Steel Authority of India
Reco Price: Rs 202
Target Price: Rs 235
While no major capacity additions are planned in FY11, the company expects to be able to report production and sales volume growth through improved efficiency. FY12E should see significant (around 1.5 MT) sales volume growth led by 2 mtpa IISCO expansion. Most of the other capacity additions continue to be planned for FY13. The brokerage is positive on the product mix changes that should lead to realisation improvement as well as process changes that would bring about cost improvement. Recent capex trends have been healthy and backward integration with iron ore protects the company against price escalation of raw material. Back ended expansion plans however limit upward potential for the stock price in the near future. The stock is trading at 10.3x on 2010-11 estimates. Maintain hold.
— Ambit Capital
ITC
Reco. Price: Rs 294
Target Price: Rs 303
After achieving a significant presence in the personal wash category, ITC forayed into the skincare category with the launch of Vivel Active fair cream. The product is currently marketed in Kerala and would be extended to the other domestic markets over time. The product will be directly competing with Hindustan Unilever Ltd (HULs) Fair & Lovely fairness cream. With ITC’s entrance in the category, we expect the competition to heat up in the domestic market. Further, the addition of new products, and the increased distribution and higher brand investments towards the existing products/new launches would help the company clock a hefty growth of above 40 per cent in the personal care segment in the coming years. The stock trades at 23.4x its FY2011E earnings and 20.4x its FY2012E EPS. Maintain buy.
— ShareKhan