Vijaya Bank: Interest earnings seen up

ANALYSTS' CORNER

Tower Capital & Securities Private Limited has initiated coverage on Vijaya Bank recommending a "buy" with a target price of Rs 75 in atleast next 12 months. The bank is expected to witness improvement in core interest earnings.

Retail advances which constitute 37% of total advances in H1FY06, is expected to go upto 40% in coming years. The esrtwhile lower yielding corporate assets is expected to be re-priced with strong advance offtake.

The bank is well guarded from additional provisioning in the rising interest scenario as it has transferred majority of the investments to the HTM segments in Q1FY06 and as on H1FY06 HTM constitutes 56% of the total investments.

The bank's Tier I CAR is expected to improve significantly with inclusion of IFR into Tier I capital and is comfortably placed to raise its Tier II borrowings in future to adhere to Basel II norms. The stock trades at an attractive P/Adj BV of 1.5x FY06E and 1.2x FY07E.

PTC India: Riding on power trading wave

Angel Broking has reiterated a "buy" recommendation on PTC India with a target price of Rs 66. For Q2FY06, revenues grew by 45.3 per cent year on year at Rs 862 crore. Net profit grew by by 56.3% yoy to Rs 10.2 cr.

The company has proven its dominance in the arena of power trading amidst competition. It has signed long-term power purchase agreements for close to 2500 MW and has signed MoUs for 15,500 MW.

It has also tied up a long-term sales agreement for 1,060 MW and contracts for 2,400 MW are under active consideration. Overall, the company is expected to post CAGR of 24% and 22% in sales and net profits respectively in FY2005-08 period.

BHEL: Strong orderbook

Motilal Oswal has maintained a "buy" on Bharat Heavy Electricals (BHEL) subsequent to the company's second quarter results. This is following the rise in profit after tax of 64 per cent and an improvement in the topline (sales revenue) by 45 per cent to Rs 2510.30 crore.

The earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by 184 basis points to 14.7 per cent largely reflecting operating leverage.

BHEL has signed a technology transfer contract with Alstom project for boilers and earlier with Siemens for super critical turbines. This is expected to boost the order book of the BHEL through negotiated route from PSUs.

The order book of Rs 33200 crore the company has strong revenue growth visibility. Given increased momentum in order booking, order execution, and operating leverage Motilal Oswal has raised the FY06 EPS estimates to Rs 56.10 and FY07 estimates to Rs 76.10.