| There has been a shift in the bargaining power in favour of large processed fabric manufacturers while branded retailing has recorded high growth. |
| Moreover, there has been improvement in RoE. The report adds that composite mills are back in favour, due to regulatory changes. Value of surplus land could be the icing on the cake. The stock trades at 9.3x and 6.5x its FY07E and FY08E EPS, respectively. |
| It is expected to get re-rated as earnings grow and the shift in product mix gathers traction. A capex of Rs 814 crore would drive revenue growth of 34 per cent CAGR over FY06-08. |
| Responding to favourable regulatory changes for organised and composite mills, the company has embarked on large capacity expansion. |
| NTPC: Big capex plans |
| Brics PCG recommends a "buy" on NTPC. The report states NTPC is a national power generation company, supplying electricity all across India. |
| The company has an installed capacity of 24,249 MW (FY05) and demonstrates high capacity utilisation. It has built up a diversified generation portfolio with projects spread across the country. |
| It has put in place aggressive capex plans under both, the tenth (FY02-FY07) and eleventh (FY08-FY12) five year plans. This would utilise its excess cash and bond funds for power generation projects. |
| It has forayed into distribution ventures through privatisation of existing networks and by setting up parallel networks for evacuation from its stations. The report adds the company's earnings are higher than reported. |
| Britannia: Margins under pressure |
| Citigroup Equity Research has downgraded its rating on Britannia Industries to "sell". The report does not see any near-term triggers that can raise the stock price. |
| Meanwhile, cost pressures are rising with sharp increases in the prices of key raw materials, such as wheat and sugar. |
| While the improvement in product mix would mitigate the cost pressures to some extent, overall report expects margins to remain under pressure. |
| The company's closest competitor, Parle, has upped the ante through a combination of aggressive advertising push and new products. ITC is also steadily emerging as a strong number three player. |
| While the growth in the branded bakery segment would support the presence of three players, Britannia would have to work harder to sustain its market share. |
| The report finds a further re-rating unlikely for the stock price, which is up 109 per cent over the last 12 months and is currently trading at 26 per cent premium to the Sensex. The operating parameters, going forward, are unfavorable for the company. |
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