Research Calls: Infosys Technolgies

BRICS PCG recommends a "Buy" on Infosys Technologies at Rs 2183 with a revised target of Rs 2806 (earlier target price of Rs 2217). The stock trades at 32.1 times and 25.7 times its estimated FY07 and FY08 earnings respectively.

The strong growth recorded in the December 2006 quarter with a 9.7 per cent growth in total billed volumes and a 10.1 per cent growth in revenues in dollar terms was in line with expectations.

Though the rupee appreciation led to a fall of 200 basis points in margins, it was offset to the extent of 80 basis points by an improvement in revenue productivity, 30 basis points by lower SG&A expenses and 80 basis points by higher license fees from banking product Finnacle.

Though BRICS has marginally revised its FY07 EPS estimates down to Rs 68 from Rs 69, it has kept its FY08 estimates of 85.1 unchanged. Moreover added offshore effort and continuing Client growth are key positives.

Gujarat Gas

Angel Broking recommends a "Buy" on Gujarat Gas at Rs 1,274 with a 12 month target price of Rs 1,653. The stock is valued at 17.2 times, 14.4 times and 11.9 times its estimated CY06, CY07 and CY08 earnings, respectively.

The corresponding EV/EBITDA ratios are 9.9 times, 8 times and 6.4 times respectively. The company which has operations in gas distribution in the industrial retail, PNG and CNG domains.

The high margin industrial retail and CNG are expected to grow by over 15 per cent, while PNG is likely to grow by over 35 to 40 per cent. The company also has plans to add to its existing 2,100 km gas pipelines entering newer industrial areas of Jagadia, Kim-Karanj and Vapi.

In addition, about 5-7 new CNG stations will be set up, with an investment of Rs 70-100 crore a year. The power co-generation business too, would remain under focus with a scaling up of capacity by 20 MW each year until 2010, adding to the existing 18 MW. With stable revenues ensured, the business appears to be on a steadily upward trend.

Bartronics India

HDFC Securities Retail research recommends a "Buy on decline" on Bartronics India (BIL) with a price range of Rs 98 to Rs 111. The stock closed at Rs 123 on January 12 and trades at at 13.8 times and 8.9 times FY08 and FY09 estimated earnings.

BIL, which is the only integrated player in the AIDC/RFID solution market in India, planning to establish a manufacturing facility near Hyderabad for smart cards and/or RFID tags with an investment of Rs 262 crore.

HDFC securities expects the company to achieve a topline of Rs 71 crore, Rs 210 crore and Rs 280 crore respectively in next three years from FY07 on the back of rising output.

The new project brings with it the benefits of the first mover in a fast growing industry, faster rollout, backward integration and change in orbit for BIL. However, it exposes to the risks of project completion, gestation issues, operating risk of low utilisation in a capital-intensive industry and an entry into a commodity business.

Kalpataru Power Transmission

Edelweiss Capital recommends a "Buy" on Kalpataru Power Transmission at Rs 1043. The stock trades at 20.4 times , 14.8 times and 11.1 times its FY07, FY08 and FY 09 estimated earnings, respectively.

The corresponding EV/EBITDA ratios for FY07, FY08 and FY09 are 13 times, 10.9 times and 8.5 times. Kalpataru Power has interests in power transmission line towers, transmission equipment and gas pipeline infrastructure projects with approximately 25 per cent of the market share in domestic power transmission and distribution towers.

By the end of H1FY07, the company had domestic orders worth about Rs 130 crore and is expected to grow further, thanks to the rise in the power transmission capacity in India. Further, the revenues from the company's gas pipeline business are growing at about 60 per cent year on year.

Tanla Solutions

Emkay Private Client Research recommends a "Buy" on Tanla solutions at Rs 395 with a target price of Rs 613. The stock trades at 15.9 times and 11.5 times its estimated FY08 and FY09 earnings respectively.

Emkay believes that an impressive business model and the robust industry environment as also Tanla's future plans to enter new geographies and extending the services and product offerings make its growth prospects very positive.

Revenue is expected to grow at an CAGR of 92 per cent and net profits at a CAGR of 79 per cent over FY06A-FY09E.