Bajaj Auto
CMP: Rs 2,511.65
Target price: Rs 2,549
Merrill Lynch has downgraded Bajaj Auto to neutral rating, and slashed earnings forecasts, after the company unexpectedly cut prices on Platina- a 100cc bike brand- by 12%.
"We are therefore slashing EPS (earnings per share) forecasts by 6% in FY08 (to Rs 120.2) and 10% in FY09 (Rs 131.9), and sum of parts value to Rs 2,549 (compared to earlier 2,871)," the investment bank said in a note to clients. "Bajaj Auto's strategy to initiate discounts goes against the company's stated policy of targeting profits, not volumes. We believe that volumes will not compensate, given the model's much weaker franchise compared to competition (Hero Honda's CD-Deluxe, which has also cut prices)," it added.
Concor
CMP: Rs 1,865
Target price: NA
ASK Securities is positive on Container Corporation of India (Concor) citing major market share in the railway logistics business and strong financial position.
"While we take cognisance of Concor's strong balance sheet, its leadership status and most importantly its domain expertise, the road ahead is tough," the brokerage said in a unrated note to clients. "Nevertheless, we continue to believe that its robust business model will deliver results, unless the scenario gets altered dramatically. Therefore, the next few quarters would be very critical to monitor so as to identify any signs of reversal," it added.
HDFC Bank
CMP: Rs 1,357.25
Target price: Rs 1,565
Citigroup has rated HDFC Bank a hold, with a 12-month price target of Rs 1,565, after its second quarter earnings.
"We believe HDFC Bank should be able to generate a premium to its current trading level as it sustains asset growth, consolidates its distribution, leverages off new capital and stabilises its business mix with increased retail returns," the investment bank said in a note to clients.
"We remain positive on the bank's prospects and management's ability to deliver, but in the near term the stock's performance could be moderated by high valuations relative to ROE (return on equity) and peers, uncertainty on interest rates, and competitive pricing environment," it added.
TCS
CMP: Rs 1106.75
Target price: Rs 1,230
Morgan Stanley has rated TCS an "equalweight", with a price target of Rs 1,230 based on price to earnings (P/E) ratio of 21 times 2008-09 estimated earnings. The investment bank feels concerns over the impact of the rupee's appreciation on the IT services sector and a possible US slowdown already reflects in the stock, reducing the likelihood of a sharp fall. "Given its client base and management expertise, our bias is positive for the stock," Morgan Stanley said in a note to clients.
"TCS has historically grown faster than companies in the broad market (BSE Sensex) and has consequently traded at varying premiums. Our estimates assume a P/E discount of 10% to Infosys going forward, which is also towards the average end of its historical trading range," it added.
Patel Engineering
CMP: Rs 639.25
Target price: Rs 992
Enam Securities has rated Patel Engineering an "outperformer" with a price target of Rs 992. "At CMP, adjusted for value of real estate and BOT (build operate transfer) investments of Rs 607 per share, the core business is available at just 2.1 times FY08E EV/ EBIDTA (enterprise value/earnings before interest, tax and depreciation & amortisation)," the brokerage said in a note to clients.
At the time when the company released the report, Patel shares were at Rs 654. "We value PEL's real estate (roughly 1,000 crore) at Rs 35 billion (Rs 3,500 crore) or Rs 591 per share in our base case estimate," the note added.
Man Industries
Target Price: Rs 188
CMP: Rs 118.35
IDBI Capital Markets has initiated coverage on Man Industries with a 12-month price target of Rs 188 citing robust outlook for the pipes industry and stronger order book position. "As a result of increased hydrocarbon E&P (exploration and production) activities and continued rise in the crude prices has set a long-term demand for steel pipes both in domestic and overseas markets.
Well-timed capacity expansion makes the company comparable to its peers in terms of the capacities in domestic market," the brokerage said in a note. "Robust order book of Rs 22 billion (Rs 2,200 crore), to be executable in 12-15 months, which is 1.9x its FY07 sales, provides a near term revenue visibility. This clearly indicates the ability of the company to get huge orders from the Oil and Gas behemoths amidst tough competition," it added.
