NTPC
Reco price: Rs 168
Target price: Rs 171
NTPC is the safest bet in the power utility space, given its dominant position in electricity generation, better fuel supply arrangements (FSAs), robust power purchase agreements (PPAs) and higher dividend yield. Payments from NTPC’s customers, predominantly SEBs, are supported the RBI. This gives it an extra edge. However, execution issues, lower plant availability factor (PAF) due to domestic coal deficit and falling plant load factor (PLF) led by SEBs backing down will remain key concerns. Analysts believe the company will sustain growth, led by its regulated business model and reasonable growth in capacity addition. Analysts expect nine per cent CAGR in revenues and muted CAGR in earnings over FY11-FY14. Market performer.
IIFL
MARICO
Reco price: Rs 170
Target price: NA
Marico plans to sell 4.8 per cent stake to Singapore’s sovereign wealth fund, GIC, and Baring Private Equity India to raise Rs 500 crore. Indivest Pte. Ltd., an investment arm of GIC, will invest Rs 375 crore to subscribe to over 2.2 crore shares, while Baring India Private Equity Fund will invest Rs 125 crore to subscribe to over 0.73 crore shares on a preferential basis, valuing each share of the company at Rs 170. Proceeds of the preferential issue will primarily fund the acquisition of Paras Pharmaceuticals, as well as other capital expenditure and is subject to shareholders’ approval in the EGM scheduled for May 2. The stock trades at a price to earnings multiple of 20.8 times FY2014. Maintain neutral.
Angel Broking
ING VYSYA BANK
Reco price: Rs 355
Target price: Rs 433
Analysts expect ING Vysya Bank (IVB)’s profitability to scale up on the back of improving operating efficiency, due to its expanding branch franchise in the metro/urban areas of northern and western parts of India. Advances grew at 22 per cent year-on-year against the industry average of 16 per cent in the first nine months of FY12. Given the bank’s adequate capital base, analysts believe IVB would continue to grow its loan book above the industry average. It would also be able to leverage its ING group alliance to get large corporate lending, along with its legacy SME relationship base with the Vysya community for business banking. Overall, analysts believe that with improving profitability, high CASA base, stable asset quality and an easing interest rate scenario, the bank is poised for a re-rating. Initiate coverage with buy.
Reliance Securities
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MOIL
Reco price: Rs 254
Target price: Rs 350
MOIL stock quotes at a price/book value (P/BV) of two times, in spite of huge cash in the books. While the median P/BV of the mining industry across the globe is around 2.8, most global counterparts are highly leveraged companies. In terms of EV/Ebitda, MOIL looks undervalued. Analysts believe it is one of the gems in the mining sector, with a high return on equity, zero debt and strong reserves, which provide visibility over 20 years. Analysts strongly believe the stock is ready for a re-rating in the near future. Buy.
Anand Rathi Research