vengabeats
Nilesh Nagdev
Yes Bank
Research: Anand Rathi Securities
Recommendation: Buy
CMP: Rs 85 (Face Value Rs. 10)
12-Month Price Target: Rs. 107
Yes Bank, founded in August '04, is the only Greenfield private sector bank to come up in the last decade. Yes Bank has registered growth of its balance sheet to a respectable Rs 3,797 crore since it commenced operations in August '04. In Q3FY06, its loan book stood at Rs 1,911 crore, compared to Rs 567 crore in Q3FY05, while deposits grew from Rs 300 crore in Q3FY05 to Rs 1,778 crore in Q3FY06. Yes Bank has segregated its business into three distinct segments, driven by a knowledgebased approach and caters to high growth emerging sectors. While Corporate & Institutional Banking (C&IB) will focus on big corporate clients with a turnover of over Rs 500 crore, the Business Banking segment will provide products and services to small and medium enterprises (SMEs) with a turnover of less than Rs 500 crore. The bank will increase its retail focus once its retail branches become operational by Q1FY07. It plans to focus on home and personal loans. Retail is expected to constitute 5% and 10% of the loan book by FY07E and FY08E.
IVRCL
Research: Emkay PCG
Recommendation: Buy
CMP: Rs. 1135 (Face Value Rs. 10)
12-Month Price Target: NA
IVRCL, a Hyderabad- based construction company, is a leader in the water segment providing a complete range of solutions. Along with the water segment, the company also has an expertise in roads, bridges, buildings, industrial structure and the power & transmission sector. Acquisition of Hindustan Dorr Oliver has further strengthened its position. The expertise of the acquired company will help IVRCL bid for complex projects in the water segment. The company has an order book of Rs 6,200 crore which is 6 times the company's FY05 revenue. The surging order book, once converted to revenues, is likely to expand profit margins. Consistent growth in revenues over the years clearly depicts the company's project execution capabilities and project management skills. For Chennai Water Desalination project, it has formed an SPV M/s Chennai Water Desalination Ltd, for execution of the project on the DBOOT(Design, Build, Own, Operate and Transfer ) basis. For the Jalandhar Amritsar BOT project, it has formed an SPV Amritsar Jalandhar Tollways Ltd to execute the project. Separate SPV structure helps in bringing in more transparency in the project. Both these projects are financially closed while for other BOT projects, detailed project report is under preparation.
Diamond Cables Research: India Infoline
Recommendation: Buy
CMP: Rs. 79 (Face Value Rs. 10)
12-Month Price Target: Rs. 120
Diamond Cables is the third largest manufacturer of aluminum conductors in the country with strong presence in the distribution segment. Despite presence in a high potential segment, DCL has grown at a slower pace as compared to its peers due to lack of adequate working capital availability. However, India Infoline believe the company is likely to witness accelerated revenue growth over the next few years given the high opportunity segment in which the company operates. The company has a debt of Rs1bn and accumulated losses of Rs18.5 crore on its books. The future of the company hinges on two major factors – successful implementation of on going debt restructuring and company's ability to raise capital (via private equity) for funding future growth. While the stock is available at an attractive 4.5 times FY08E of Rs17.1, this is a high risk-high return stock and only recommended for investors with a high-risk appetite.
Infotech Enterprises
Research: Angel Broking
Recommendation: Buy CMP: Rs 534 (Face Value Rs. 10)
12-Month Price Target: Rs. 675
Infotech is a specialist player having a significant presence in the Automotive, Industrial Machinery and Utilities segments while it enjoys a leadership position among its Indian peers in the Aerospace and Infotech has entered into long-term strategic relationships with global leaders such as Pratt & Whitney, Bombardier, Alstom Transport, and KPN Telecom, to name a few. The nature of service offerings and the potential of such relationships offer excellent topline visibility for the company. It has stabilized its operating margins between 18-20% since the last six quarters while growing its topline by over 5% sequentially (QoQ) during the same period. Angel Broking believe that the company has attained critical mass to scale up, which is reflected in the growth in its key accounts. At the current market price, the stock trades at an attractive discounting of 12.2 times FY2007E EPS of Rs 44.6 and 3.2 times FY2007E Book Value of Rs 171. Angel Broking initiate coverage on the stock with a Buy recommendation with a 12-month Target Price of Rs 675.
India Cement Research: IDBI Capital
Recommendation: Buy
CMP: Rs. 153 (Face Value Rs. 10)
12-Month Price Target: Rs. 176
India Cements (ICEM) has posted a net profit of Rs.183m for the 9M FY06 as against a loss of Rs.691m in the corresponding period last fiscal. IDBI Capital estimate ICEM's FY06 cement sales at 7.2m tonnes, up 31% from FY05. With the demand in South looking firm and highest market share for ICEM, the company to continue its growth trajectory. Better price realisation; savings in power cost and lower sales tax are estimated to improve EBITDA Margin to 23.1% in FY07 from 11.7% in FY05. At the strong demand coupled with very little capacity addition coming up in South, is estimated to keep cement prices firm. IDBI Capital estimate ICEM realisations to improve by a CAGR of 8% to Rs 2,464 per tonne in FY06 and Rs.2,661 per tonne in FY07. At the current market price of Rs.133, the stock is trading at 9.7 FY07E EV/EBITDA and 7.6 FY08E EV/EBITDA.
