Tata Motors
Reco price: Rs 748
Target price: Rs 907
Tata Motors (TML) delivered a good performance during the fourth quarter of 2009-10 on a consolidated basis. The company reported net sales of Rs 28,978 crore (Rs 15,696 crore for the March quarter, up 84.6 per cent year-on-year). Sequentially, the company registered a 10.6 per cent jump in net sales. This was mainly due to higher other income and a turnaround performance by the company’s key subsidiaries. Aggressive cost-cutting measures adopted in domestic and overseas operations resulted in a good top-line performance and an improved operating leverage. The company reported net profit of Rs 2,228 crore on improved performance by Jaguar and higher Other Income on sale of investments. Maintain buy.
— Angel Securities
HPCL
Reco price: Rs 339
Target price: NA
The brokerage increased the estimate of the government’s share of cooking fuel underrecoveries to 70 per cent for both FY11 and FY12 from 66 per cent earlier. Further, assume petrol/diesel underrecoveries to be borne by upstream companies and by a partial pass-on of prices to consumers. Maintain the FY11E (estimated) and FY12E earnings per share. There are expectations of possible de-control of gasoline prices, which will be decided on June 7. However, the constrained fiscal situation leaves only one option for the government — a complete pass-on of prices to consumers. However, this may be difficult, given the high inflation and political pressure. Hence, oil marketing companies may offer more short-term trading opportunities than long-term investment options. At Rs 339, HPCL is trading at 6.3x and 4.9x FY11E and FY12E enterprise value/earnings before interest depreciation and tax, respectively. Maintain hold.
— Edelweiss Securities
