BHEL
Reco price: Rs 289;
Target price: NA
BHEL has bagged an order worth Rs 774 crore from ONGC. The company will supply six onshore drilling rigs to ONGC. Various problems on the business front are coming to the fore for BHEL – including dismal order intake, no signs of let-up in competition (domestic and international) and order book growth under threat (nine months of FY12 revenue exceeded nine months FY12 order inflow) – all of which raised serious concerns over the company’s long-term growth. Although analysts believe that on the valuation front the stock is undemanding at a Price to Earnings multiple of less than 11 times its FY13 estimated earnings, earnings would face severe strain going forward, given the structural issues. Maintain sell.
Angel Broking
CUMMINS INDIA
Reco price: Rs 464;
Target price: Rs 510
Cummins Inc targets a revenue of $7 billion from India business by 2016 from $2.3 billion in 2011 (CAGR of 25 per cent over CY11/16).Cummins is trading at 19 times FY13 earnings. Analysts believe, given the strong franchisees and product profile, the company will be the biggest beneficiary of an upturn in the capex cycle. Maintain buy.
Prabhudas Lilladhar
SOBHA DEVELOPERS
Reco price: Rs 258;
Target price: Rs 353
In Q4, Sobha has launched two projects in Chennai and is on track to launch another residential project in Bangalore. With these, Sobha will have launched 11 million sq ft of residential projects in the last six quarters and is in the process of launching eight million sq ft in FY13. These projects provide sales visibility of Rs 7,800 crore. Analysts expect Sobha to pre-sell residential real estate of Rs 1,650-1,700 crore in FY12, compared to Rs 1,120 crore in FY11. This growth of more than 45 per cent year-on-year (y-o-y) is in contrast to the declines seen at most developers in FY12. Maintain Buy.
Goldman Sachs