Blue
Star
CMP: Rs
535
Target price: Rs
593
Kotak Securities has a ‘buy’ rating on the central
air-conditioning systems major Blue Star, as it feels it will report handsome
earnings growth over the next two years (CAGR of 78% between FY07 and FY09). The
company being in a position to offer the best requirement for central as well as
commercial refrigeration equipment enabling it to maintain a leading market
position in this segment, remains one of the key reasons for its bullishness.
The brokerage also feels that the stock is a play on structural
themes like IT/ITeS and retail. However, the brokerage warns that appreciation
in the rupee and slowdown in IT/ITeS services remain key concerns. Kotak
calculates that at the current price, BSL is trading at 25.1x and 19.3 times
FY08 and FY09 earnings, respectively, and on a forward EV/EBITDA basis, the
stock is trading 12.6 times.
Ruchi
Soya
CMP: Rs
144
Target price: Rs
193
KR Choksey Securities has reiterated its ‘strong
buy’ recommendation on Ruchi Soya Industries (RSIL) and revised upwards
its estimates and target price. “We strongly believe RSIL is grossly
undervalued considering the various growth drivers of its existing business and
new ventures,†the brokerage said in a note to its clients. It says that
its belief in the growth prospects of the company is substantiated by the fact
that the management of RSIL is increasing its stake in the company by way of a
preferential allotment.
It estimates that India has one of the
lowest per capita consumption of oil in the world, but rising income levels,
emanating from general economic growth, is leading to an increase in consumption
which should augur well for the company. Taking into consideration the
consistently high growth in branded revenues, sustainable revenue
visibility and improvement in profitability, the brokerage believes RSIL
deserves the valuation of an FMCG
company.
Simplex
Infra
CMP: Rs
692
Target price: Rs
754
Ambit Capital has a ‘buy’ rating on Simplex Infra on
the basis that the company’s two recent equity issues would lead to an
increased net worth and reduced financial leverage. “The risk of high
debt-to-equity would now take a back seat, as it would come down from 2.5 times
in FY07 to 0.7 times in FY08E.
The reduction in financial leverage
would lead to a reduction in the extremely high interest payments and thus
increasing earnings for the company on a net level,†the brokerage feels.
Considering the robust order book position (of Rs 8,100 crore), improved
debt-to-equity levels and improved working capital position, Ambit has remodeled
its numbers for FY08E and FY09E, with an increase of 10.8% and 22.8% in net
earnings for two years.
Kalyani
Steels
CMP: Rs
499
Target price: Rs
771
Prime Broking says ‘it’s a no-brainer’ to
figure out that the Pune-based company is a strong ‘buy’, based on
the company’s expected growth in its core business and highly attractive
valuations. The brokerage estimates that the company plans to expand its
capacity at Hospet by 75% to 0.3m metric tonnes in FY08 at an outlay of Rs 300
crore, implying a 28% volume CAGR(compounded annual growth rate).
It
says that KSL directly and through its 100% subsidiaries has substantial
investments in group companies — Bharat Forge, Bharat Utilities and Hikal.
At current market prices, the value of the KSL’s investment portfolio
works out to Rs 633 per share, which is around 20% higher than the
company’s current stock price. “Applying a holding discount of 30%,
we have arrived at an investment value of Rs 443 per share,†the brokerage
said.
Pyramid
Saimira
CMP: Rs Rs
484
Target price: Rs
630
India Infoline says that investors should ‘buy’ the
stock on declines as it could be a good long-term bet. The brokerage says that
the com-pany, engaged in distribution and exhibition of films, plans to enter
into movie making business with plans to make 40 movies in five lan-guages by
FY09.
“We expect the subsidiaries of PSTL, Pyramid Saimira
Production and Singapore-based Pyramid Saimira Entertainment to witness huge
growth in coming quarters,†India Infoline said. The company’s
capex plans also include development of 200 malls and 175 multiplex with around
2,000 screens by FY10. Recently, PSTL acquired Texas-based FunAsia an existing
theatre and radio network in Chicago and
Houston.
Disclaimer:
The above stocks are picked up at random from research reports of brokerage
houses. Investors are advised to use their own judgement before acting on these
recommendations. ET does not associate itself with the choices.
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