiff challenges for Mphasis. Any potential open offer by parent HP remains the key upside risk to our call.

Havells India : Havells has successfully managed to turnaround Sylvania operations and is geared to capitalize on this turnaround by maintaining its focus on improving profitability and relying on its domestic business for steady revenue growth. For Sylvania, LATAM and Asia would continue to be the growth drivers, whereas Europe would contribute with either flat or muted growth. We maintain our ‘BUY” rating on the stock with a price target of Rs 470, thereby implying a target multiple of 9.6x FY13E EV/EBIDTA. Currently, Havells is trading at 7.3x FY13E EV/EBIDTA. 

Institutional holding more than 40% in Indian cos

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