Emkay recommends 6 stocks to buy post Q4 results

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Emkay recommends 6 stocks to buy post Q4 results

Emkay Global Financial Services has come out with its report on stocks like GIPCL, IRB Infra, JK Tyres, IPCA Labs and Madras Cement.

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RELATED NEWS Hold BGR Energy; target of Rs 521: ULJK Securities Hold Dish TV; target of Rs 82: KRChoksey Buy MRPL; target of Rs 142: LKP ALSO READ See previous views by Emkay Global Financial Services See what other Experts & Brokerages are saying about IRB Infra See messages about IRB Infra IRB Infra BSE | NSE 29/05/12 Are Mutual Funds betting on IRB Infra? Other Stocks in this news JK Tyre and Industries | Ipca Laboratories | Madras Cements | Gujarat Industries Power Co. |

Emkay Global Financial Services has come out with its report on stocks like GIPCL, IRB Infra , JK Tyre , IPCA Labs and Madras Cements .

GIPCL : GIPCL is likely to earn a sustainable core ROE of 17% including Surat-II. At CMP of Rs86/share, the stock is trading at 8xFY13E earnings and 0.8x FY13E Book Value - which we believe is reasonable considering the reported ROE of 11% in FY13E (due to cash and CWIP). Given (1) stabilization of Surat II and (2) underperformance of the stock, we upgrade the stock to 'buy' from 'hold' with a revised target price of Rs115/Share (1.1xFY13E Book).

IRB Infra : We expect the BOT revenues to see sharp jump in Q1FY12 driven by 1) 18% toll rate hike on MPEW w.e.f April 1, 2011, 2) Expected commencement of tolling at Tumkur- Chitradurga from June 1, 2011, 3) Kolhapur project will also commence operations in Q2FY12E further boosting the BOT momentum. IRB gross toll collection for the quarter grew by 8.5% yoy to Rs5.5 bn driven by Surat Dahisar and Bharuch Surat registering growth of 8.3% and 10.7% respectively. Projects like Pune Nashik witnessed 57.1%yoy growth followed by MMK which grew 46.2% and Kharpada growing by 18.6%. Smaller projects like Pune Nashik, Mahol Mandrup Kamtee, Kharpada and Thane Bhiwandi Bypass delivered impressive performance and witnessed 57.1%, 46.2%, 18.6% and 15.6% respectively. We maintain our BUY rating with a target price of Rs 255.

JK Tyres : We retain our FY12 est. with APAT at Rs ~900mn and EPS of Rs 21.8. We believe high rubber prices continue to remain a key concern for tyre OEMs profitability and hence prefer to wait for a quarter before revising our estimates. We maintain our ACCUMULATE rating on the stock with a TP of Rs 118 (5.4x/4,4x PER and 5.2x/4.6x EV/EBITDA on FY12/13e).

IPCA Labs : We expect Ipca to report 17% growth in revenues in FY12E and 20% growth in FY13E. EBIDTA margins are expected to increase from 19.1% in FY11 to 20.1% in FY12E and 20.9% in FY13E. Earnings will grow by 26% CAGR over FY11-13E. Based on strong growth in domestic portfolio and export formulations, we revise our rating on the stock to Buy (earlier Accumulate) with a revised target price of Rs409 (14xFY13E earnings). At CMP, IPCA trades at 13x FY12E and 10x FY13E EPS.

Madras Cements : Cement demand in the southern region continues to remain sluggish with the region registering a decline of ~4% in Q4FY11. Andhra continues to the biggest drag while TamilNadu hits the speed breaker on account of recent assembly election. Sluggish consumption growth in the key southern markets for MCL has resulted in lower volumes this quarter and continues to be one of the major concerns for cement producers operating in this region. We cut our volume estimates for MCL for FY12, which has lead to 3.8%, cut in our FY12E earnings. We also cut or target on MCL by 2% to Rs100 to factor in the earnings downgrade. We introduce our FY13E EPS for MCL at Rs11.9.

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