Buy Bhagyanagar India,target of Rs 63: Karvy

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Buy Bhagyanagar India,target of Rs 63: Karvy

Karvy Stock Broking has recommended buy rating on Bhagyanagar India, with a target price of Rs 63. At current levels, the stock quotes at 5.8x FY08E and 5x FY09E fully diluted earnings.

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Karvy Stock Broking has recommended buy rating on Bhagyanagar India , with a target price of Rs 63 in its March 18, 2008 research report. "Bhagyanagar India recently formed a joint venture company named `Surana Ventures` for setting up of solar photo voltaic cell and module project in partnership with its promoters and a group company named Surana Telecom. The JV plans to manufacture and sell the equipment required for generating solar energy. It will be an 80% export-oriented unit with substantial tax-benefits.Bhagyanagar India and Surana Telecom will hold 40% each in the Rs 3 bn project with the remaining 20% being held by the core promoters of the company".

"We believe that the project will be value accretive for Bhagyanagar India but only on a long term basis as it will be essential to see whether the company can go as per its fund raising plans given the globally weak market conditions. Hence, we have not incorporated any benefit to Bhagyanagar India in terms of our financial projections. At current levels, the stock quotes at 5.8x FY08E and 5x FY09E fully diluted earnings. We rate the stock as a BUY, maintaining our price target of Rs 63, valuing its real estate business at 90% of the value of its current undeveloped land bank and other businesses of copper and telecom cables at 3x EBIDTA" says Karvy Research Report.

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