BGR ENERGY SYSTEMS
Reco Price: Rs 697,
Target Price: Rs 831
BGR Energy Systems (BGR) plans to enter into the BTG segment soon. This will make BGR an end-to-end engineering and equipment supplier for the power sector. BGR has expertise to cater to EPC and BOP segments of power plants, which implies a substantial increase in the potential addressable market. Furthermore due to lack of fully integrated players in this segment, BGR is well placed to benefit from strong demand. BGR’s current order backlog is at Rs10500 crore, implying a coverage ratio of 3.42 times (based on FY10E revenue). Management continues to be confident regarding bagging at least one of the two EPC orders from Rajasthan SEB worth Rs 6,000-6,500 crore each. Maintain BUY.
— Reliance Securities
ARVIND
Reco Price: Rs 57
Target Price: Rs 96
By virtue of its operational scale and early investments in brands, Arvind is best positioned amongst peers to benefit from this structural shift in the industry. The contribution of higher-margin and more capital-efficient segments is increasing and analysts see return ratios settling at levels much higher than those reported in the recent past. Arvind made early investments in design, sales & distribution and branding, and today boasts of strong network relationships and an impressive bouquet of established brands developed over the last couple of years. These brands, some of which have been made private labels, also give its value retail initiative, Megamart, a strong competitive advantage over other retailers in the segment. Analysts forecast a 200bps expansion in EBITDA margin between FY10 and FY13. Initiate coverage with buy.
— Religare Institutional Research
WIPRO LTD
Reco Price: Rs 457
Target Price: Rs 500
Wipro management expects the budgets to be marginally positive but the outsourcing component is expected to rise in CY11. Also, the next budgeting cycle might see higher component of discretionary spending compared to the previous year. The company is not witnessing any pricing pressure; however they expect price increment in FY12. December quarter is on track as clients are looking to finish the allocated budgets for this year. However, the holiday season in the western countries might put some pressure on volume growth. It is expected to achieve the upper end of revenue guidance which is 3.5-5.5 per cer sequential growth in dollar terms; supported by additional 1 per cent sequential growth due to cross currency (based on current exchange rates). The attrition is slowing down and it will normalize in the next quarter. Maintain ‘BUY’ .
— Pinc Research
