Karvy is bullish on Nava Bharat Ventures and has recommended buy rating on the stock with a target price of Rs 177 in its research report dated October 1, 2015.
Karvy's reserach report on Nava Bharat Ventures
Nava Bharat Ventures (NBV), a Hyderabad based company, operates in the business verticals of power generation, mining, ferro alloys and agri-business spread across India, South East Asia and Africa. Generation and sale of power is a major business segment of NBV. The power assets are spread over Telangana, Andhra Pradesh and Odisha in India, Southern Province of Zambia and Champasak Province of Laos. It has installed capacity of 442 MW, directly or indirectly, under domestic operations. NBV has majority stake in MCL, which is setting up a 300 MW thermal power plant (through its wholly owned subsidiary Nava Bharat (Singapore) Pte. Ltd. (NBS)). NBS has also acquired a majority equity stake in Namphak Power Company, for establishing a 150 MW hydro electric power station in Laos. NBV is having manganese alloy plant in Telangana and chromium alloys plant in Odisha having output capacity of 125000 Tonnes Per Annum (TPA) and 75000 TPA respectively. It has sugar plant in Andhra Pradesh with a capacity of 4000 Tonnes of Cane per Day (TCD).
We expect that the NBV is set to witness a sustainable growth in the coming years in terms of revenue and profits on the back of expansion and implementation of power plants and commissioning of coal mining operations. Given that the stock is trading at an attractive valuation of 0.5x BV of FY15 and followed by expected stability in the top line and bottom line, we initiate coverage on the stock with a ‘BUY’ recommendation and a SOTP-based target price of Rs.177 representing a potential upside of 20% with a time horizon of 9-12 months.
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