CAIRN INDIA
Reco price: Rs 357
Target price: NA
Cairn India’s 100 per cent subsidiary, Cairn Energy India (Cairn Energy), has notified the Management Committee of an oil discovery in the Nagayalanka-SE-1 well in the onshore block KG-ONN-2003/1 in the Krishna-Godavari Basin. Cairn Energy is the operator in the block with 24 per cent stake, while Cairn India and ONGC hold 25 per cent and 51 per cent stake, respectively, in the block. A gross 57 meters hydrocarbon column has been interpreted from log data, core and testing data to be the oil-bearing block. However, the company said, further appraisal will be required to establish the commerciality of the Nagayalanka-SE discovery. Analysts await further clarity on the commercial feasibility of the block. Maintain neutral.
Angel Broking
BHEL
Reco price: Rs 260
Target price: Rs 266
BHEL’s provisional net profit for FY’12 and Q4’FY12 is ahead of analysts’ and Street expectations, led by higher operating margins, while revenue was below expectations. Importantly, order inflow for the year plunged 63 per cent year-on-year (yoy)to Rs 22,000 crore. Order book stands at Rs 1.35 trillion, down 18 per cent yoy. BHEL has withdrawn FPO papers filed with the capital markets regulator for a share sale.The stake sale, which had been approved by the Cabinet in 2011, was expected to raise about $1 billion. Analysts do not anticipate any revival in the sector over the near term given environment clearance, land and coal linkage issues. Maintain hold.
Edelweiss Securities
SUZLON
Reco price: Rs 26
Target price: NA
The IT department has disallowed accelerated depreciation to wind power from FY13 onwards. Until March 31, 2012, wind power could avail of an accelerated depreciation of 80 per cent in the first year of operation. This will now get reduced to 35 per cent in the first year of operation. The generation-based incentive for wind mills though, is likely to continue. Consequently, in FY13, analysts expect Suzlon’s order intake to decline by 10-15 per cent to 1.9 Gw. This is likely to impact FY13 consolidated Ebitda estimates by 20 per cent. With IPPs becoming a bigger pie of installations, the funding to the wind sector has also seen a quantum jump. Maintain buy.
Ambit Capital
MINDTREE
Reco price: Rs 490
Target price: Rs 511
MindTree Ltd (MTL) primarily earns revenues from product engineering and IT services. MTL predominantly provides application development , maintenance and testing and infrastructure management services. Renewed management focus on growing IT services’ revenues and operating margin expansion could abate investor concerns, accelerated by events, such as foray into the handsets market and exit of the founder chairman. Analysts expect revenues/net profit to grow at 20.2 per cent/3.7 per cent compounded rate during FY10-FY13, coupled with a 122 basis points expansion in Ebitda margins to 16 per cent in FY13. Though valuations appear reasonable, higher contribution of discretionary services portfolio remains a concern. Noticeably, research and development outsourcing services are late cyclical and generally lag IT services in recovery. Initiate coverage with hold.
ICICI Securities
