DB CORP
Reco Price: Rs 273,
Target Price: Rs 320
DB Corp (DBC) enjoys leadership in most existing markets with a readership base of 13.3 million, which is the second highest in India. Second, its revenue mix is well spread among four key geographies, unlike peers, which are concentrated in one or two specific states. Consolidation in current markets and entry into high growth markets like Bihar and Jharkhand, which have a low media penetration, will drive future growth in circulation and advertisement revenue. DBC ‘s advertisement revenue has grown at a compounded rate of 22 per cent over FY06-FY10, backed by improving economic scenario and the company ‘s focus on retail advertisers, which is expected to sustain at these levels. DBC ‘s radio business My FM turned Ebitda positive in FY10 and is expected to contribute positively to earnings from FY11. Maintain buy.
—Reliance Securities
CMC
Reco Price: Rs 2,376,
Target Price: NA
For Q2 FY11, CMC ‘s consolidated revenues grew by 10.6 per cent quarter-on-quarter. The incremental revenue growth was largely driven by the customer services segment, which clocked a sequential growth of 24 per cent. On the other hand, the system integration business grew by 9.6 per cent. Ebitda margins declined by 270 basis points sequentially, on account of wage hikes effective during the quarter and staff costs rising by 14 per cent. The net profit for the quarter was down 6 per cent. Management commentary on the future outlook is quite optimistic. The brokerage believes significant business traction will continue with CMC ‘s renewed business focus on high value business segments coupled with “joint-go-to-market “ strategy with Tata Consultancy Services.
—Sharekhan
IndusInd Bank
Reco Price: Rs 275,
Target Price: NA
IndusInd bank has again delivered a strong performance led by traction in net interest income. The bank has consistently delivered across all metrics - evident from higher margins, expanding CASA base, robust credit growth, strong fee income and healthy asset quality. The management is now working to accelerate loan growth (about 35 per cent CAGR over FY10-13) and grow profitably. Driven by a sound business model and significantly underutilised franchise, the brokerage expects IndusInd to deliver 43 per cent earnings CAGR over FY10-13. Despite the recent run-up in the stock price, it expects further upside driven primarily by return on asset expansion (about 35 basis points over FY10-13) and strong asset growth. At 2.9 times its 2011-12 estimated adjusted book value, the brokerage reiterates outperformer .
—IDFC Securities
Jasch Industries
Current price: Rs 14.6,
Fair value: Rs 14.2
Crisil Equities has assigned a fundamental grade of 2/5 to Jasch Industries, indicating Rs moderate ‘ fundamentals. The company ‘s presence in the synthetic leather industry catering to footwear manufacturers positions it well to benefit from the secular growth in domestic footwear demand. Jasch is undertaking plant modernisation, which is expected to improve margins over the next two years. However, our grade is moderated by the fact that this industry is unorganised which limits the bargaining power of the players. The industry is dependent on the customs duty to maintain profitability. Crisil Equities expects Jasch ‘s EPS to increase from Rs 1.6 in FY10 to Rs 2.2 in FY12. It has used discounted cash flow method to value Jasch and arrived at a fair value of Rs 14.2 per share.
—Crisil Equities
