Brokers' call

Bonanza

YES Bank (Buy)

CMP: Rs 302.50

Target: Rs 320

Net interest income (NII) of the bank grew by 35.1 per cent y-o-y to Rs 354 crore in Q1FY12 on the back of 26.1 per cent growth in advances. NII on sequential basis registered a growth of only 1.6 per cent in Q1FY12 owing to decline in loan growth by 3.7 per cent on q-o-q basis. YES bank has reported a net profit of Rs 216 crore in Q1FY12 registering a growth of 38.2 per cent y-o-y on account of sharp drop in provisioning expenses. The bank has reported better result on y-o-y basis with a strong NII growth while maintaining a stable NIM in a higher interest rate regime. Long-term investors can stay invested for a target of Rs 320 in medium term.

MSFL

Hindalco (Buy)

CMP: Rs 155.55

Target: Rs 269

Hindalco stock has corrected by almost 40 per cent in the past three months due to ongoing fear of global recession. However, Novelis results and management commentary discard these fears and state that the company will continue to do well in its overseas subsidiaries. We will review our earnings estimates after the standalone results and update on the ongoing capex programme. Nevertheless, we foresee very marginal change in our assumptions as we have already factored in considerable delays in capex programme. We believe that the correction in stock is overdone and more than factors in all the negatives. Thus we continue to maintain our BUY recommendation with target price of Rs 269.

Emkay Global

Mahindra Satyam (Hold)

CMP: Rs 78.35

Target: Rs 80

M Satyam's performance continues to be strong with the dollar rev up 5.3 per cent QoQ while margins improved by 160 basis points QoQ to 14.6 per cent (note that margins have improved by 820 basis points over past 2 quarters. Net profits at Rs 225 crore beat estimates driven by higher margin show and aided further by lower taxes and higher other income. We raise FY12-13E EPS by 29-5.3 per cent to Rs 6.4-6.7 driven largely by higher margin assumptions (14-14.2 per cent versus 12.7-13.7 per cent earlier) and lower taxes.

Sharekhan

L & T (Buy)

CMP: Rs 1,653.35

Target: Rs 1,911

While the company reported robust results for the quarter, the achievement in the order inflow guidance would be highly subjective to uptick in infrastructure development activities in the country and West Asia. Nonetheless, maintenance of the robust growth guidance for the year reiterates the company's confidence in its execution capabilities and bidding opportunities in the infrastructure sector. We have revised our sum of the parts target price to Rs 1,911. At the current market price the stock is trading at 16.8x its FY2013 consolidated earnings estimates. We continue to believe that L&T is the best proxy play on India's infrastructure growth theme and maintain our Buy rating on the stock.

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