economic times picks
CMP: Rs 70.50
Target Price: Rs 90
CLSA Asia-Pacific Markets maintains an 'outperform' on Jagran Prakashan, with a 12-month price target of Rs 90. "An economic slowdown notwithstanding, improving literacy and income levels in Hindi heartland imply that drivers for Jagran's growth are still in place.
With a 35% ad rate hike in 2008, Jagran continues to narrow the gap with its more expensive English rivals," the foreign brokerage said in a client note, after a Q&A reply from the management.
"Rising newsprint prices have made Jagran cautious on launching new editions in FY09 and its focus this year will be profitability. While management has budgeted for a minor increase in FY10 newsprint prices, it believes that prices are likely to peak in Q2FY08 and decline thereon," it added.
Neyveli Lignite
CMP: Rs 117.15
Target Price: Rs 160
MERRILL Lynch has maintained its 'neutral' rating on Neyveli Lignite, with a price target of Rs 160 citing the absence of triggers in the near term as the main reason.
"We see the NLC stock moving sideways due to lack of tariff visibility especially of lignite, slow earnings growth (9.7% CAGR — compounded annual growth rate FY08-10E) due to delays in capacity addition, falling RoE (return on equity) until FY09E (estimated) and expensive valuation (PE — price to earnings of 16 times FY10E)," the investment bank said in a client note.
"Neyveli's much-delayed capacity addition of 750mw (30% of capacity) at Tamil Nadu and Rajasthan projects has started, with the placement of equipment orders on Bhel after a delay of 6 months. These projects are likely to fully commission in FY10E, limiting growth in generation/profits till then," it added.
Info Edge
CMP: Rs 948
Target Price: Rs 1,300
Citigroup has rated Info Edge a 'buy', with a price target of Rs 1,300, while raising revenue estimates for the first quarter of 2008-09.
"Although most quarters are generally backend loaded, with our checks suggesting demand has been strong through the first 2 months, we feel confident enough to raise our Q1 revenue from Rs 577 million to Rs 606 million and our earnings from Rs 79 million to Rs 94 million," the investment bank said in a client note.
"Specifically, we believe Naukri has continued to see strong demand from non-IT (65% of revenues), especially the broadly defined infrastructure sector (oil & gas, real estate, construction, etc.). Significantly, IT services demand was actually quite strong in the first couple weeks of April, which bodes well for Q1," it added.
Thermax
CMP: Rs 431.10
Target Price: Rs 568
IDFC-SSKI Securities has maintained an 'outperformer' on Thermax with a price target of Rs 568 citing attractive valuations. "At 14.8 times FY09E (estimated) earnings, valuations are attractive considering the strong earnings growth and high return rations (40%+)," the institutional brokerage said in a client note.
"Based on its order backlog and capacity expansion plans, we expect Thermax to register 25% earnings CAGR over FY08-10. We have factored in slower growth in FY09 to build in the lean order backlog," it said.
"Notably, order booking has picked up in Q4FY08 (fourth quarter of 2007-08) after a slowdown seen in 9MFY08 (nine-month of 2007-08) due to delays in order finalisation by clients. We expect order flow to improve further led by Thermax's entry in utility boiler segment and the huge capex earmarked by various industries," it added.
Zensar Tech
CMP: Rs 136.10
Target Price: Rs 234
Kotak Securities' private client research group has maintained its 'buy' rating on Zensar and price target of Rs 234 after a recent management meet.
"We expect Zensar to achieve revenues of Rs 9.02 billion (Rs 902 crore) in FY09 2008-09 EBIDTA (operating profit) margins are expected to be higher because of higher offshore content and improved profitability in BPO (business process outsourcing) and TD (ThoughtDigital, a recently acquired company)," the retail broke-rage said in a client note.
"Higher revenues from value-added services are also expected to restrict the impact on margins due to salary increases and expected rupee appreciation. Consequently, its profit after tax is expected to grow to Rs 75.6 crore in FY09."
