Grasim Industries
Reco price: Rs 2,645
Target price: NA
After getting the court approvals, May 28 has been fixed as the record date for determining the entitlement of Grasim shareholders to receive shares of Samruddhi. May 26 onwards, Grasim Industries (Grasim) stock will start trading ex-Samruddhi. Samruddhi is likely to get listed in June. Currently, the Grasim stock value includes value of the company’s entire cement capacity. Post the demerger, the stock value will include only 65 per cent value of the standalone cement business. For the balance portion, Grasim shareholders will be directly be given Samruddhi shares (in the 1:1 ratio). At $110/tonne, Grasim's fair value stands at Rs 2,318 for the Grasim stock after the demerger and Rs 490 for each share of Samruddhi. Hence, overall valuation for a Grasim shareholder works out to Rs 2,800/share. Maintain hold.
— Edelweiss Securities
Gammon India
Reco price: Rs 190
Target price: Rs 290
The management has guided robust sales of Rs 6,300-6,500 crore for the year 2010-11, which is 14 per cent ahead of estimates. The sales will be achieved from existing order book without taking into account new order intake. The company expects to maintain its operating margins at 9-9.5 per cent. The company has also guided for a total order intake for the year 2010-11 at Rs 10,000-12,000 crore — higher than the estimates of Rs 8,800 crore and higher than financial year 2010 intake of Rs 6,100 crore. The company is expecting to double order intake from the roads segment. At the recommended price, the stock is trading 12.8 times financial year 2010-11 estimated earnings. Retain buy.
— Ambit Capital
TV18
Reco price: Rs 77
Target price: Rs 102
TV18 suffered heavily as the ad market for business news space shrank H2FY09 (second half of 2008-09) onwards, while rising operating costs, due to many onetime expenses, crippled operating performance. Further, debt-funded growth accentuated negative operating leverage, resulting in losses at both standalone as well as consolidated levels in FY09 and H1FY10. The company has taken multiple measures to control costs, the effect of which can be seen in the first nine months of 2009-10 with costs dipping 20-30 per cent across all businesses. Expect TV18 to report an earnings before interest, taxes, depreciation and amortisation (Ebitda) of Rs 75 crore at standalone level in FY12E, helped by a top line compounded annual growth rate (CAGR) of 12 per cent and operating expenses growth of six per cent during FY10E-FY12E. Maintain buy.
— Elara Capital
Reliance Infrastructure
Reco price: Rs 996
Target price: Rs 1,079
Reliance Infrastructure (R-Infra) has reported standalone revenue growth of 9.7 per cent year-on-year (y-o-y) at Rs 2,600 crore for Q4FY10 against estimates of Rs 3,400 crore. Sales were down also on account of lower-than-expected sales in engineering, procurement and construction (EPC) and the Mumbai distribution business. Standalone profit after tax (PAT) declined 27.5 per cent y-o-y to Rs 250 crore. The PAT was also lower on account of Rs 190 crore the company lost on account of not effecting a tariff hike in Mumbai circle. For FY10, the company clocked sales of Rs10,000 crore, growth of 1.6 per cent y-o-y and PAT of Rs 1150 crore — just 1.1 per cent higher y-o-y. R-Infra has Rs 8,850 crore as cash and cash equivalents. Maintain accumulate.
— Prabhudas Lilladher
