Research Calls: HCL Technologies

ASK Raymond James recommends a "Buy" on HCL Technologies at Rs 630, with a target of Rs 740. The stock trades at 19.3 times and 16.1 times estimated FY07 its and FY08 earnings respectively.

According to ASK RJ, HCL Technologies is one of the cheapest stocks amongst the large cap companies and offers about 18 per cent appreciation potential from the current levels.

The Q2 FY07 results had exceeded expectations with a 6.2 per cent rise in revenues and 14.3 per cent rise in profits, quarter on quarter on the back of strong volume growth of over 7 per cent and improved price realisation of about 1.3 per cent in core software and IT services.

Although the enterprise application services has taken a dip of about 1.5 per cent quarter on quarter, services to other domains like infrastructure, engineering, banking and financial services industry, and life sciences have demonstrated a quarter on quarter growth of 11.8 per cent, 7.1 per cent, 26.7 per cent and 21.4 per cent respectively.

This leads to an expectation of good Q3 results. Hence, ASK RJ has revised its FY07 earnings estimate upward by 1.4 per cent to Rs 32.6 per share.

South Indian Bank

IL&FS Investsmart recommends a "Buy" on South Indian Bank at Rs 97, with a one year target of Rs 119, implying a growth in the price of 23 per cent. The stock trades at 1.1 times, 0.86 times and 0.75 times its estimated FY07, FY08 and FY09 price to book value respectively.

A year on year (y-o-y) increase of 27 per cent in deposits, a 22 per cent rise in advances, a surge of 28 per cent in interest income and a reduction of non performing assets to 1.49 per cent in Q3 FY07 against 1.69 per cent in Q2 FY07 and 2.42 percent in Q3 FY06 "� all sums up into a significant improvement in profitability of the bank.

Lower operating costs and high fee-based income fuelled a y-o-y growth of 33 per cent, 39 per cent and 20 per cent in operating profits, profit before tax and profit after tax, respectively. In the past two months, the stock has appreciated about 37 per cent.

Great Offshore

BRICS PCG recommends a "Buy" on Great Offshore, at Rs 759, with a one year target of Rs 900, an upside of 18 per cent.

Rising demand for global offshore services, a dominant position in the Indian markets and strong deepwater capabilities figure amongst the key growth drivers for the offshore company, recently hived off from GE Shipping.

In addition, improved utilisations will result into an increased contribution from its two exploratory drilling rigs at 40 per cent by FY09, up from 16 per cent in FY06.

By FY09, the company has scheduled a capital expenditure of about US$ 240 million which will be financed through 25 per cent internal accruals and 75 per cent debt, adding three anchor handling tug supply vessels and a jack-up rig to the company's fleet thus fuelling growth.

The new business has a fleet strength of 37 vessels comprising 2 drilling rigs, 23 offshore support vessels, 11 harbour tugs and a barge. It has plans to become a composite service provider in the offshore drilling, offshore oilfield support, marine construction and port terminal services segments.

Great Offshore's earnings and operating revenues are expected to grow at a CAGR of 58 per cent and 40 per cent respectively over FY06-FY08. The stock trades at 23.7 times, 12.6 times and 11.8 times its estimated FY07, FY08 and FY09 earnings respectively.

Amtek Auto Ltd

Emkay Research recommends a "Buy" on Amtek Auto at Rs 351 with a target of Rs 510. The stock trades at 15 times and 13 times its estimated FY07 and FY08 earnings respectively, and the EV/EBITDA multiples of 7 times and 5 times respectively.

Amtek Auto is India's second largest forgings company and a Tier I supplier of auto components to large automobile companies domestically, like Maruti Udyog, Hyundai Motors, Mahindra and Mahindra, Ford Motors, Tata Motors General Motors, Hero Honda, Bajaj Auto, Honda Motorcycles and Scooters India, etc.

Supply of components to passenger car makers constitute about 72 per cent of Amtek Auto's total revenues. Driven by strong passenger car sales, the revenues from the segment are expected to grow at a CAGR of 12-15 per cent over the next three to four years.

In addition to the domestic markets, Amtek Auto has foreign clients like BMW, CNH Global, Detroit Diesel, Scania, Delco Machining, Land Rover, Cummins US, Renault and Perkins to which it exports its auto component products.

The export revenue for the company is expected to grow at a CAGR of about 43 per cent, at an estimated Rs 780 crore by FY09, thus contributing about 81 per cent of its FY09 total revenues "� up from 70 per cent in FY05.

TTK Prestige

Emkay also recommends a "buy" on consumer durable major TTK Prestige at a price of Rs 132 with a price target of Rs 201. The pressure cooker player is expanding its portfolio to become a total kitchen solution provider.

Emkay expects revenues to register a 27 per cent CAGR over FY06 and FY08E. At a price of Rs 132, the stock trades at 13 times and 9 times its estimated FY07 and FY08 EPS.