Sushil Finance

PNB (Buy)

CMP: Rs 976

Target: Rs 1,370

Punjab National Bank (PNB) posted a modest net profit of Rs 11.05 billion, a growth of 3.4 per cent year on year in Q1 FY12, mainly due to higher provisions. NII grew by 19 per cent Y-o-Y while core fee income was decent with 21 per cent Y-o-Y growth. We expect Advance and Deposit growth of 18 per cent & 16.4 per cent in FY12E and 17 per cent & 15.7 per cent respectively in FY13E, while its net profit to grow at 8 per cent in FY12E & 18 per cent in FY13E. The bank currently trades at an attractive valuation of 1.2x FY13E ABV and 5.5x FY13E Earnings. We believe that the stock can trade at ABV multiple of 1.6x given its strong business model, sustainable ROE of +21 per cent, high CASA and high CD ratio. We maintain “Buy” rating on the Bank with a price target of Rs.1370 (at 1.6x FY13E ABV & 7.7x FY13E EPS).

Sharekhan

Patels Airtemp India (Buy)

CMP: Rs 53

Target: Rs 84

We have downgraded our earnings estimates for FY2012 and FY2013 in view of the slower than expected execution of orders by the company's clients and the lower margin outlook. In line with the revised estimates, we have revised our price target for the company to Rs84 (5x FY2013 earnings per share [EPS]). At the current market price the stock is available at 3.2x FY2013E earnings. Given its healthy dividend yield of 3.7 per cent and robust return on net worth of 23.4 per cent (for FY2011), the stocks valuations appear to be quite attractive. We maintain our Buy recommendation on the stock.

BP Equities

Supreme Infra (Buy)

CMP: Rs 220

Target: Rs 293

In view of the growing order book, efficient execution of ongoing projects, backward integration and improving track record, we expect the company's top line to grow at a healthy CAGR rate of ˜35 per cent during FY11A to FY13E. The company is well poised to capitalise on the opportunities and grow faster than its peers. SIIL trades at a P/E of 4.9X and 3.8X FY12E and FY13E EPS of Rs. 46.4 and Rs 60.2 per share, which we think is available at a discount to its peers considering its healthy order book, high growth rate and healthy return ratios. The BOT projects are another important trigger for the company to perform going forward. We recommend “Buy” on the stock with a target price of Rs 293 (previous recommendation Rs 300), an upside of 31 per cent from the present levels based on SOTP method.

Emkay Global

Ballarpur Ind (Accumulate)

CMP: Rs 28

Target: Rs 35

Q4FY11 EBITDA margins were above estimates at 20.7 per cent (adjusted for Rs 17 crore of IPO related exp & Rs 7 crore of SFI related exp); APAT of Rs 98.6 crore supported further by tax credits. We expect H1FY12 to witness margin compression on account of plant shutdown at SFI due to commissioning of new plant and time required to ramp up production.

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