Marg
Current price: Rs 189,
Fair value: Rs 353
Crisil Equities has assigned fundamental grade of 3/5 to Marg indicating 'good' fundamentals. Marg’s Karaikal Port is strategically located between the congested Chennai and Tuticorin ports. It is also expected to benefit from the value accretion in the real estate projects given the low-cost land bank. Marg is also ramping up its EPC team to reap benefits in the construction segment. Marg’s revenues are expected to grow at a two-year CAGR of 66 per cent to Rs 1,000 crore in FY12, while EPS is expected to grow by 109.9 per cent to Rs 18.6. Crisil Equities has used the sum-of-the-parts method to value ports (Rs 171), SEZ (Rs 91), real estate (Rs 28), EPC (Rs 10) and land bank (Rs 53), and has arrived at a fair value of Rs 353.
— Crisil Equities
Tulip Telecom
Reco Price: Rs 179,
Target Price: Rs 233
Tulip recorded a 19.2 per cent year-on-year growth in revenues in Q2FY11 to Rs 590 crore, driven by the VPN business. Fibre as a per cent of total VPN revenues stand at 35 per cent and is expected to hit 40 per cent by the end of FY11. Tulip recorded a 207 basis points year-on-year increase in its Ebitda margins to 27.9 per cent, led by strong revenue growth in fibre and wireless as well as lower cost per unit owing to bulk purchases of bandwidth. It recorded an impressive 59.6 per cent year-on-year growth in net profit to Rs 78 crore. Tulip is expected to record a strong 21.6 per cent CAGR in top-line, and 14.6 per cent CAGR in bottom-line over FY10-12.
Upgrade to 'Buy'.
— Karvy Stock Broking
Allcargo Global Logistics
Reco Price: Rs 166,
Target Price: Rs 217
Allcargo Global Logistics’ (AGL) consolidated 3QCY2011 results were significantly above expectations, on account of strong performance across segments. During the quarter, the company re-assessed useful life of its cranes, which resulted in lower depreciation thereby boosting profit by Rs 11 crore to Rs 57 crore. ECU line continued its strong performance and registered year-on-year revenue and profit growth of 27 per cent and 77 per cent, respectively, thereby emphasising our call of sustainable recovery in margins. The stock has grossly underperformed since the last one year owing to subdued performance by ECU Line; however the subsidiary has been gaining traction since the last two quarters.
Maintain ‘Buy’.
— Angel Broking
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IVRCL Infrastructure
Reco Price: Rs 135,
Target Price: NA
IVRCL Infra reported below expected PAT for Q2FY11, while sales was below expectation at Rs 1,070 crore. Sales declined by 14.4 per cent year-on-year on account of slower execution, driven by extended monsoon and delays in financial closure of its BOT projects. The company surprised on EBITDA margin front which stood at 8.8 per cent. A sharp increase in depreciation and interest cost saw net profit decline by 51 per cent year-on-year to Rs 23.3 crore. The current order backlog stood at Rs 24,000 crore and provides significant revenue visibility for next 2-3 years. IVRCL expects a pickup in order inflow in H2FY11, and order book to close in range of Rs 28,000-31,000 crore in FY11. The management has lowered its guidance by Rs 250 crore to Rs 6,500 crore for FY11; Ebitda margins expected to range at 9.5-10 per cent. The stock is currently trading at 11.2 times its FY12 estimated earnings.
— MSFL Research