Hold TVS Motor, Madras Cements, Lakshmi Machine: Emkay

Emkay Global Financial Services has come out with its report on various stocks. The research firm recommends hold rating on TVS Motor, Madras Cements and Lakshmi Machine.

TVS Motors: At CMP of Rs 33, the stock trades at 6.8x/6.3x PER and 4.2x/3.6x EV/EBIDTA of our FY13/14 standalone estimates. We have valued the standalone business at 9x FY14 EPS. However, we ascribe a negative value of Rs 13.5 per share to subsidiaries (1.5x accumulated losses). We continue to have concerns with respect to continued to investments in subsidiaries and rising losses in subsidiaries. Strong dividend yield will provide cushion to the stock. Madras Cements: 4Q cement demand in the southern region jumped ~8% showing some signs of revival. However the recent sand mining ban implemented in AP from April 1st 2012 has led to acute shortage of the construction raw material thereby impacting cement offtake with prices declining by Rs15-30/bag in the MCL’s key markets. Adjusting lower exit realizations and higher costs we downgrade our FY13 EBITDA by 9.2%. Stock valuations at 11X PER and 6.8X EV/E leave very little upside considering muted FY12- 14E EBIDTA CAGR and continued oversupply scenario in South. Maintain HOLD. Lakshmi Machine Works: Downgrade the stock to HOLD from ACCUMULATE with revised TP of Rs 1444, based on 8x FY13E core EPS of Rs87.5 and net cash of Rs692 per share. At CMP of 1544, LMW trades at 12.3x and 9.7x FY13E/14E EPS of Rs125.4/159.3. Institutional holding more than 40% in Indian cos 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

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