CMP: Rs 2,511.65
Target price: Rs 2,549
Merrill Lynch has downgraded Bajaj Auto to neutral rating, and slashed earnings forecasts, after the company unexpectedly cut prices on Platina- a 100cc bike brand- by 12%.
"We are therefore slashing EPS (earnings per share) forecasts by 6% in FY08 (to Rs 120.2) and 10% in FY09 (Rs 131.9), and sum of parts value to Rs 2,549 (compared to earlier 2,871)," the investment bank said in a note to clients. "Bajaj Auto's strategy to initiate discounts goes against the company's stated policy of targeting profits, not volumes. We believe that volumes will not compensate, given the model's much weaker franchise compared to competition (Hero Honda's CD-Deluxe, which has also cut prices)," it added.
Concor
CMP: Rs 1,865
Target price: NA
ASK Securities is positive on Container Corporation of India (Concor) citing major market share in the railway logistics business and strong financial position.
"While we take cognisance of Concor's strong balance sheet, its leadership status and most importantly its domain expertise, the road ahead is tough," the brokerage said in a unrated note to clients. "Nevertheless, we continue to believe that its robust business model will deliver results, unless the scenario gets altered dramatically. Therefore, the next few quarters would be very critical to monitor so as to identify any signs of reversal," it added.
HDFC Bank
CMP: Rs 1,357.25
Target price: Rs 1,565
Citigroup has rated HDFC Bank a hold, with a 12-month price target of Rs 1,565, after its second quarter earnings.
"We believe HDFC Bank should be able to generate a premium to its current trading level as it sustains asset growth, consolidates its distribution, leverages off new capital and stabilises its business mix with increased retail returns," the investment bank said in a note to clients.
"We remain positive on the bank's prospects and management's ability to deliver, but in the near term the stock's performance could be moderated by high valuations relative to ROE (return on equity) and peers, uncertainty on interest rates, and competitive pricing environment," it added.
TCS
CMP: Rs 1106.75
Target price: Rs 1,230
Morgan Stanley has rated TCS an "equalweight", with a price target of Rs 1,230 based on price to earnings (P/E) ratio of 21 times 2008-09 estimated earnings. The investment bank feels concerns over the impact of the rupee's appreciation on the IT services sector and a possible US slowdown already reflects in the stock, reducing the likelihood of a sharp fall. "Given its client base and management expertise, our bias is positive for the stock," Morgan Stanley said in a note to clients.
"TCS has historically grown faster than companies in the broad market (BSE Sensex) and has consequently traded at varying premiums. Our estimates assume a P/E discount of 10% to Infosys going forward, which is also towards the average end of its historical trading range," it added.
Patel Engineering
CMP: Rs 639.25
Target price: Rs 992
Enam Securities has rated Patel Engineering an "outperformer" with a price target of Rs 992. "At CMP, adjusted for value of real estate and BOT (build operate transfer) investments of Rs 607 per share, the core business is available at just 2.1 times FY08E EV/ EBIDTA (enterprise value/earnings before interest, tax and depreciation & amortisation)," the brokerage said in a note to clients.
At the time when the company released the report, Patel shares were at Rs 654. "We value PEL's real estate (roughly 1,000 crore) at Rs 35 billion (Rs 3,500 crore) or Rs 591 per share in our base case estimate," the note added.
Man Industries
Target Price: Rs 188
CMP: Rs 118.35
IDBI Capital Markets has initiated coverage on Man Industries with a 12-month price target of Rs 188 citing robust outlook for the pipes industry and stronger order book position. "As a result of increased hydrocarbon E&P (exploration and production) activities and continued rise in the crude prices has set a long-term demand for steel pipes both in domestic and overseas markets.
Well-timed capacity expansion makes the company comparable to its peers in terms of the capacities in domestic market," the brokerage said in a note. "Robust order book of Rs 22 billion (Rs 2,200 crore), to be executable in 12-15 months, which is 1.9x its FY07 sales, provides a near term revenue visibility. This clearly indicates the ability of the company to get huge orders from the Oil and Gas behemoths amidst tough competition," it added.
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