Top 15 companies you should keep an eye on: PINC Research

PINC Research has come out with its PowerPicks for November 2011. The research firm has included fifteen companies with their potential upside: Ashok Leyland (+41%), Ashoka Buildcon (+51%), Bajaj Auto (+7%), HCL Tech (+14%), Infosys (+5%), IRB Infra (+33%), Jagran Prakashan (+35%), Jyothy Labs (+53%), M&M (+14%), Nestle (-18%), NIIT Tech (+36%), Phoenix Mills (+27%), Power Grid (+15%), Sintex Industries (+118%) and Tecpro Systems (+75%).

ASHOK LEYLAND: BUY, TP-Rs 38 (41% upside)
Our earnings estimates for FY11 and FY12 are Rs 2.5 and Rs 3.1 respectively. Our FY12 earnings estimate is 3% higher than consensus estimate of Rs 2.4. We have a 'BUY' recommendation on the stock with a target price of Rs 38, which discounts FY13E earnings by 12.5x.

ASHOKA BUILDCON: BUY, TP-Rs 363 (51% upside)
Our FY12 and FY13 earnings estimates are Rs 21.6 and Rs 25.7, 12.1% and 15.3% lower than consensus estimates respectively. We expect top-line growth of 54.4% and 15.6% to Rs 20.1bn and Rs 23.3bn in FY12 and FY13 vs. consensus forecasts of 46.8% and 21.5% to Rs 19.1bn and Rs 23.2bn, respectively. We value BOT (on a DCF basis) at FY12E and FY13E equity multiples of 1.6x and 1.1x, respectively. Our SOTP-based target price is Rs 363, where BOT is valued at Rs 218 and EPC at Rs 145 (9x FY12E earnings). The stock offers an upside potential of 51% at our SOTP-based target price of Rs 363 vs. consensus target of Rs 344.

BAJAJ AUTO: BUY, TP-Rs 1,850 (7% upside)
Our FY12 and FY13 earnings estimates are Rs 107.5 and Rs 123.3, respectively. We have a 'BUY' recommendation on the stock with a target price of Rs 1,850 discounting FY13E earnings at 15x. Our FY12 earnings estimate is 1.2% higher than the consensus estimate of Rs 106.3.

HCL TECH: BUY, TP-Rs 490 (14% upside)
Our revenue estimate for FY12 is higher by 3% than consensus while the estimate for FY13 is 1% lower. EBITDA margin estimates vary from consensus by 80bps and (30bps) for FY12 and FY13 respectively. EPS estimate is 10% higher for FY12 while marginally lower at -1% for FY13.

INFOSYS: BUY, TP-Rs 2,950 (5% upside)
Our revenue estimates are marginally higher than consensus at 0.6% and 0.3% for FY12 and FY13 respectively. EBITDA margin estimates are higher by 120bps for FY12 and 40bps for FY13. EPS estimates vary from consensus at 2.8% and 1% for FY12 and FY13 respectively.

IRB INFRASTRUCTURE: BUY, TP-Rs 216 (33% upside)
Our FY12 and FY13 earnings estimates are Rs 14.5 and Rs 12.5, 1% and 23.3% lower than consensus estimates respectively. We expect top-line growth of 28.2% and 22.3% to Rs 31.3bn and Rs 38.2bn in FY12 and FY13 vs. consensus forecasts of 30.5% and 30.5% to Rs 31.8bn and Rs 41.5bn, respectively. We believe the recent correction in its share price provides a good entry point for long-term investors. The stock offers an upside potential of 33% at our SOTP-based target price of Rs 216 vs. consensus target of Rs 210.

JAGRAN PRAKASHAN (JPL): BUY, TP-Rs 148 (35% upside)
Our FY13 revenue estimate is 5% below consensus. However, our FY13 EPS estimate of Rs 8 is in-line with estimates. We have a 'BUY' recommendation on the stock with a target price of Rs 148 (18xFY13E EPS).

JYOTHY LABORATORIES: BUY, TP-Rs 212 (53% upside)
Our estimates for FY13 are among the highest on the street, led by expectation of better performance of the core business and sustainability of Henkel's profitable performance. We assign 16x to FY13E earnings and add Rs 12/share NPV on tax saving of Rs 1.2bn @12% discount rate to derive the TP of Rs 212.

MAHINDRA & MAHINDRA: BUY, TP-Rs 898 (14% upside)
Our FY12 and FY13 earnings forecast are Rs 45.7 and Rs 52.9 respectively. Our FY12 earning estimate is in line with the consensus estimate. We value M&M at Rs 898 using SOTP methodology, discounting the standalone business at 13x FY13E earnings.

NESTLE INDIA: SELL, TP-Rs 3,578 (18% downside)
Our estimates and target price are lower than the consensus, led by the expectation of pressure on EBITDA margin and argument of narrowing down of the Nestle's valuation premium. We assign P/E of 30x on the next 12-months earnings to derive TP of Rs 3,578.

NIIT TECH: BUY, TP-Rs 285 (36% upside)
Our top-line estimate for FY12 is higher by 2.7% than consensus and marginally higher by 1.3% than consensus for FY13. Our EBITDA margin estimates are marginally lower by 40bps and 50bps for FY12 and FY13 respectively. Our EPS estimate for FY12 is marginally higher by 0.6% than consensus but EPS estimate for FY13 is 3.9% lower than consensus.

PHOENIX MILLS: BUY, TP-Rs 265 (27% upside)
Our EPS estimates for FY12 and FY13 are Rs 10.8 and Rs 16.0, respectively. Our FY12 earnings estimate is 30% higher than consensus estimate of Rs 8.3. We have a 'BUY' recommendation on the stock with a target price of Rs 265, which discounts FY12E gross NAV by 15%.

POWER GRID: BUY, TP-Rs 120 (15% upside)
Our FY12 & FY13 PAT estimates are in line with consensus. We value PGCIL on FCFE basis to arrive at a target price of Rs 120 (terminal growth rate 3% and 13% Ke).

SINTEX INDUSTRIES: BUY, TP-Rs 240 (118% upside)
Our earnings estimates (EPS) for FY12 and FY13 are Rs 20.2 and Rs 23.6, respectively. Our FY12 earnings estimate is 1% higher than consensus estimate of Rs 19.9. We have a 'BUY' recommendation on the stock with a target price of Rs 240, which discounts FY12E earnings by 12x.

TECPRO SYSTEMS: BUY, TP-Rs 375 (75% upside)
We expect EPS of Rs 31 and Rs 37.4 in FY12E and FY13E, respectively, almost in line with consensus forecasts. We expect 9% growth in order inflow in FY12, whereas some analysts forecast de-growth of ~30-35%. However, the management has guided for ~30% growth in order inflow in FY12. We have a BUY recommendation with a target price of Rs 375 (10x FY13E).

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More