Accumulate Nava Bharat Ventures; target of Rs 290: Emkay

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Accumulate Nava Bharat Ventures; target of Rs 290: Emkay

Emkay Global Financial Services is bullish on Nava Bharat Ventures and has recommended accumulate rating on the stock with a target price of Rs 290 in its June 01, 2011 research report.

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RELATED NEWS Sell Cummins; target of Rs 635: Aditya Birla Money Buy Ambuja Cements; target of Rs 147: IIFL Buy HDIL; target of Rs 225: PINC Research ALSO READ See previous views by Emkay Global Financial Services See what other Experts & Brokerages are saying about Nava Bharat Ven See messages about Nava Bharat Ven Nava Bharat Ven BSE | NSE 30/05/12 Are Mutual Funds betting on Nava Bharat Ven?

Emkay Global Financial Services is bullish on Nava Bharat Ventures and has recommended accumulate rating on the stock with a target price of Rs 290 in its June 01, 2011 research report.

"Nava Bharat Ventures, Q411 APAT of Rs 651 million (down 41% yoy) is marginally ahead of estimates. Highlights - merchant tariff Rs 4.2/unit, PLF 91%, cost of gen. up by Rs 0.3/unit (MCL supplies & captive plants). Seeking to enter into a contract with TISCO for ferro Chrome- to produce 35000MT in FY12E (30MW power requirement). No clarity as yet, we assume profit at power trade off level. Assume (1) higher fuel cost of Rs 2.4/unit vs Rs 2.2/unit, (2) 0.15 million /0.60 million MT of Zambian coal trading in FY12E/13E & (3) MAT credit in FY13E. Cut FY12E/13E earnings by 17%/2%. Natural hedge play starts with likely TISCO deal. Maintain Accumulate on relatively cheap valuations (Implied LT merchant tariff of Rs 3.1/unit), natural hedge, fuel security with use of washery rejects; Lower PT to Rs 290/Share."

"We cut our FY12E/FY13E by 17%/2% to Rs 38.5/share and Rs 45.6/share - assume fuel cost of Rs 2.4/unit, 0.15 million /0.60 million MT of coal trading from Zambia in FY12E/13E and MAT credit of Rs 500 million in FY13E. We believe the likely deal with TISCO is start of natural hedge play. Stock is trading at 5.1xFY13E EPS, 0.8xFY13E book and implies long term merchant rate of Rs 3.1/unit (relatively lower). Maintain Accumulate on relatively cheap valuations, natural hedge and better fuel security with use of washery rejects. Lower price target to Rs 290/Share (earlier Rs 328/share) on higher fuel cost assumption," says Emkay Global Financial Services research report.

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