Indian Hotels
Reco Price: Rs 104,
Target Price: Rs 111
With the sustenance of the strong growth in the foreign tourist arrivals and the likely improvement in the corporate and domestic leisure travel, expect Indian Hotels (IHCL) occupancy ratio to stand at approximately 69 per cent in the first quarter of FY11.
Also, expect an increase of about 11 per cent y-o-y in the average room rates (ARR) during the quarter.
The improvement in occupancies and higher ARRs would result in a strong improvement in the operating profit margins (OPMs), to 22.5 per cent in the first quarter of FY11.
Consequently, expect the company to report adjusted profit after tax of Rs 16.5 crore in the first quarter of FY11 as against a loss of Rs17.6 crore in the first quarter of FY10. The stock trades at 19.1x its FY12E (consolidated) earnings.
Maintain buy.
— Sharekhan
CESC
Reco Price: Rs 380,
Target Price: Rs 467
At the operational front, Spencer’s revenues per sq ft have improved by Rs 100 to Rs 795 in FY10 The current run rate is Rs 850-860, and the management is targeting Rs 900 for FY11 and Rs 1,000 in FY12.
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This is achievable as the company is taking a host of restructuring measures and also churning product offerings by focusing more on high-margin products and services. Spencer’s has an outstanding debt of Rs 400 crore, almost similar to FY09 levels.
At 1x enterprise value per sales, Spencer’s is worth around Rs 50 a share for CESC. The sum of parts valuation attaches a value of Rs 467 a share comprises Rs 410 for regulated power and Dhariwal project.
Maintain buy.
— Edelweiss Securities
Godrej Properties
Reco Price: Rs 633,
Target Price: NA
Godrej Properties (GPL) has forayed into the NCR by signing a development agreement with Frontier Home Development for a 9-acre plot in Gurgaon’s Sector-80 with a saleable area of 1.05 million sq ft (msf).
This pact is in keeping with GPL’s trusted business model of joint development, which allows the company to drive capital efficiency by stripping away land investment cost.
The Gurgaon project is expected to add Rs 5 a share to net asset value of Rs 520 for the company. Over the last fortnight, the GPL stock has appreciated 20 per cent with the announcement of a new deal. Maintain hold.
— Religare Capital Markets