Bajaj Auto
Reco Price: Rs 2,171
Target Price: Rs 2,320
Bajaj Auto’s (BAL) Q4 FY10 Ebitda margins at 22.9 per cent were better than expectations, thanks to better exports realisations (product-mix shifted in favour of three wheelers), and lower staff (due to year-end gratuity adjustments) and operating expenses (zero subvention costs for the quarter). Though some of these margin boosting factors were quarter specific, broadly margins are set to be in and around a healthy 20 per cent level (21.7 per cent for FY10) for at least next few quarters as the impact of commodity prices (save steel prices) has largely been factored in. Ebitda margins have been revised upwards by 70 bps and 50 bps to 20.6 per cent and 19.4 per cent for FY11E and FY12E, respectively. Maintain accumulate.
— Elara Securities
Gammon India
Reco Price: Rs 210
Target Price: Rs 290
Gammon India (GIL) reported revenue and net profit came in at Rs 1652.8 crore and Rs 54.8 crore higher than expectations, while Ebitda (below expectation) came in at Rs 125.2 crore. However, Oman JV recorded losses on account of some final maintenance work and higher winding up cost for shifting the establishment. The JV losses can continue during FY11E also. Margins could come lower on account of change in project mix and progress and steady state margins were revised downwards to around 9.5 per cent. Order book stands at Rs 14,500 crore. GIL currently has about Rs 1,200 crore of debt on the books. GIL is progressing well with its India Power Business and is in advanced talks with private players, expected to break first Super Critical boiler award in CY10. Maintain buy.
— Ambit Capital
