Buy M&M, L&T, Tata Chemicals, PTC India: Sharekhan

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Buy M&M, L&T, Tata Chemicals, PTC India: Sharekhan

Sharekhan has come out with its report on various stocks.

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RELATED NEWS Way2Wealth neutral on Voltas Hold Honda Siel: Parag Parikh Financial Advisory Services Hold Bajaj Auto; target of Rs 1572: Nirmal Bang ALSO READ See previous views by Sharekhan See what other Experts & Brokerages are saying about PTC India See messages about PTC India PTC India BSE | NSE 30/05/12 Are Mutual Funds betting on PTC India? Other Stocks in this news Larsen and Toubro | Mahindra and Mahindra |

Sharekhan has come out with its report on various stocks.

PTC India : We remain positive on the derisked business model of PTC India and continue to feel that the company would remain a niche play on the power sector growth story. We also expect that the overall power traded volumes will be significantly boosted by the long-term PPAs in the next two- three years when the undersigned power projects would start commercial operation. At the current market price, the stock is trading at 1x FY2012E book value which looks very attractive considering its growth trajectory. We remain positive on the stock and maintain our Buy rating with a revised sum-of-the-parts based price target of Rs115.

Tata Chemicals : For FY2012 we consolidate estimated earnings to factor in the input cost pressure and also lower trading volume in the fertiliser segment. TCL is expected to show a strong performance on the back of a relatively healthy demand for soda ash and sodium bicarbonate in India compared to the rest of the world. We value TCL at 9x FY2013E earnings per share (EPS) and investment value of Rs41 per share. We maintain our Buy recommendation on the stock with a price target of Rs400.
 
Larsen & Toubro : The company reported robust results for the quarter, the achievement in the order inflow guidance would be highly subjective to uptick in infrastructure development activities in the country and the Middle East region. Nonetheless, maintenance of the robust growth guidance for the year reiterates the company's confidence in its execution capabilities and bidding opportunities in the infrastructure sector. We have revised our sum of the parts (SOTP) target price to Rs1,911, incorporated the audited numbers from its annual report including those of its subsidiaries and have also accounted for the finance business holding's initial public offering (IPO). At the current market price the stock is trading at 16.8x its FY2013 consolidated earnings estimates. We continue to believe that L&T is the best proxy play on India's infrastructure growth theme and maintain our Buy rating on the stock.

Mahindra & Mahindra : Our volume growth assumption for FY2012 stands at 15.7% YoY. This is higher than the industry growth expectation of 10-12%. We believe that M&M can outperform on account of a 24% year-on-year growth achieved in Q1FY2012 and the expected launch of a new SUV in H2FY2012. We also have high hopes from its tractors as the company increased its market share in this segment and outgrew the industry in Q1FY2012. Our stand-alone FY2012 earnings per share (EPS) estimate at Rs43.6 remains unchanged. Though we have factored in the sudden drop in commodity prices and the benefit to accrue from Q3FY2012 onwards, we have also estimated a higher promotional spend in H2FY2012 on account of the launch of the new SUV.

However, we are revising our FY2013 EPS estimate higher by 2.3% to Rs51.1 as we expect cost management to improve. We are revising our sum-of-the-parts (SOTP) price target upwards to Rs770 per share on account of the higher FY2013 EPS estimate for the stand-alone operations and the higher valuation of Tech Mahindra (roll over to the FY2013 earnings estimate). We maintain our Buy recommendation on the stock.

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