Analysts Picks, Sail, Unity Infraprojects, Zee, Ranbaxy
Sail
CMP: Rs 146.20
Target Price: na
IDFC-SSKI Securities has initiated coverage on Steel Authority of India (SAIL) with a ���neutral��� rating. ���At 8.9x (times) FY09E (estimated) and 8.7x FY10E earnings, the stock trades in line with global peers. Though SAIL offers long-term value, given its iron ore reserves and scale of capacity ramp-up beyond FY10, the stock is fairly priced at 8.7x FY10E earnings,��� the institutional brokerage said in a client note.
Considering the multiple re-rating seen in the last few years and just 5% earnings CAGR (compounded annual growth rate) over FY08-10E, the brokerage sees little scope for further re-rating. IDFC-SSKI sees some pain for SAIL in the near-term. ���Steel price increases for SAIL, hostage to regulatory intervention, would be insufficient to pass on the incremental impact of a three times rise in international prices of coking coal. This, along with a hefty wage bill hike, would lead to a 12% drop in EBITDA (earnings before interest taxation depreciation and amortisation)/ tonne over FY08-10,��� it added.
Unity Infraprojects
CMP: Rs 399.95
Target Price: Rs 955
Zee Entertainment
CMP: Rs 220.15
Target Price: Rs 243
Goldman Sachs has maintained its ���neutral��� rating on Zee Entertainment while lowering its 12-month price target to Rs 243 from around Rs 286 to reflect lower growth in the medium term.���We cut our mid-term EPS growth estimate (CAGR FY2009E-12E) to 21% from 29%, due to lower-than-expected subscription revenues and slower advertising growth from FY2010E with increasing competition in the Hindi general entertainment TV channel genre,��� the investment bank said in a client note. ���We raise FY2009E (12%) and FY2010E (2%) estimates on lower Zee Next losses and higher sports syndication revenues.We forecast 25% growth in advertising revenues in FY2009E,��� it added.
CMP: Rs 525.30
Target Price: Rs 553
Puravankara Projects
CMP: Rs 171.30
Target Price: Rs 245
Merrill Lynch has initiated coverage on Puravankara with a ���buy��� rating and price target of Rs 245, a 15% discount to its net asset value of Rs 288. ���Our NAV is based on property price assumptions being lower by 10-20% below the current prices and the sale of the entire land bank in 12 years instead of company expectation of 7-8 years. In our view the current stock price is discounting a decline of 10% over our volume sales assumptions during FY09-10 and pricing decline of 10% over our base case which we feel are unreasonable,��� the investment bank said in a client note. ���Our call is supported by the premium brand, beneficiary of the long term growth of IT/ITES (information technology/ IT-enabled services), strong balance sheet and experienced management. Our confidence in PO (price targets) reflects from the sales of 50% of projects under development,��� it added.
Target Price: na
IDFC-SSKI Securities has initiated coverage on Steel Authority of India (SAIL) with a ���neutral��� rating. ���At 8.9x (times) FY09E (estimated) and 8.7x FY10E earnings, the stock trades in line with global peers. Though SAIL offers long-term value, given its iron ore reserves and scale of capacity ramp-up beyond FY10, the stock is fairly priced at 8.7x FY10E earnings,��� the institutional brokerage said in a client note.
Considering the multiple re-rating seen in the last few years and just 5% earnings CAGR (compounded annual growth rate) over FY08-10E, the brokerage sees little scope for further re-rating. IDFC-SSKI sees some pain for SAIL in the near-term. ���Steel price increases for SAIL, hostage to regulatory intervention, would be insufficient to pass on the incremental impact of a three times rise in international prices of coking coal. This, along with a hefty wage bill hike, would lead to a 12% drop in EBITDA (earnings before interest taxation depreciation and amortisation)/ tonne over FY08-10,��� it added.
Unity Infraprojects
CMP: Rs 399.95
Target Price: Rs 955
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Kotak Securities��� private client research has maintained its ���buy��� rating on Unity while slashing its price target to Rs 955 from Rs1,048 earlier. ���Though order book of Unity Infra is adequately hedged against raw material price hikes, the recent spurt in the steel prices in last quarter of FY08 may have a negative impact on the company���s profitability,��� the brokerage said in a client note. ���To factor in the hike in steel prices in the last quarter as well as expected increases in the costs going forward, we downgrade our operating margin assumptions. We now expect margins to remain at about 13% in FY09 and FY10 against 13.6% assumed earlier for those fiscals,��� it added.Zee Entertainment
CMP: Rs 220.15
Target Price: Rs 243
Goldman Sachs has maintained its ���neutral��� rating on Zee Entertainment while lowering its 12-month price target to Rs 243 from around Rs 286 to reflect lower growth in the medium term.���We cut our mid-term EPS growth estimate (CAGR FY2009E-12E) to 21% from 29%, due to lower-than-expected subscription revenues and slower advertising growth from FY2010E with increasing competition in the Hindi general entertainment TV channel genre,��� the investment bank said in a client note. ���We raise FY2009E (12%) and FY2010E (2%) estimates on lower Zee Next losses and higher sports syndication revenues.We forecast 25% growth in advertising revenues in FY2009E,��� it added.
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Ranbaxy LabsCMP: Rs 525.30
Target Price: Rs 553
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JP Morgan has reiterated its ���neutral��� rating on Ranbaxy, with a price target of Rs 553, after the company���s settlement with Pfizer on Lipitor. ���We find the timing of the settlement with Pfizer surprising, given the acquisition announcement by Daiichi Sankyo. Given the relatively strong position of Ranbaxy on Lipitor and the deep pockets of Daiichi, we expected an April 2010 launch. We wait for Daiichi���s future strategy for Ranbaxy, particularly on Para IV challenges,��� the investment bank said in a client note. ���We had earlier built in a March 2010 launch in our estimates and valued the Lipitor opportunity at Rs 33 per share. We now value the Lipitor at Rs 25 per share - assuming a total market of $7B in 2012, and market share of 30%,��� it said.Puravankara Projects
CMP: Rs 171.30
Target Price: Rs 245
Merrill Lynch has initiated coverage on Puravankara with a ���buy��� rating and price target of Rs 245, a 15% discount to its net asset value of Rs 288. ���Our NAV is based on property price assumptions being lower by 10-20% below the current prices and the sale of the entire land bank in 12 years instead of company expectation of 7-8 years. In our view the current stock price is discounting a decline of 10% over our volume sales assumptions during FY09-10 and pricing decline of 10% over our base case which we feel are unreasonable,��� the investment bank said in a client note. ���Our call is supported by the premium brand, beneficiary of the long term growth of IT/ITES (information technology/ IT-enabled services), strong balance sheet and experienced management. Our confidence in PO (price targets) reflects from the sales of 50% of projects under development,��� it added.
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