PINC Research handpicks 14 stocks from diverse sectors
PINC Research has come out with its report on 14 various stocks.
June 16, 2011 / 09:06 IST
PINC Research has come out with its report on 14 various stocks.
Ashoka Buildcon
Ashoka Buildcon (ABL) has experience of a decade in BOT road projects and it currently has 23 projects under its portfolio, with 16 operational projects. ABL is among the few BOT developers, which has seen a complete life cycle of a project and has handed over four BOT assets back to the government. Further, ABL has a strong in-house EPC arm for executing captive as well as third party contracts. We value BOT (DCF basis) at equity multiple of 1.6x and 1.1x FY12E and FY13E. Our SOTP-based target price is Rs363; we value the BOT division at Rs207 and the EPC division at Rs156 at 9x FY12E earnings. We have a 'BUY' recommendation on the stock.Bajaj Auto
With success of Pulsar135 and Discover twins (100cc and 150cc), Bajaj Auto's brand-centric strategy has been validated. The high-margin brands, Pulsar and Discover, now account for 70% of the company's motorcycle sales. In addition, continued demand for three-wheelers and robust exports would help Bajaj Auto achieve volume growth of 16.2% in FY12 and 11.9% in FY13. Our FY12 and FY13 earnings estimates are Rs107.5 and Rs123.3 respectively. We have a 'BUY' recommendation on the stock with a target price of Rs1,664, discounting FY13E earnings at 13.5x. Our FY12 earnings estimate is 3.7% higher than consensus estimate of Rs103.7.Godawari Power
We expect GPIL to benefit from 28% earnings CAGR over FY11-FY13E on volume growth and margin expansion. This would be driven by higher output from the Ari Dongri mines, 0.6mntpa pellet plant, and 20MW biomass power plant. Further, 0.6 mtpa pellet plant of the 75% subsidiary Ardent Steel has stabilized with 37% CU in Q4FY11 and is expected to support earnings growth further. Our FY12 EBITDA estimate is 17% above consensus as we expect improved performance from Ardent Steel. We assume 60% and 70% CU for Ardent Steel in FY12 and FY13 respectively. We have a 'BUY' recommendation on the stock with a target price of Rs 270.HCL TechUptick in discretionary IT spend and recovery in the European market will boost volume growth. Margin expansion through improving employee pyramid and scale efficiencies. Our revenue estimates vary from consensus by (1)% for FY12 and for FY13 it is in line with consensus, underpinned by stronger volumes and modest uptick in pricing. Our EBITDA margin forecast for FY12 and FY13 is higher than consensus by 60bps and 30bps respectively. Our FY12 EPS estimate is in line with consensus whereas for FY13 it is 1% higher than consensus. Buy for a target price of Rs 630.IRB Infrastructure Developers
With the Infra segment, which has been languishing due to fundamental issues, we prefer IRB given its unique ability to manage and win competitive projects. We strongly believe in the sustainability of IRB's business model. The company is well positioned to add projects worth $1bn per annum. Our FY12E and FY13E earnings estimates are Rs14.0 and Rs10.5, which are 6% and 36.9% lower respectively than consensus estimates. We expect top-line growth of 27.7% at Rs 31.1bn for FY12E and 18.1% at Rs36.7bn for FY13E vs. consensus estimate of 43.7% at Rs35bn and 26.9% at Rs44.5bn. We believe the recent correction in stock price provides a good entry point for long-term investors. The stock offers an upside potential of 30.3% at our SOTP-based target price of Rs227 vs. consensus target of Rs236.Jagran Prakashan (JPL)
We like JPL for its leadership in UP (the largest print market in terms of readership and print ad value). The company's strong position in growing regions such as Bihar and Jharkhand, good cost efficiency, phased and planned expansion into other media businesses, and wide portfolio (including Mid-day, I-next and Cityplus) strengthen our belief that it is well poised to benefit from steady growth in the print media sector. In FY11, JPL's revenue increased 18.5% to Rs 11.1bn and net profit increased 17% to Rs 2.1bn. Improved ad yields and increased focus on color ads led to ad revenue growth of 20% and circulation revenue growth of 3.5% (despite increased competition from Hindustan and Dainik Bhaskar). Our revenue estimate for FY13 is 3% above consensus. However, our EPS estimate of Rs8.3 for FY13 is 8% below consensus. Buy for a target price of Rs 150.Jyothy Laboratories
we expect numerous positives for Jyothy in the medium to long term that would improve profitability. Jyothy is among the few companies in the FMCG space which has immense potential for long-term profitability. Our estimates for FY13 are among the highest on the street, led by expectation of profitability improvement in Henkel India and 50% debt repayment during FY13. We assign 16x to FY13 earnings and add Rs12/share NPV on tax saving of Rs1.2bn @12% discount rate to derive the TP of Rs280.Lupin
Lupin is one of the best plays in the pharma space, given its strong execution capabilities, improving financial performance and diversifying business model. The high-margin branded generic business has been the key differentiator. Strong growth in the US (both branded generic and generic segments), Japan and India would maintain the growth momentum. Our FY2013 earnings estimate is 7% lower than consensus. We expect net sales and EPS to log CAGR of 14.4% and 15.1% to Rs 74,424mn and Rs25.3 over FY2011-13E respectively. We value the company at 22x (in line with the big players in the sector) June'12E earnings yielding a TP of Rs 497.Mahindra & Mahindra
M&M has a significant rural presence and the timely onset of monsoons and further forecasts for normal monsoons for the year would benefit the company. The automobile segment is expected to record 13.2% growth in FY12, led by new product launches. The tractor segment too is expected to grow 11.1% in FY12, underpinned by higher crop output and increased demand for low horsepower Yuvraj range of tractors. We expect EPS of Rs41.6 and Rs48.0 in FY12 and FY13 respectively. Our FY12 earnings estimate is 8.5% lower than consensus estimate of Rs45.5. Our SOTP valuation of Rs836 discounts the standalone business at 13x FY13E earnings.Nestle India
We believe entry of new players in the hitherto-secure noodles segment challenges Nestle's 'cash cow'. Further, we believe the premium enjoyed by the stock vis-
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