Emkay recommends 8 stocks to buy for month of June

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Emkay recommends 8 stocks to buy for month of June

Emkay Global Financial Services has come out with its report on various stocks.

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Watch CNBC-TV18 live only on MYTV >> RELATED NEWS Accumulate Bajaj Electricals; target of Rs 287: JRG Sec Accumulate Motherson Sumi; target of Rs 246: PLilladher Buy Hindustan Zinc; target of Rs 162: FairWealth Securities JagranPrakashan BSE | NSE 29/05/12 Are Mutual Funds betting on JagranPrakashan? Other Stocks in this news Colgate Palmolive (India) | Gujarat State Fertilizers Company | IVRCL | Gujarat Narmada Valley Fertilizers Company | Mahindra and Mahindra | Shree Cements | Sun Pharmaceutical Industries |

Emkay Global Financial Services has come out with its report on various stocks.

Jagran Prakashan : Given the cost escalations, we cut EPS est. by 3.6/1.5% for FY12E/13E. Maintain BUY rating on the stock with revised target price of Rs149. At CMP of Rs120, stock trades at 15.3x /12.1x our EPS estimate for FY12E/13E.

Shree Cement : On account of higher than expected FY11 exit cement prices, we upgrade our FY12 EBITDA estimates by 3.8% to Rs11.4bn. However, adjusting for revised accelerated depreciation charges as guided by management, we cut our earnings estimates for FY12 by 85.4% to an EPS of Rs13.8 (Rs95 earlier). The accelerated depreciation in FY12 would reduce the burden in FY13 with much lesser depreciation charges. We introduce our FY13 estimates with a EPS of Rs175. The change in earnings for FY12 does not affect our target for Shree as earnings change in driven by higher deprecation (non cash charges). We continue to value Shree on 6X FY12E EV/EBITDA (currently 5.6X FY12). We maintain ACCUMULATE rating on the stock with price target of Rs1,960.

Sun Pharma : We expect Sun Pharma to report 23% growth in revenues in FY12E and 15% growth in FY13E. EBIDTA margins are expected to decrease from 34.4% in FY11 to 33.2% in FY12E and 33.9% in FY13E. Earnings will grow by 15% CAGR over FY11-13E. We revise our target price to Rs497 (22xFY13E core earnings of Rs22.6). At CMP, the stock trades at 23x FY12E and 20x FY13E EPS.

Colgate Palmolive : While we forecast a moderation in overall volume growth, we expect Colgate to maintain its leadership position in the market aided by healthy new product launches and regular brand activation programmes. We expect the company to post PAT CAGR of 13% over FY11-13E with unchanged FY13E earnings of Rs37.6/Share. Valuations at 24X FY13E EPS appear fair and hence, we maintain our HOLD rating on the stock with target price of Rs826/Share.

GSFC : On the valuations front, GSFC has current cash on its book of Rs 6.7 bn (84 / share) with negligible long term debt. Further it has liquid investments of Rs 5.4 bn (Rs 68/ share). With 42% of cmp in cash and equivalents and FY12 EV/EBITDA of 1.8x, P/E of 4.8x and 20% discount to book value, we believe that the stock offers attractive investment opportunity on compelling valuations. However due to volatile earnings driven by unpredictable chemical prices in FY12E, we maintain our price target of Rs 530 which discounts 7.2x FY12E EPS and we reiterate our BUY recommendation.

IVRCL Infra : IVRCL's order backlog at 4.2x FY11 revenues, provides good revenue visibility, ~40% of the order backlog is witnessing tardy progress and faces execution headwinds, hurting that visibility. We remain skeptical on the pace of ramp up of these projects. We also built in lower order inflow assumptions in the transportation vertical due to aggressive competition in the road BOT space, which we believe will restrict IVRCL AH to aggressively bid for road projects. Consequently we cut our EPS estimates by -8.7% for FY12E and target by 8% to Rs93 (valuing core construction business at 9X FY12 PER. We introduce our FY13E EPS at Rs8.4.

GNFC : We expect chemicals segment performance to remain strong and maintain our FY12 estimates (EPS of Rs 22.4) and introduce FY13E estimates of Rs 26.5. We believe commissioning of Nitric Acid plant (DNA and WNA) by July'2011 is likely to drive revenues growth in FY12E while commissioning of Ethyl Acetic and TDI plant to add revenues in FY13E. Due to volatile chemical prices, we maintain our price target based on 7x FY12 estimates of Rs 157 and maintain our BUY recommendation on the stock.

Mahindra & Mahindra : We have valued the company on SOTP basis. We have lowered our TP by ~2% to Rs 810. We have valued the standalone business at Rs 658 (lowered by 5%) which implies 7.5x FY13E EV/EBIDTA. We have valued the listed subsidiaries and Tech Mahindra at Rs 138 per share. We introduce value for MVML subsidiary at Rs 15 (7.5x FY12E EV/EBITDA, EBITDA of Rs 2.3bn and net debt of Rs 8bn in FY12E).

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