STATE BANK OF INDIA
Reco price/date: Rs 1,831/September 6
Current/target price: Rs 1,853/Rs 2,270
State bank of India (SBI) has cut its retail term deposit rates by 50-100 basis points across all maturities except 5 years and above. The new rates will be effective from September 07, 2012. The downward revision is expected to push up the margins of the bank which witnessed significant decline in the June 2012 quarter on account of asset quality pressures. Analysts expect the calculated Net interest margin of the bank to sustain at 3.5 per cent levels for both FY’13 and FY’14. At the current market price, the stock is trading at 1.2 times (including subsidiaries) FY’14 estimated adjusted book value. Buy.
Angel Broking
TATA MOTORS
Reco price/date: Rs 229/September 6
Current/target price: Rs 233/Rs 261
JLR’s retail sales volume in the US increased by 32 per cent y-y in August 12. After four months of weak growth, volumes in August 12 were much improved. Note that August 12 had one more selling day as compared to Aug-11, and analysts estimate that this benefitted growth by around 4 per cent. Analysts are building in flat volumes for models ex-Evoque in the US for JLR in FY13, compared to around a 6 per cent y-y decline in volumes thus far. Maintain Neutral.
Nomura Equity Research
ONMOBILE GLOBAL
Reco price/date: Rs 35/September 6
Current/target price: Rs 38/Rs 60
Analysts believe the stock price decline year-to-date more than factors in the change in management and the weakness in the domestic business. Cash is about 38 per cent of market cap and analysts find valuation cheap as overall business continues to grow. Morgan Stanley’s EPS estimates reflect lower domestic revenues and higher taxes arising from withholding taxes in foreign countries. However, its Ebitda and cash profit forecasts for F13-14 are 18 per cent and 26 per cent lower. Maintain Overweight.
Morgan Stanley Research
KNR CONSTRUCTIONS
Reco price/date: Rs 118/August 30
Current price/fair value: Rs 105/Rs 148
KNR’s Q1’FY13 revenues were below CRISIL Research’s expectations. Revenues declined by 26 per cent y-o-y as work on some of the projects has not yet started. Ebitda margin declined by 86 basis points y-o-y to 16.1 per cent. Given lower revenue, net profit declined by 39 per cent y-o-y. Order intake during the quarter was sluggish. Its current order book is Rs 2,880 crore (3.3 times FY12 revenue). Given the delays in execution of key projects, CRISIL Research has lowered its revenue estimate for FY13 to Rs 890 crore. Earnings estimates are lowered by 25 per cent to Rs 41 crore for FY13. Fair value is revised to Rs 148 from Rs 158.
CRISIL Research
