IDFC
Reco Price: Rs 128
Target Price: Rs 155
The company’s NII grew 50 per cent y-o-y on the back of strong growth in infrastructure segments (46.6 per cent y-o-y), as well as strong treasury profits, with net profit reporting 21 per cent growth to Rs 1,280 crore for FY11. Though the loan growth was slower in H1FY12, it is expected to improve in H2FY12 due to a renewed focus on renewable power projects and improved execution of road projects. In the longer term, the management remains positive on the growth outlook, and is confident of the strong guidance on doubling the loan book between FY11-FY14. The pressure on the net interest margin is likely to ease, as the banks have been raising their lending rates, thus, allowing the company to pass on the increased cost of capital. Maintain Buy.
—Karvy Stock Broking
CEAT
Reco price: Rs 109
Target price: Rs 135
Ceat has raised the prices of its products by 2–2.5 per cent across categories last week to offset the impact of rubber prices, which have increased by 10.3 per cent till date in 2011, and 30.4 per cent since June 2010. The recent price rise follows the price rises in May by an average three–four per cent. While rubber prices have cooled off from their highest levels, and have currently stabilised at Rs 210/kg, major tyre producers have increased prices in June, as they had earlier resisted from passing on the entire cost increases to the consumers. The recent increases in tyre prices will help Ceat protect its margins. Maintain Buy.
—Angel Broking
GODREJ INDUSTRIES
Reco price: Rs 209
Target price: Rs 232
Godrej Industries (GIL), a part of Godrej Group, is engaged in the businesses of manufacture and marketing of oleo-chemicals, their precursors and derivatives, bulk edible oils, estate management and investment activities. On a consolidated basis, GIL Q4FY11 revenue rose by 34 per cent y-o-y to Rs 1,404 crore and net profit grew by 42 per cent y-o-y to Rs 108 crore. The revenue growth was largely driven by a healthy growth in the estate and property development (56 per cent y-o-y) and chemical business (43 per cent y-o-y). Buy.
—Bonanza Portfolio
KSK ENERGY
Reco price: Rs 110
Target price: Rs 110
According to media reports, environment ministry has denied forest clearance to morga II (GMDC), but at the same time has recommended the allocation of another block in Chhattisgarh. GMDC has a contract to supply coal from Morga II (350 million tonnes reserves but now in ‘no go’) to KSK’s Mahanadi power plant in Chhattisgarh. However, GMDC has identified an alternative coal block, Bhalumuda, in Chhattisgarh, and has applied to the coal ministry for its allocation. Analysts believe the likelihood of an alternative coal block allocation is a positive development for KSK, as it will remove a long-pending ambiguity and overhang on the stock. Maintain hold.
—Emkay Research
