Amtek India: Expansion binge

ANALYSTS' CORNER

Kotak Securities, in its results update, maintains its "buy" recommendation. The report states that the company has posted encouraging Q2 FY06 standalone numbers in terms of topline, EBIDTA and bottomline growth.

Net revenues grew by 45 per cent y-o-y, with EBIDTA up by 53 per cent and PAT growing by 17 per cent, respectively.

The company's expansion plans to increase its existing casting capacity at Bhiwadi to 70,000 tpa from the existing 30,000 tpa, estimated to cost Rs 45 crore, are on track and are expected to completed by March 2006.

Meanwhile, the company's proposed plan of SigmaCast's Line shifting plans to its existing unit based at Bhiwadi are also progressing as per schedule and the first two lines are expected to get shifted by December 2005 end. The other two lines are expected to be shifted by June and December 2006 respectively.

Tata Motors: Volumes driver

IDBI Capital recommends a "buy" on Tata Motors. The report states that the revenues (net of excise) at Rs 5040 crore were up 16 per cent y-o-y, compared to Rs 4360 crore in the corresponding previous period. PAT at Rs 460.2 crore was up 45.5 per cent.

Operating margins expanded by 170 bps. For FY06 the report estimates the company to post PAT of Rs 1507.4 crore, 24 per cent growth.

The surge in volume sales has been the growth driver for Tata Motors. The commercial vehicles sales at 56,077 units were up 10 per cent compared to 50,908 units in corresponding previous period. Passenger vehicles sales grew by 10 per cent at 34,033 units.

Utility vehicles sales witnessed a 15 per cent increase at 9,336 units for Q3 FY06. The company has registered an impressive growth in exports for the third quarter. The exports at 11,782 units were up 35 per cent.

Jaiprakash Associates: Adding capacity

Citigroup Research recommends a "buy" on Jaiprakash Associates. The report states that the company successfully completed a euro 165 million FCCB issue.

It has plans to ramp up cement capacity to 15 million tonne from seven million tonne and a JV for coal mining and setting up 1000 MW of coal-based capacity in Madhya Pradesh.

This expansion would be executed through the creation of new capacity/enhancement of existing capacity/or acquisition of capacity. This would make it the third largest player in India after the AV Birla Group and Holcim.

The report puts EV/tonne of $ 100 for cement and P/BV of 2.0x for Baspa II and Vishnuprayag. Its construction business is expected to grow at 10 per cent CAGR over FY05-08E, while cement revenues are expected to grow at 29 per cent CAGR.

Cement operating margins are set to expand 350-500 bps over the period, while consolidated fully-diluted EPS is expected to grow at 37 per cent CAGR.