Omax Auto: Value buy

ANALYSTS' CORNER

Edelweiss Securities maintains its value buy on Omax Auto at Rs 136. The company's June quarter numbers reflect good operating performance.

However, the report adds that profits are lower than expected due to capacity expansion leading to higher interest and depreciation expenses.

Sales increased 25 per cent year on year, EBITDA increased 17.4 per cent, while profits increased only by two per cent due to higher depreciation and lower other income.

The company is likely to start production of body frames for TVS in August and is in talks for supplying body panels to Sonalika tractors.

Omax is in the process of increasing its capacities and as these get utilised by larger exports and rising domestic sales, its margins are expected to improve.

The stock trades at P/E of 10.7x and 8.1x on FY06E and FY07E EPS of 12.7 and 16.7, respectively. Its valuations are among the lowest in the sector, given its size and rising exports.

The company has a three year order book of Rs 180 crore for exports.

TV18 India: on a roll

SSKI Securities grades TV18 India as an outperformer. The report adds that the company is strengthening its position in the business news genre and has reported a strong revenue growth of 57 per cent year on year to Rs 26.6 crore.

It has managed to maintain operating margins at 51 per cent (competition has witnessed margin pressure in the quarter) with EBITDA at Rs 13.5 crore.

Net profit stood at Rs eight crore, up 28 per cent. The report further says, "A buoyant Indian economy and booming capital markets have ensured viewership growth in the business news space. Despite the entry of NDTV Profit, CNBC TV18 has maintained its competitive edge, leveraging on strong content and established equity. The company is broadbasing its content and is no more a synonym of stock market performance. With its strengthened position in the business news genre, TV18 is slated to make an entry in the general news diaspora under the name Broadcast India." At Rs 335, the stock trades at P/E of 12.5x.

GMDC: upward bias seen

Enam Securities grades GMDC (Gujarat Mineral Development Corporation) as an outperformer at Rs 422. The target price is Rs 522 with potential upside of 24 per cent.

The report adds that GMDC reported a 42 per cent year-on-year growth in revenues in June quarter. The company reported EBIDTA of Rs 57.3 crore (up 34 per cent) as against Rs 42.6 crore last time.

Commissioning of its power plant led to higher capital charges and depreciation was up at Rs 22.7 crore. Interest charges also rose to Rs 10 crore. The report further states, "GMDC's operating performance reflects volume growth in the lignite business. But PBT declined 36 per cent owing to poor performance of power business. Large capital charges without any major revenue constrained the power business."

The company expects Tadkeshwar mines to commence production soon and has synchronised its power plant and expects to commence operations in a month. At Rs 422, GMDC trades at 7.3x FY06E earnings.