Research: Anand Rathi Securities
Recommendation: Buy
CMP: Rs 85 (Face Value Rs. 10)
12-Month Price Target: Rs. 107
Yes Bank, founded in August '04, is the only Greenfield private sector bank to come up in the last decade. Yes Bank has registered growth of its balance sheet to a respectable Rs 3,797 crore since it commenced operations in August '04. In Q3FY06, its loan book stood at Rs 1,911 crore, compared to Rs 567 crore in Q3FY05, while deposits grew from Rs 300 crore in Q3FY05 to Rs 1,778 crore in Q3FY06. Yes Bank has segregated its business into three distinct segments, driven by a knowledgebased approach and caters to high growth emerging sectors. While Corporate & Institutional Banking (C&IB) will focus on big corporate clients with a turnover of over Rs 500 crore, the Business Banking segment will provide products and services to small and medium enterprises (SMEs) with a turnover of less than Rs 500 crore. The bank will increase its retail focus once its retail branches become operational by Q1FY07. It plans to focus on home and personal loans. Retail is expected to constitute 5% and 10% of the loan book by FY07E and FY08E.
IVRCL
Research: Emkay PCG
Recommendation: Buy
CMP: Rs. 1135 (Face Value Rs. 10)
12-Month Price Target: NA
IVRCL, a Hyderabad- based construction company, is a leader in the water segment providing a complete range of solutions. Along with the water segment, the company also has an expertise in roads, bridges, buildings, industrial structure and the power & transmission sector. Acquisition of Hindustan Dorr Oliver has further strengthened its position. The expertise of the acquired company will help IVRCL bid for complex projects in the water segment. The company has an order book of Rs 6,200 crore which is 6 times the company's FY05 revenue. The surging order book, once converted to revenues, is likely to expand profit margins. Consistent growth in revenues over the years clearly depicts the company's project execution capabilities and project management skills. For Chennai Water Desalination project, it has formed an SPV M/s Chennai Water Desalination Ltd, for execution of the project on the DBOOT(Design, Build, Own, Operate and Transfer ) basis. For the Jalandhar Amritsar BOT project, it has formed an SPV Amritsar Jalandhar Tollways Ltd to execute the project. Separate SPV structure helps in bringing in more transparency in the project. Both these projects are financially closed while for other BOT projects, detailed project report is under preparation.
Diamond Cables Research: India Infoline
Recommendation: Buy
CMP: Rs. 79 (Face Value Rs. 10)
12-Month Price Target: Rs. 120
Diamond Cables is the third largest manufacturer of aluminum conductors in the country with strong presence in the distribution segment. Despite presence in a high potential segment, DCL has grown at a slower pace as compared to its peers due to lack of adequate working capital availability. However, India Infoline believe the company is likely to witness accelerated revenue growth over the next few years given the high opportunity segment in which the company operates. The company has a debt of Rs1bn and accumulated losses of Rs18.5 crore on its books. The future of the company hinges on two major factors – successful implementation of on going debt restructuring and company's ability to raise capital (via private equity) for funding future growth. While the stock is available at an attractive 4.5 times FY08E of Rs17.1, this is a high risk-high return stock and only recommended for investors with a high-risk appetite.
Infotech Enterprises
Research: Angel Broking
Recommendation: Buy CMP: Rs 534 (Face Value Rs. 10)
12-Month Price Target: Rs. 675
Infotech is a specialist player having a significant presence in the Automotive, Industrial Machinery and Utilities segments while it enjoys a leadership position among its Indian peers in the Aerospace and Infotech has entered into long-term strategic relationships with global leaders such as Pratt & Whitney, Bombardier, Alstom Transport, and KPN Telecom, to name a few. The nature of service offerings and the potential of such relationships offer excellent topline visibility for the company. It has stabilized its operating margins between 18-20% since the last six quarters while growing its topline by over 5% sequentially (QoQ) during the same period. Angel Broking believe that the company has attained critical mass to scale up, which is reflected in the growth in its key accounts. At the current market price, the stock trades at an attractive discounting of 12.2 times FY2007E EPS of Rs 44.6 and 3.2 times FY2007E Book Value of Rs 171. Angel Broking initiate coverage on the stock with a Buy recommendation with a 12-month Target Price of Rs 675.
India Cement Research: IDBI Capital
Recommendation: Buy
CMP: Rs. 153 (Face Value Rs. 10)
12-Month Price Target: Rs. 176
India Cements (ICEM) has posted a net profit of Rs.183m for the 9M FY06 as against a loss of Rs.691m in the corresponding period last fiscal. IDBI Capital estimate ICEM's FY06 cement sales at 7.2m tonnes, up 31% from FY05. With the demand in South looking firm and highest market share for ICEM, the company to continue its growth trajectory. Better price realisation; savings in power cost and lower sales tax are estimated to improve EBITDA Margin to 23.1% in FY07 from 11.7% in FY05. At the strong demand coupled with very little capacity addition coming up in South, is estimated to keep cement prices firm. IDBI Capital estimate ICEM realisations to improve by a CAGR of 8% to Rs 2,464 per tonne in FY06 and Rs.2,661 per tonne in FY07. At the current market price of Rs.133, the stock is trading at 9.7 FY07E EV/EBITDA and 7.6 FY08E EV/EBITDA.