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.
Target Price: Rs 90
CLSA Asia-Pacific Markets maintains an 'outperform' on Jagran Prakashan, with a 12-month price target of Rs 90. "An economic slowdown notwithstanding, improving literacy and income levels in Hindi heartland imply that drivers for Jagran's growth are still in place.
With a 35% ad rate hike in 2008, Jagran continues to narrow the gap with its more expensive English rivals," the foreign brokerage said in a client note, after a Q&A reply from the management.
"Rising newsprint prices have made Jagran cautious on launching new editions in FY09 and its focus this year will be profitability. While management has budgeted for a minor increase in FY10 newsprint prices, it believes that prices are likely to peak in Q2FY08 and decline thereon," it added.
Neyveli Lignite
CMP: Rs 117.15
Target Price: Rs 160
MERRILL Lynch has maintained its 'neutral' rating on Neyveli Lignite, with a price target of Rs 160 citing the absence of triggers in the near term as the main reason.
"We see the NLC stock moving sideways due to lack of tariff visibility especially of lignite, slow earnings growth (9.7% CAGR — compounded annual growth rate FY08-10E) due to delays in capacity addition, falling RoE (return on equity) until FY09E (estimated) and expensive valuation (PE — price to earnings of 16 times FY10E)," the investment bank said in a client note.
"Neyveli's much-delayed capacity addition of 750mw (30% of capacity) at Tamil Nadu and Rajasthan projects has started, with the placement of equipment orders on Bhel after a delay of 6 months. These projects are likely to fully commission in FY10E, limiting growth in generation/profits till then," it added.
Info Edge
CMP: Rs 948
Target Price: Rs 1,300
Citigroup has rated Info Edge a 'buy', with a price target of Rs 1,300, while raising revenue estimates for the first quarter of 2008-09.
"Although most quarters are generally backend loaded, with our checks suggesting demand has been strong through the first 2 months, we feel confident enough to raise our Q1 revenue from Rs 577 million to Rs 606 million and our earnings from Rs 79 million to Rs 94 million," the investment bank said in a client note.
"Specifically, we believe Naukri has continued to see strong demand from non-IT (65% of revenues), especially the broadly defined infrastructure sector (oil & gas, real estate, construction, etc.). Significantly, IT services demand was actually quite strong in the first couple weeks of April, which bodes well for Q1," it added.
Thermax
CMP: Rs 431.10
Target Price: Rs 568
IDFC-SSKI Securities has maintained an 'outperformer' on Thermax with a price target of Rs 568 citing attractive valuations. "At 14.8 times FY09E (estimated) earnings, valuations are attractive considering the strong earnings growth and high return rations (40%+)," the institutional brokerage said in a client note.
"Based on its order backlog and capacity expansion plans, we expect Thermax to register 25% earnings CAGR over FY08-10. We have factored in slower growth in FY09 to build in the lean order backlog," it said.
"Notably, order booking has picked up in Q4FY08 (fourth quarter of 2007-08) after a slowdown seen in 9MFY08 (nine-month of 2007-08) due to delays in order finalisation by clients. We expect order flow to improve further led by Thermax's entry in utility boiler segment and the huge capex earmarked by various industries," it added.
Zensar Tech
CMP: Rs 136.10
Target Price: Rs 234
Kotak Securities' private client research group has maintained its 'buy' rating on Zensar and price target of Rs 234 after a recent management meet.
"We expect Zensar to achieve revenues of Rs 9.02 billion (Rs 902 crore) in FY09 2008-09 EBIDTA (operating profit) margins are expected to be higher because of higher offshore content and improved profitability in BPO (business process outsourcing) and TD (ThoughtDigital, a recently acquired company)," the retail broke-rage said in a client note.
"Higher revenues from value-added services are also expected to restrict the impact on margins due to salary increases and expected rupee appreciation. Consequently, its profit after tax is expected to grow to Rs 75.6 crore in FY09."
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.