Ashok Leyland
Reco price: Rs 72
Target price: Rs 83
Strong CV demand would steer the market share growth of Ashok Leyland. Key volume drivers include: commencement of Uttarakhand plant, strong traction in southern market, entry into newer segments and CV financing from Hinduja Leyland Finance. The company is expected to clock in sales of 87,000 vehicles in FY11 compared to 63,942 in FY10. Resilient margin performance is expected over the next two years; driven by strong pricing power, along with, excise duty benefits from the Uttarakhand plant and stable raw material prices. Expect a 70 basis points rise in margins. The Tax rate would drop 200 basis points post ramp up at Uttarakhand plant. Revenues are expected to grow at a CAGR of 23.6 per cent during FY10-12. The stock trades at an attractive P/E of 12.2 times its 2011-12 estimated earnings. Maintain buy —IndiaInfoline
B L Kashyap & Sons
Reco price: Rs 372
Target price: NA
BL Kashyap & Sons’ (BLK) order accretion has been robust over the past five months. The company has won projects worth Rs 1,400-Rs 1,500 crore in FY11 till now. Its current order book stands at Rs 4,000 crore, 4x its FY10 revenues, indicating strong future growth visibility. With improvement in the economic outlook, BLK should be able to sustain the order wins pace, enhancing the company’s growth prospects. At Rs 372, the stock is available at attractive valuations of 14.7x and 10.0x FY11E and FY12E, respectively, on P/E basis. With improvement in execution, operating leverage should kick in going ahead. Any value arising from development or outright sale of its realty projects will provide upsides. Maintain buy. — Edelweiss Research
Entertainment Network India
Reco price: Rs 238
Target price: Rs 290
The Copyright Board has given its verdict on the music royalty issue in favor of the radio industry. It has decided to shift from the current fixed fee to a revenue sharing model of a mere 2 per cent. As of now, radio companies pay a fixed royalty of approx Rs 850 per hour. This works out to be a fixed Rs 50 lakh per station paid to music company associations. This had forced radio companies to incur significant losses in the past. The reduction in royalty would add approx Rs 10 crore annually to ENIL’s bottomline. The increase in the FY11E and FY12E Ebitda estimates is subject to the permanence of the new revenue sharing model. In case music associations challenges the verdict in a higher court, implications could be different. Maintain buy . —Elara Capital
C&C Construction
Reco price: Rs 247
Target price: NA
In 2009-10, bottomline growth was robust at 68.1 per cent led by higher other income and a tax write-back. Revenue growth was driven by better execution of projects and new order inflows worth Rs 583 crore. Its order book stands at Rs 2,613 crore currently, which is 2.3 times C&C's 2009-10 revenue. The company enjoys the lowest bidder (L1) status for projects worth Rs 400 crore. The management has pegged its order book at Rs 4,000-Rs 4,500 crore by 2010-11. In view of the company’s presence in difficult terrains, superior operating margin and its efforts to de-risk its order book, the stock looks attractively valued. It trades at a P/E of 5.3 times its 2011-12 earnings estimate. —Sharekhan