January 05, 2011 / 17:02 IST
Anagram Research has come out with a report on New Year Picks for 2011. The research firm is positive on Autos, Capital Goods, Power Equipments, Construction, Infra, Metals, Fertilizer and Agri. Related, Pharma, IT and Banks. Anagram maintains negative view on Real Estate, Telecom and Cement.
Growth Momentum to Continue:C & C Construction: Despite of expectations of strong revenue growth for the next 2-3 years and high margins, the company currently trades at 6.5 times and 5 times FY11 and FY12 expected earnings. We continue to believe that the stock at current market price provides a good long term investment opportunity. Our 1 year forward price target for the stock stands at Rs 325 which includes Rs 292 contribution from the EPC business (8 times FY11E EPS), Rs 19.5 per share from Kurali Kiratpur BOT project and Rs 13 per share from Mokama Munger BOT project.Supreme Infrastructure (SIIL): We are bullish on SIIL due to its high margin profile, growth prospects and relatively lower valuation. We believe that Infrastructure industry is to witness many folds investment over the next few years and SIIL is well positioned to benefit from this as it already has exposure to most of the Infrastructure verticals. Our SOTP based FY12 end target price for the stock is Rs 343 implying 38% upside. We have valued EPC business of SIIL at Rs 319 based on DCF and the two BOT projects at Rs 24 based on NAV. At the target value of Rs 319, the EPC business will trade at 9.4 times and 7.1 times FY11E and FY12E earnings respectively.Diamond Power Infrastructure: We expect Sales and EPS to grow by 42% CAGR over 2010-13 led by capacity expansion, entry into new segments, margin expansion and lower interest cost. At the current market price of Rs 197 the stock trades at 6.5/4.6x its FY11E/FY12E EPS of Rs 30/42 and 5.1/3.7x its FY11E/FY12E EBITDA. At our target price of Rs 297 the stock would trade at P/E of 7 and EV/EBITDA of 5.
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