Accumulate Bharat Bijlee; target of Rs 1350: Emkay

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Accumulate Bharat Bijlee; target of Rs 1350: Emkay

Emkay Global Financial Services has recommended accumulate rating on Bharat Bijlee with a target of Rs 1350 in its July 23, 2010 research report.

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Emkay Global Financial Services has recommended accumulate rating on Bharat Bijlee with a target of Rs 1350 in its July 23, 2010 research report.

"Apart from Cash of Rs 600 million (net cash of Rs 320 million), Bharat Bijlee (BBL) has a long-term investment in Siemens (2.8 million shares) and HDFC (0.10 million shares). After according a 40% discount to current market price of the above securities, per share investment value for BBL works out to Rs 259 per share. To value BBL, we have removed the above value (Rs 259 per share) from the CMP of Rs 1260 per share. The stock is trading at 10.4xFY11E earnings, 5.5xFY11E EBITDA and 2.2xFY11E Book Value (ex investment value). We have valued BBL at Rs 1350 per share, based on average EV/EBITDA (6x) of the industry. However on recent outperformance, we downgrade the stock to accumulate," says Emkay Global Financial Services research report.

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