BPCL
Reco price/date: Rs 728/May 15;
Current/Target price: Rs 733/Rs 816
Bharat Petroleum Corp. Ltd (BPCL) holds 10 per cent interest in the Block 1 oil field in Mozambique. In February 2012, Royal Dutch Shell Plc had made a $1.6 billion bid for Cove Energy, which holds 8.5 per cent interest in the block. In April 2012 Shell raised its bid for Cove Energy to $1.8 billion. Analysts are valuing BPCL’s interest in Block 1 based on Shell’s bid for Cove Energy. Bank of America Merrill Lynch has, therefore, raised the value of BPCL’s 10 per cent stake in Block 1 from Rs 249/share ($1.8 billion) to Rs 294/share ($2.1 billion). However, the market value of BPCL’s investments in Indraprastha Gas and Petronet LNG is down by Rs 33/share. Maintain Buy.
Bank of America Merrill Lynch
Ashok Leyland
Reco price/date: Rs 26/May 16;
Current/Target price: Rs 25/Rs 32
Ashok Leyland Ltd’s March quarter revenue grew 13 per cent year-on-year (y-o-y) to Rs 4,310 crore, mainly led by four per cent volume growth and improved spare parts sales. Led by lower margin, net profit declined 10 per cent y-o-y to Rs 270 crore. To factor in the poor operating performance, analysts have lowered their FY13-FY14 earnings estimates by five per cent each. Analysts expect margin improvement led by a revival in volumes, pricing action and production ramp-up at its Pantnagar facility in Uttarakhand. At 8.9 times FY13 estimated earnings and 6.3 times enterprise value/Ebitda (earnings before interest, taxes, depreciation, and amortisation), the stock appears attractively valued. Maintain Outperform.
Standard Chartered Equity Research
Tulip Telecom
Reco price/date: Rs 79/May 16;
Current/Target price: Rs 76/Rs 80
Tulip Telecom Ltd’s operating performance for the quarter ended March 2012 was disappointing. After indicating a slowdown in sales growth in the third quarter last fiscal, the company is now facing margin pressures. The high debt has led to increase in interest costs, which combined with lower margins is leading to an earnings cut of 52 per cent for the year ending September 2013. Now, with rising strain on the business, despite its cheap valuations, Edelweiss has downgraded the stock to hold.
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Edelweiss Securities
Sagar Cements
Reco price/date: Rs 170/May 16;
Current/Target price: Rs 170/Rs 211
On lower-than-expected realizations and stock adjustments, Sagar Cements Ltd’s March quarter profit plunged 88 per cent y-o-y. Lower raw material and fuel costs were offset by higher freight and other expenditures. However, the expansion of Sagar’s joint venture plant with French firm Vicat SA is on track and will be commissioned in Q2’FY13. Key downside risks for the stock are price correction and sluggish volumes in the South. Maintain Buy.
Anand Rathi Research
Note:Reco price/date refers to the price and date at which the recommendation was made. Target price refers to the fair value of the stock as per the said brokerage