IFIN

Bharti Airtel (Buy)

CMP: Rs 432

Target: Rs 495

Bharti Airtel (Bharti's) revenue grew 4.4 per cent QoQ to Rs 16,980 crore in 1QFY12, in line with our estimate. Consolidated EBITDA stood at Rs 5,710 crore in 1QFY12 with EBITDA margin of 33.6 per cent. Higher depreciation and interest costs led to 13.2 per cent decline in PAT to Rs 1,220 crore in 1QFY12. Bharti's usage in Africa increased 9.5 per cent QoQ as ARPM declined 3.2 per cent representing elasticity. Revenue increased six per cent to $979 million in 1QFY12. The company maintained revenue guidance at $5 billion and EBITDA guidance at $2 billion by March 2013. We expect Bharti's earnings to grow at 38 per cent CAGR over FY11-13. At current price, Bharti trades at an EV/EBITDA of 8.2x FY12 EBITDA and 6.2x FY13 EBITDA. We have increased our target price to Rs 495 based on DCF valuation methodology.

Dalmia Securities

Orchid Chemicals (Buy)

CMP: Rs 199

Target: Rs 309

Orchid Chemicals and Pharmaceuticals Ltd. (OCPL) has come out with their consolidated Q1FY12 result. Although the top-line is in line with our expectation, the bottom line came as a major disappointment to us. We have factored in lower sales due to disruption in production in Alathur facility and lower profit due to lower EBDITA margin expectation. Despite that we find a fair value of Rs 309 for Orchid with an upside of 56 per cent from current level.

Sushil Finance

Zensar Tech (Buy)

CMP: Rs 139

Target: Rs 240

Zensar has restructured its businesses on vertical lines with six global profit centres for the verticals of manufacturing, media, retail, banking and financial services, insurance and connected services (healthcare, government, utilities and transportation) to bring significant consulting expertise on the domain and focus on integrated offering to enable customers leverage best in class technologies and processes for their competitive advantage. Going forward, we expect its consolidated revenues to grow by 33.8 & 15 per cent in FY12E & FY13E respectively and its APAT to decline by 4.4 per cent in FY12E, but to grow by 18.4 per cent in FY13E. We maintain our “Buy” rating on the stock with a target price of Rs 240.

IIFL

GSK Consumer (Buy)

CMP: Rs 2,413

Target: Rs 2,752

With zero debt on its books and operating cash flows of about Rs 200-300 crore a year, GSK Consumer is a cash-rich company. The company expects to incur normal capex of Rs 60 crore a year. It also plans to expand the distribution network from current 6,50,000 outlets to 7,00,000 outlets by CY12 end, which will be a key revenue growth driver. Ramp up in noodles and new categories like glucose will further fuel growth. We expect the company to register 22 per cent CAGR in net profit over FY10-12. At the current market price of Rs 2,413, the stock is trading at 22.8x CY12E EPS of Rs105.8. We maintain ‘Buy', with a nine-month price target of Rs 2,752 (earlier Rs 2,569).

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