Alstom Projects India: Global alignment

ANALYSTS' CORNER

Khandwala Research recommends a buy on Alstom Projects India at Rs 209 and has set a target price of Rs 308. The report states that Alstom plans to make India its global operations hub.

Alstom has more than 30 per cent share of world hydel power generation and India is considered to be one of the most important developing markets.

The company's expansion plans to make its Vadodara establishment a global hub for hydel plants and the plant engineering centre in Delhi remain on track. A new business unit for turbo machinery has also been established.

The report adds, "Alstom's association with Delhi Metro, access to state-of-the-art technology in the area of rail transportation, experience in handling traction projects, local manufacturing base for products and engineering skill, core group of world-class engineers places the business in an advantageous situation." The stock trades at a P/E multiple of 21X FY06.

Omax Auto: Operating excellence

Edelweiss Securities maintains its value buy on Omax Auto. The report states that the company's June quarter numbers reflect good operating performance.

However, profits are lower than expectations due to the capacity expansion leading to higher interest and depreciation expenses. Sales increased 25 per cent, while EBITDA increased 17.4 per cent y-o-y. But profits increased only by two per cent due to higher depreciation and lower other income.

The report adds, "Omax Auto plans to make body frames for TVS. It is also in talks for supplying body panels to Sonalika tractors. It is currently in the process of increasing its capacity and with exports and rising domestic sales, its margins will begin to improve."

The stock trades at P/E of 10.7 and 8.1 on FY06E and FY07E. Its valuations are among the lowest in the sector, given its size and rising exports. It has a three year order book of Rs 180 crore.

BoB: Outperformer nevertheless

SSKI Securities maintains its outperformer rating on the Bank of Baroda. The report states that a 46 per cent fall in June quarter bottomline was in line with their expectation.

This has been because of the transfer of securities to HTM during the quarter for which the bank took a hit of Rs 260 crore. The bank now has 60 per cent of SLR portfolio and 21 per cent of NDTL in HTM.

However, net interest income has registered 11 per cent y-o-y growth outperforming expectations. This has been driven primarily by stable NIMs and a rebound in advances growth to 20 per cent.

While, core fee income growth has remained modest, operating expenses have also remained under control.

The report adds, "There has been a sharp improvement in asset quality with gross as well as net NPAs coming down to 7.2 per cent and 1.5 per cent, respectively, with provisioning comfortable at 80 per cent. The stock currently trades at 1.1x FY06E and 1x FY07E adjusted book.