Patel Engineering
CMP: Rs 949.70
Target price: Rs 1,149
Macquarie has maintained an ‘outperform’ on Patel Engineering after the company announced better-than-expected margins, which made up for marginal disappointment on the topline. “The topline in (third quarter) came in marginally below expectations.
However, EBITDA margins more than made up for the shortfall,” said the report, adding, “the company recorded an EBITDA of Rs 592 million (Rs 59.2 crore), up 26% Y-o-Y.” According to the brokerage, the company is pre-qualified for Rs 60 billion (Rs 6,000 crore) worth of projects, processing of which is expected in the near term.
The management has indicated that they would bid for orders worth Rs 100 billion over next 12 months, adds the report. The company’s order book currently stands at Rs 55 billion (Rs 5,500 crore), 3.4 times trailing 12 months’ revenues. The order book number does not include any in-house build-operate-transfer (BOT) projects, notes the report.
ABG Shipyard
CMP: Rs 936.65
Target Price: Rs 1,096
Prabhudas Lilladher has put an ‘outperformer’ rating on ABG Shipyard after the company’s topline grew by 68% Y-o-Y to Rs 2,584 million (Rs 258.4 crore), accompanied by strong operating margin of 25%.
“On account of higher-than-expected EBIDTA margin, we are raising our margin estimate for FY08 from 19% to 24%, which is an increase of 18% to our earning estimate,” said the brokerage.
“We are also revising our FY09 turnover estimate upwards by 20% to Rs 18.9 billion (Rs 189 crore) on account of the expansion at Surat,” it added. The company has announced Rs 4 billion (Rs 400 crore) expansion of its Surat facility, which will increase its fabrication capacity by four times, noted the report. The brokerage added that in order to fund expansion, the company has issued four million warrants to its promoter at a price of Rs 796.
Further, the company plans to raise Rs 8 billion (Rs 800 crore) through a QIB issue and the estimated equity dilution, post-issue, is likely to be 22%. “Currently, the stock trades at 16 times FY09 estimates. We rate the stock an ‘outperformer’ with a price target of Rs 1, 096,” said the report.
Shree Cement
CMP: Rs 1,325.10
Target Price: Rs 1,693
ICICI Direct has upgraded Shree Cement to ‘outperformer’ after the company reported a 44% increase in its topline on account of its 1.5 million tonne per annum (TPA) capacity addition during the quarter.
“Cement despatches during the quarter amounted to 1.52 million tonne, up by 17.9% Y-o-Y,” said the report. Strong demand boosted realisations to Rs 3,440 per tonne in Q3FY08 from Rs 3,230 per tonne in Q3FY07, while operating margins improved from 45.12% in Q3FY07 to 46.27% in Q3FY08, it added.
While profit before interest, depreciation and taxes increased by 56% during the quarter, the company’s 18 MW captive power plant (CPP-IV) at Bangur City, Rajasthan, resulted in cost savings. However, the report added, higher depreciation costs due to the capacity expansion impacted the company’s bottomline.
CMP: Rs 949.70
Target price: Rs 1,149
Macquarie has maintained an ‘outperform’ on Patel Engineering after the company announced better-than-expected margins, which made up for marginal disappointment on the topline. “The topline in (third quarter) came in marginally below expectations.
However, EBITDA margins more than made up for the shortfall,” said the report, adding, “the company recorded an EBITDA of Rs 592 million (Rs 59.2 crore), up 26% Y-o-Y.” According to the brokerage, the company is pre-qualified for Rs 60 billion (Rs 6,000 crore) worth of projects, processing of which is expected in the near term.
The management has indicated that they would bid for orders worth Rs 100 billion over next 12 months, adds the report. The company’s order book currently stands at Rs 55 billion (Rs 5,500 crore), 3.4 times trailing 12 months’ revenues. The order book number does not include any in-house build-operate-transfer (BOT) projects, notes the report.
ABG Shipyard
CMP: Rs 936.65
Target Price: Rs 1,096
Prabhudas Lilladher has put an ‘outperformer’ rating on ABG Shipyard after the company’s topline grew by 68% Y-o-Y to Rs 2,584 million (Rs 258.4 crore), accompanied by strong operating margin of 25%.
“On account of higher-than-expected EBIDTA margin, we are raising our margin estimate for FY08 from 19% to 24%, which is an increase of 18% to our earning estimate,” said the brokerage.
“We are also revising our FY09 turnover estimate upwards by 20% to Rs 18.9 billion (Rs 189 crore) on account of the expansion at Surat,” it added. The company has announced Rs 4 billion (Rs 400 crore) expansion of its Surat facility, which will increase its fabrication capacity by four times, noted the report. The brokerage added that in order to fund expansion, the company has issued four million warrants to its promoter at a price of Rs 796.
Further, the company plans to raise Rs 8 billion (Rs 800 crore) through a QIB issue and the estimated equity dilution, post-issue, is likely to be 22%. “Currently, the stock trades at 16 times FY09 estimates. We rate the stock an ‘outperformer’ with a price target of Rs 1, 096,” said the report.
Shree Cement
CMP: Rs 1,325.10
Target Price: Rs 1,693
ICICI Direct has upgraded Shree Cement to ‘outperformer’ after the company reported a 44% increase in its topline on account of its 1.5 million tonne per annum (TPA) capacity addition during the quarter.
“Cement despatches during the quarter amounted to 1.52 million tonne, up by 17.9% Y-o-Y,” said the report. Strong demand boosted realisations to Rs 3,440 per tonne in Q3FY08 from Rs 3,230 per tonne in Q3FY07, while operating margins improved from 45.12% in Q3FY07 to 46.27% in Q3FY08, it added.
While profit before interest, depreciation and taxes increased by 56% during the quarter, the company’s 18 MW captive power plant (CPP-IV) at Bangur City, Rajasthan, resulted in cost savings. However, the report added, higher depreciation costs due to the capacity expansion impacted the company’s bottomline.
