RESEARCH CALLS: JK Lakshmi Cement

India Broking recommends a "buy" on JK Lakshmi Cement. The report states that the company, previously known as JK Corporation, has turned around over the couple of quarters on the back of improving operating margins and cost reduction measures taken by the management.

Thus, it recorded a jump of 29 per cent in topline and a robust growth in bottomline on a y-o-y basis, complemented by robust cement demand and higher price realisation in the northern region, which is expected to grow at CAGR of eight per cent over FY06-08.

Expansion plans are expected to drive volumes for the company, which is operating at 100 per cent plus capacity and is aggressively undergoing a capacity expansion to enhance its capacity from 2.8 MT to three MT by December 2006 and 3.3 MTPA by December 2007.

The said expansion is estimated to cost around Rs 40 crore, which would be entirely funded through internal accruals. With the continuous cost reduction measures in packaging materials and power cost along with increase in sales volumes there has been an improvement in operating margins.

Kajaria Ceramics

Emkay Research has given accumulate rating to this stock at the current price of Rs 41.90. KCL is expanding capacity by 8.4 mn sq. mts taking the total capacity to 26.4 mn sq mts at an estimated cost of Rs 1.23 bn.

KCL also intends to raise around $ 30 mn through FCCB/GDR issue to fund further capacity addition, which is likely to come on stream by Sept 07.

Subsequent quarter and FY07 will witness the benefits from the current expansion and further expansion of 8.4mn sq mts in Sept 06. FY07 revenues are expected to rise 32 per cent to Rs 4125 mn, PAT to increase 27 per cent to Rs 355mn.

Areva T&D India

India Broking, initiating coverage on Areva T&D India, recommends a "buy". The report states that the company is capitalising on the immense opportunities thrown by the domestic power and infrastructure growth.

Areva is on the restructuring way and now focuses to be a leading player in the Indian transmission and distribution market. In April 2005, the group acquired control over Alstom India after it entered into an agreement with Alstom Group by taking 66.35 per cent stake in the company at Rs 30.45 per share.

The Areva Group is one of the world leaders in nuclear power and power T&D equipments. It has worldwide presence and operates in 100 countries.

It has acquired the T&D business of Alstom to strengthen its strategic position in the energy sector. Civilian nuclear pact signed between US and India could benefit Areva as biggest builder of nuclear reactors.

Shriram Transport Finance

Motilal Oswal Securities recommends a 'buy' on Shriram Transport Finance. The report, initiating coverage on the stock, states that the company is a play on high-yield retail assets.

The company has a leadership position in used truck financing, which offers a high growth opportunity, and it will be sufficiently capitalised for growth, after the Newbridge Capital deal. With the opportunity for this business increasing, the company should be a key beneficiary.

High yields result in superior return ratios for the company. The report expects the company to maintain its superior return ratios and high margins, which should ensure premium valuations for the stock.

It also expects the company to consolidate its leadership by weaning away market share from smaller players. Moreover, the Newbridge deal should enhance its creditworthiness.