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Centrum Broking
CMP: Rs
Target: Rs 4,005
We maintain Hold rating on Shree Cement due to a) expensive valuations (above
mean+sd1) despite challenging scenario and b) earnings cut of 4.3%/7.5% for
FY14E/FY15E.
The company is increasing its grey cement capacity by 4mt by FY14-
end and further by 2mt by Oct-14E. However, we are concerned on the pricing power of the
manufacturers due to commissioning of new capacities in the key markets of the company. Earnings
expectations for the company have deteriorated sharply from the beginning of FY14 and the
possibility of further downgrades cannot be negated if cement despatches do not pick up going
forward. Considering the stretched valuations and absence of near-term triggers, we maintain Hold
rating on the stock with one-year price target of Rs4,005, downside of 7.1% from the CMP.
SBICap Securities
Persistent Systems (Sell)
CMP: Rs
Target: Rs 850
The management’s commentary remains fairly upbeat, backed by a healthy pipeline, improving traction in SMAC offerings and steady growth in linear business. We have largely maintained our revenue estimates, but have tweaked our earnings estimates by 3.4%/2.4%/1.2% for F14e/F15e/F16e, respectively, factoring 9M performance and lower ETR. The stock currently trades at 13.2x/11.6x F15e/F16e EPS. We believe that the markets are rather too optimistic on the future prospects and are factoring only the positives, disregarding the risks. We maintain our SELL recommendation on the stock with a target price of Rs850.
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