BHARTI AIRTEL
Reco. Price: Rs 314,
Target Price: Rs 360
For Q1 FY11, Bharti Airtel posted robust topline performance, up 13.8 per cent q-o-q, aided by the acquisition of Zain Africa. However, margins declined due to high SG&A, network operation and access costs, while the bottom line was severely affected due to the loss reported by its African operations. The brokerage expects Bharti Airtel’s top line to witness a 28.5 per cent CAGR over FY2010–12E, with strong addition in its subscriber base, including that of Zain Africa. However, revenue per minute is expected to decline at a 15 per cent CAGR in the same period. Thus, the bottom line is expected to decline at a 5.1 per cent CAGR over FY2010–12E, mainly due higher interest outgo on debt rose for Zain and 3G BWA and operating expenditure. Maintain accumulate
— Angel Broking
INDRAPRASHTA GAS
Current price: Rs 324,
Target price: Rs 326
The management of Indraprashta Gas (IGL) is bullish on volume growth on the back of the forthcoming Commonwealth Games after posting strong results in the June quarter. Currently, 198 CNG outlets are operational and 43 are awaiting regulatory approvals. Outlook on CNG/PNG sales looks robust with the management giving a guidance of 20 per cent volume growth in FY11 and 18 per cent in FY12. We broadly maintain our earnings estimates and the fair value (based on DCF methodology) at Rs 326. While the stock looks fairly valued currently, we are positive on it, with upsides coming from higher volumes on back of the forthcoming Commonwealth Games and possible price hikes. The impact of opening more outlets (currently awaiting regulatory approvals) has not been factored in our estimates, leaving room for further upsides. At the current price, IGL is trading at P/E of 18.2x FY11E and 15.4x FY12E earnings estimates. Maintain Buy
— Edelweiss Research
PATEL ENGINEERING
Reco. Price: Rs 412,
Target Price: Rs 567
Patel Engineering results were in-line with expectation. However, revenues were below estimates at 9.2 per cent y-o-y growth, while profits were higher at 10 per cent. The company is witnessing traction in the core business with L1 position increase by Rs 1,600 crore during the quarter where overall L1 stands at Rs 3,120 crore. The management indicated attaining FC for its thermal power project and booking of real estate revenue to start from H2 FY11, which will improve sentiments for its non-core initiatives. The risk being, lower than expected traction in AP project and deterioration in working capital and debt. The stock is trading at a P/E of 12x. Meanwhile, valuation for others remains same with real estate at Rs 55 per share, Land Bank at Rs 67, Power at Rs 36 and BOT at Rs 12. Maintain buy
— Pinc Research
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ANDHRA BANK
Reco price: Rs 142,
Target price: Rs 169
Andhra Bank’s net profit for Q1FY2011 was up a strong 25.1 per cent driven by a robust expansion in the net interest income (NII). The NII grew by a robust 66.8 per cent. The healthy NII growth primarily stemmed from a robust 27.2 per cent year-on-year (y-o-y) growth in the advances and a 20 basis point improvement in the calculated NIM (3.31 per cent) on a sequential basis. The asset quality deteriorated with the absolute gross non-performing assets (GNPAs) expanding by 18.7 per cent sequentially on the back of slippages from the bank’s restructured assets portfolio. Despite the jump in the non-performing assets on a sequential basis, GNPAs stand contained at 1.01 per cent. The stock trades at estimated 5x its FY2012E earnings and estimated 1.1x FY2012E book. Maintain buy
— Sharekhan