Analysts' corner: Allahabad Bank

Angel Broking, in its report on the banking sector, recommends a 'buy' on Allahabad Bank. The report states that the bank has witnessed a smart turnaround in the past two years, especially in cleaning up its balance sheet and getting back on growth track.

It has remarkably tackled the problem of sticky assets, which had virtually eroded its net worth. It resorted to accelerated provisioning, laid emphasis on recoveries, curtailed incremental slippages and managed to lower its NPA ratio from 12.24 per cent in FY 2000 to 0.83 per cent in December 2005.

It is now gearing up to optimally utilise its widespread branch network to ramp up its business volumes, predominantly its credit portfolio, which is relatively lower than that of other banks having a similar geographic presence. The bank is one of the oldest public sector banks with experience of around 140 years.

KEC International

Brics PCG Research recommends a 'buy' on KEC International. The company has reported outstanding numbers for Q3 FY06, surpassing expectations. Given the exceptional growth in Q3, the report has made an upward revision in its FY06E sales and profitability estimates.

The company saw a sales growth of 69.4 per cent in Q3. EBITDA margins ended lower at 9.6 per cent. The report has revised its sales estimates to Rs 1770 crore in FY06E, Rs 2250 crore in FY07E and Rs 2600 crore in FY08E.

The reduction is margins in Q3 is in line with expectations, as it witnessed unusually high figures last year on execution of certain profitable export projects during this period.

The company has given on record the effects of the subdivision of its businesses into two companies "" KEC International and KEC Infrastructure.

Samtex Fashions

Brics PCG Research, in its results update, recommends a 'buy' on Samtex Fashions. The company's net revenue during the first nine months of FY06 was to the tune of Rs 190 crore, up 27.7 per cent y-o-y.

Of the total revenue, Samtex Fashions' contribution was Rs 48.4 crore and its 100 per cent subsidiary's Rs 140 crore. Raw material cost (including stock adjustment) forthe company was Rs 140 crore during the period, higher by 46.8 per cent.

As a percentage of net revenue, the cost rose to 72.5 per cent compared with 63.1 per cent in the previous corresponding period. Operating profit too grew 27 per cent to Rs 12.1 crore, while operating profit margin was flat at 6.2 per cent during the period.

The report expects it to record consolidated revenues of Rs 310 crore, which will reflect a growth of 31 per cent in FY06E.