BHARTI AIRTEL
Reco price/date: Rs 330/Jan 9;
Current/Target price: Rs 332/ Rs 385
After witnessing a fall in its revenue market share (RMS) throughout FY12, Bharti Airtel gained RMS substantially in the last two quarters to reach 31.2 per cent in Q2FY13.
Though the gain in RMS has come at the cost of declining margins, analysts expect the situation to improve, going forward, due to declining competitive intensity in the industry, represented to some extent by declining commission costs & discount vouchers in Q2FY13 and declining subscriber additions in November.
The company has been witnessing significant growth in its data, 3G volumes recently, which would provide further impetus to growth. Also, regulatory uncertainties in the sector are nearing an end with the next auctions to be held by March 2013. Maintain Buy.
ICICI Securities
AXIS BANK
Reco price/date: Rs 1,360/ Jan 9;
Current/Target price: Rs 1,346/Rs 1,587
Axis Bank has increased the interest rates on deposits of size Rs 1 crore to less than Rs 5 crore for maturity between 18 months to less than 5 years by 25 basis points (bps) to 9.25 per cent. Recently Dena Bank, Federal Bank and Bank of India had also revised its term deposit rates by 25-35 bps for maturity bucket of 1-3years.
Increase in deposit rates, is partly due to asset liability mismatch and due to moderating deposit growth. Even going ahead, deposit growth can be expected to remain moderate as real interest rates continue to remain negative. The stock is trading at 1.9 times FY14 estimated adjusted book value. Buy.
Angel Broking
NATIONAL HYDROELECTRIC POWER CORPORATION
Reco price/date: Rs 25/ Jan 9;
Current/Target price: Rs 25/Rs 23
Led by execution delays at each of its projects under construction and higher implementation time required for hydro projects, 30 per cent of National Hydroelectric Power Corporation (NHPC)’s FY13 balance sheet would be represented by surplus cash that earns just eight per cent RoE and 18.5 per cent would be represented by CWIP that earns no RoE; depressing its overall RoE at about eight per cent.
Thus, while the stock appears cheap at 1 times FY14 estimated book value, analysts highlight that its RoE would continue to remain depressed at about eight per cent for the next several years and they see nine per cent downside from current market valuation. Downgrade to Underperform.
Credit Suisse
PERSISTENT SYSTEMS
Reco price/date: Rs 528/Jan 9;
Current/Target price: Rs 533/Rs 567
Persistent’s early focus on emerging technologies, partner-led sales model and product focus helped it to better maneuver waves of change in technology spending such as shorter project cycles, deflation in services spending from cloud computing, and greater role of functional units.
This addresses analysts’ earlier concerns on the sustainability of its IP-led business, which protects long-term margins from slowing demand for traditional product engineering services. Analysts expect Persistent’s IP-led revenues to grow faster than the company average underpinned by product takeovers and its own solutions. Ambit has cut its growth estimates from the traditional product engineering business and increased its longer-term margin assumptions to reflect the higher contribution from the IP-led business. . Maintain Buy.
Ambit Capital
GLENMARK PHARMA
Reco price/date: Rs 520/Dec 24;
Current/Target price: Rs 519/Rs 600
Glenmark Pharmaceuticals (Glenmark Pharma) has entered into an agreement with Forest Laboratories Inc (Forest Labs) to develop novel mPGES-1 inhibitors to treat chronic inflammatory conditions, including pain. Under the terms of agreement, Forest Labs will make a $6-million up-front payment and provide an additional $3 million to support the next phase of work. Analysts expect strong performance in branded generics business to continue. Maintain 'Buy'.
Sharekhan
