Grasim Industries
CMP: Rs 3,543.95
Target price: Rs 4,450
Merrill Lynch has upgraded its rating on Grasim Industries to ‘buy’ with a price target of Rs 4,450. “We continue to believe that the cement industry will witness large capacity additions by March 2009(estimated). However, we think the market is not focused on FY09E risks yet and greater focus seems likely only by March-June 2008 when some of the large capacity expansions will commission (seeing is believing),” the Merrill Lynch note to clients said.
Bajaj Auto
CMP: Rs 2,612
Target price: Rs 3,065
Motilal Oswal Securities has initiated coverage on Bajaj Auto with a ‘buy’ rating and a price target of Rs 3,065, citing increased focus on premium segment motorcycles as a key trigger. “While we expect core business profitability to improve, its insurance business is a potential value driver. We believe that Bajaj Auto’s earnings before interest, taxes, depreciation and amortisation (EBITDA) margin will improve 2QFY08 (July-October) onwards,” the Motilal Oswal note to clients said. “Our view is based on the company’s improving product mix, its reluctance to re-engage in price wars, completion of dealer inventory rationalisation, and accrual of higher duty entitlement pass book (DEPB) benefit,” the note added.
Tata Power
CMP: Rs 944.10
Target price: Rs 1,198
HSBC Securities has maintained its ‘overweight’ rating on Tata Power, while raising its price target to Rs 1,198 from Rs 843 earlier. “We believe in Tata Power’s ability to expand its generation capacity over next five years. We now expect it to implement 10.3GW by FY2013 against our earlier estimate of 9.4GW,” the HSBC note to clients said. “The coal ministry has allocated coal mines in India to the company, which should reduce its fuel costs substantially.” the note added. “We expect the coal mines to be operational by the end of FY11 and hence we reduce our fuel cost estimates by 14% and 13% for FY12 and FY13, respectively,”
PFC
CMP: Rs 207.90
Target price: Rs 242.70
ABN Amro Securities has initiated coverage on Power Finance Corporation (PFC) with a ‘buy’ rating and a target price of Rs 242.70, saying the company’s high business growth visibility, largely stable margins and status as the government’s infrastructure-financing firm make for a compelling proposition.
“PFC is treated as a government-financing firm and is therefore exempt from a number of Reserve Bank of India regulations applicable to non-banking finance companies. The status allows PFC much flexibility in lending to power sector projects and in managing its capital structure,” the ABN note to clients said. “We believe this flexibility will be of even more value over the next few years as loan growth should surge ahead,” the note said, adding that while valuations looked rich at current levels, they reflected strong growth prospects.
CMP: Rs 3,543.95
Target price: Rs 4,450
Merrill Lynch has upgraded its rating on Grasim Industries to ‘buy’ with a price target of Rs 4,450. “We continue to believe that the cement industry will witness large capacity additions by March 2009(estimated). However, we think the market is not focused on FY09E risks yet and greater focus seems likely only by March-June 2008 when some of the large capacity expansions will commission (seeing is believing),” the Merrill Lynch note to clients said.
Bajaj Auto
CMP: Rs 2,612
Target price: Rs 3,065
Motilal Oswal Securities has initiated coverage on Bajaj Auto with a ‘buy’ rating and a price target of Rs 3,065, citing increased focus on premium segment motorcycles as a key trigger. “While we expect core business profitability to improve, its insurance business is a potential value driver. We believe that Bajaj Auto’s earnings before interest, taxes, depreciation and amortisation (EBITDA) margin will improve 2QFY08 (July-October) onwards,” the Motilal Oswal note to clients said. “Our view is based on the company’s improving product mix, its reluctance to re-engage in price wars, completion of dealer inventory rationalisation, and accrual of higher duty entitlement pass book (DEPB) benefit,” the note added.
Tata Power
CMP: Rs 944.10
Target price: Rs 1,198
HSBC Securities has maintained its ‘overweight’ rating on Tata Power, while raising its price target to Rs 1,198 from Rs 843 earlier. “We believe in Tata Power’s ability to expand its generation capacity over next five years. We now expect it to implement 10.3GW by FY2013 against our earlier estimate of 9.4GW,” the HSBC note to clients said. “The coal ministry has allocated coal mines in India to the company, which should reduce its fuel costs substantially.” the note added. “We expect the coal mines to be operational by the end of FY11 and hence we reduce our fuel cost estimates by 14% and 13% for FY12 and FY13, respectively,”
PFC
CMP: Rs 207.90
Target price: Rs 242.70
ABN Amro Securities has initiated coverage on Power Finance Corporation (PFC) with a ‘buy’ rating and a target price of Rs 242.70, saying the company’s high business growth visibility, largely stable margins and status as the government’s infrastructure-financing firm make for a compelling proposition.
“PFC is treated as a government-financing firm and is therefore exempt from a number of Reserve Bank of India regulations applicable to non-banking finance companies. The status allows PFC much flexibility in lending to power sector projects and in managing its capital structure,” the ABN note to clients said. “We believe this flexibility will be of even more value over the next few years as loan growth should surge ahead,” the note said, adding that while valuations looked rich at current levels, they reflected strong growth prospects.
