JP Associates
Reco Price: Rs 122,
Target Price: Rs 136
The cement will drive near-term earnings growth for JP Associates. The brokerage expect its cash flows to be a hit due to land payments. Jaypee Cement is targeting production of 50 million tonnes (mt). A large part of the planned cement capacity addition from 34 mt to 50 mt will be brown field, entailing competitive capital cost. The performance of its EPC business is expected to be muted; improved intake seen from real estate development, power. With cumulative real estate bookings in NCR region at Rs 12,600 crore, expect revenue booking traction and a meaningful ramp up in revenue recognition from 2010-11, as sales in Noida project cross the 30 per cent revenue recognition stage. JP is estimated to post earnings CAGR of 29 per cent over FY10-12. Maintain buy.
—Motilal Oswal Securities
Kalpataru Power & Transmission
Reco Price: Rs 204,
Target Price: Rs 240
On 13th September, Kalpataru Power (KPTL) secured three orders worth over Rs 550 crore from the Kenya Electricity Transmission Company (KETRACO) and Parbati Koldam Transmission Company. KPTL's total order book sizes up to Rs 5,200 crore. Current order book of the company stands at two times its 2009-10 net sales, giving strong revenue visibility. Strong order book flow from transmission EPC business is expected going forward. Moreover, it has a healthy mix of domestic (about 70 per cent) and overseas projects (30 per cent). It is expected to clock in EPS of Rs 15.6 for 2010-11. Maintain outperformer .
—Karvy Stock Broking
Bharti Airtel
Reco Price: Rs 359,
Target Price: Rs 479
Bharti’s robust cash generation, strong positioning in the domestic market coupled with declining competitive intensity and stabilisation of tariffs, reduction in losses from new operations (DTH/Bangladesh) and turnaround of Africa operations will support/accelerate its growth trajectory. With peak of the capex intensity already behind, Bharti will generate gigantic free cash flows between 2012-16; totaling $20bn, i.e. average $4bn per annum. HDFC Securities expects Zain (African operations) to be earnings accretive for Bharti from 2011-12 supported by relatively low cost of funding. Key risks include uncertain regulatory policies, mobile number portability and execution failure in Africa. Intiate with buy.
—HDFC Securities
CCL Products
Reco Price: Rs 266,
Target Price: Rs 740
CCL trades at just five times and 3.6 times its 2010-11 and 2011-12 expected earnings, respectively. It is expected to post incremental volume sales of 3,500 tonnes in 2010-11. Overall margins are expected to improve primarily due to the commissioning of the Switzerland facility. With world class facilities and India’s cost advantage, CCL should be able to increase its current three per cent market share. High entry barriers, low capital intensity, high profitability and low valuations make CCL an ideal re-rating candidate with the potential to trade in the 8-10 times P/E band over the next 2-3 years. Maintain buy.
—Reliance Securities
