ITC
Reco price: Rs 271
Target price: Rs 305
In its note, the brokerage said ITC’s sales growth for the quarter ended March 2010 was about six per cent ahead of its expectation, whereas operating and net earnings performance was in line. Resumption of active trading in Soya came as a positive surprise, which boosted agri business growth. Sales growth in the cigarette business was sustained, though margin trends were below expectations. Other FMCG businesses significantly surprised on both sales and net profit fronts. The hotel business performance has shown a turnaround and is expected to do well. Growth momentum in cigarette business should sustain well around long-term averages of three-four per cent. Non-cigarette business is expected to deliver sales growth of 16 per cent. The brokerage raised earnings estimate and target price to Rs 305 (implies forward P/E multiple of 20 times of FY2010-11). Maintain buy.
— Ambit Capital
Indraprastha Gas
Reco price: Rs 221
Target price: Rs 267
During the quarter ended March 2010, the company reported 12.1 per cent growth in CNG volumes to 135.7 million kg backed by strong car conversion rate in Delhi. PNG volumes witnessed a stellar jump of 62.3 per cent, led by network expansion and demand from industrial consumers. Backed by volume growth and higher realisation, the company reported 27.4 per cent growth in revenue. Further volume growth should be higher as about 30 CNG stations of the company are in the last leg of commissioning. However, the recent price hike in APM gas prices will dampen profitability till the company passes on the additional burden, which the management is confident of. At recommended price, stock trades at 9.9 times FY11-12 earnings. Maintain buy.
— Prabhudas Lilladher
HSIL
Reco price: Rs 84
Target price: Rs 140
Led by higher operating margins and lower tax and interest, the company reported higher profits for FY2010. The sanitary ware division’s revenue grew 32 per cent, helped by a better product mix and higher realisations. Also, the margins improved due to higher capacity utilisation. Container glass division saw 60 per cent growth in revenue during the quarter ended March 2010, led by capacity expansion from 953 million to 1,643 million pieces per annum. Also, the division witnessed higher market share in South India at 70 per cent against 62 per cent earlier. In the March quarter, the company acquired Havells' bathroom fittings and accessories brand 'Crabtree' having the potential to generate revenue of Rs 60 crore. Reiterate buy.
— Anand Rathi Financial Services
Motherson Sumi
Reco price: Rs 137
Target price: Rs 185
Motherson Sumi’s (MSSL) Q4FY10 consolidated results were above expectations, primarily driven by higher inventory accretion (Rs 38 crore, or 1.9 per cent, of sales). SMR surprised positively with Ebitda margins of 8.7 per cent (up 220 bps quarter-on-quarter) and lower-than-expected restructuring costs. Lower-than-expected consolidated debt is another positive surprise. Currently, estimates remain unchanged for FY11 and FY12 respectively. The recent currency fluctuations pose the biggest threat to estimates, arising from translation. Expect MSSL to report an earning per share of Rs 9.5 and Rs 12.2 for FY11 and FY12, respectively. The stock is trading at 15.1 times and EV/Ebitda of 7.4 times its FY12 estimates. Maintain buy.
— Emkay Global
