Emkay Global Financial Services has maintained hold rating on Punj Lloyd with a target price of Rs 91 in its June 1, 2011 research report.
"Punj Lloyd swings good performance in Q4FY11 - APAT of Rs177 mn and Ebidta margins of 8.9% - especially in light of subdued performance in recent quarters. Cancels inactive Libya orders of Rs 60 bn from YE order backlog, Continued order inflows at Rs 92 bn in FY11E and YE backlog of Rs 228 bn. Issues common to Ensus and ONGC remain unresolved - Further Auditors draw qualification of similar type on 3 additional projects. Unresolved issues and Concerns persist."
"So far, Punj Lloyd has shown checkered performance - with good performance in few quarters and disappointment in many quarters. Further, progress on large orders remains tardy impacting the revenues and corresponding Ebidta margins. Until stabilization of operations with no negative surprise, does not warrant change in rating. Citing large draw down in forward valuations from 3X P/BV and 0.9X P/BV and strong capabilities in multiple verticals alongside diversified geographical presence, we do not ascribe SELL rating at current valuations. Until then, at P/BV of 0.7X FY12E, we retain Hold rating with price target of Rs 91/Share," says Emkay Global Financial Services research report.
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