PhiLlips Carbon Black
Reco Price: Rs 191
Target Price: Rs 250
Phillips Carbon Black (PCB), leading manufacturer of carbon black, is well poised to ride the boom in the domestic tyre industry. To meet the rising demand, PCB is expanding its capacity to 410,000 tonnes in 2010-11 from 360,000 tonnes.
Additionally, it is foraying into Vietnam market by setting up a plant with the capacity of 65,000 tonnes. Sale of power generated from off gases arising from carbon black plants will be a money spinner in the near term. With revenue CAGR of 23 per cent and PAT CAGR of 21 per cent during FY10-12E, the stock is attractively valued at 4.3x FY11E EPS of Rs 51.8.
Maintain buy.
— India Infoline Research
Alembic
Reco Price: Rs 55
Target Price: Rs 74
Alembic announced the de-merger of its Pharma business as a separate company named Alembic Pharma. With this, Alembic plans to insulate its Pharma business from the high loss-making Pen-G business. The company also plans to develop its 70 acre land asset.
The brokerage believe the de-merger of the company — Alembic and Alembic Pharma — is a positive step in long-term as it unlocks value for both the businesses and paves way to rope in future investors. On sum of parts basis, Alembic’s fair value comes to Rs 74, wherein the company is assumed to continue with its loss-making API facility at Vadodara.
Maintain buy.
— Angel Securities
Provogue India
Reco Price: Rs 60
Target Price: Rs 95
Provogue India (PIL), a leading fashion brand retailing company, is among the key beneficiaries of the revival in urban consumption on the back of an overall improvement in the domestic economy that has led to a significant improvement in the same-store sales for the company.
Moreover, the aggressive expansion of PIL’s retail stores (the number of stores to increase by 50-60 per cent in the next two years) and its enhanced product range would further add to the growth momentum. PIL is poised to report a healthy earnings growth of 22.8 per cent CAGR (over FY10-12) in its core business of fashion brand retailing, which itself is valued at Rs 56 a share and another Rs 39 a share is assigned to its real estate venture.
Maintain buy.
— Sharekhan
Oil India
Reco Price: Rs 1,430
Target Price: Rs 1,500
For FY11 and FY12, Oil India has a capex plan of Rs 8,500 crore. Of this, Rs 7,300 crore is for exploration and development of its domestic and international assets.
Its balance sheet is debt-free and its FY10-end cash reserve was $1.9 billion. Management said growth would primarily be driven by mature production blocks in the north-east, gas production ramped up (along with rising gas demand in the north-east) and growth overseas (as its M&A strategy is focused on discovered and producing property).
Brokerage is maintaining their FY11/12 EPS estimates, while awaiting further clarity on the subsidy-sharing policy. With an excellent reserve-replacement ratio of over 1.5x during FY03-10, there is a potential valuation upside.
Maintain buy.
— Anand Rathi Research
