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IFCI Financial
IRB Infra (Buy)
CMP: Rs 164
Target: Rs 221
IRB increased toll for Mumbai-Pune expressway (18 per cent in April), Bharuch Surat (eight per cent in July). An expected 10 per cent toll increase for Surat-Dahisar road is due in September. Management indicates that traffic has not reduced despite the recent increases in fuel prices and toll rates. Despite stiff condition, toll collection on the Tumkur-Chitradurga road in is line with the company's estimates of Rs 0.40 crore daily.
IRB has qualified for projects worth Rs 41,660 crore, which provides strong revenue visibility. Of this, projects worth Rs 1,200 crore and Rs 29,650 crore are under the RFP and RFQ stages respectively. IRB has a strong unexecuted order book of Rs 11,170 crore, which provides visibility to construction revenue over the next four years based on FY12 estimates.
Elara Securities
Jubilant Life (Buy)
CMP: Rs 200
Target: Rs 260
Jubilant has reported 16 per cent y-o-y growth in sales, 240bps increase in EBITDA margin, and 53 per cent y-o-y growth in PAT in Q1FY12. While Jubilant's Q1FY12 result is inline with our estimates, management's guidance of commissioning of new plants for key products Q2FY12 onwards, improves business forecast of the company. Commercial production of Niacinamide and Symtet in FY12E, product launches in derivatives, and higher utilisation would catalyse growth in FY12-13E. Higher crude oil prices and astute price management in procuring ethanol are other key factors that enabled Jubilant regain leadership in its flagship business in LSP.
Angel Broking
Bharat Forge (Accumulate)
CMP: Rs 292
Target: Rs 325
Bharat Forge (BFL) registered strong 36.1 per cent y-o-y (4.4 per cent q-o-q) growth in its standalone revenue to Rs 858 crore, primarily aided by a 67.1 per cent (6.4 per cent q-o-q) and 17.4 per cent (2.2 per cent q-o-q) y-o-y jump in exports and domestic revenue, respectively. EBITDA margin remained stable on a y-o-y as well as q-o-q basis at 24.3 per cent, despite a surge in commodity prices. As a result, BFL posted a 63.9 per cent y-o-y (down three per cent q-o-q) jump in its net profit to Rs 97 crore, beating our estimates, owing to better performance at the operating level and higher other income. We have revised our revenue and earnings estimates downwards to factor in the likely slowdown in the US and the European markets. Nonetheless, on account of the recent correction in the stock price, we maintain our Accumulate view on the stock.
ABB (Sell)
CMP: Rs 799
Target: Rs 278
ABB India (ABB) reported mixed set of results for 2QCY2011. The company outperformed on the top-line front but disappointed on the earnings estimate due to lower-than-expected margin. The company reported strong growth of 17.0 per cent y-o-y in its top line to Rs 1,713 crore, which was higher by 1.8 per cent from our expectation of Rs 1,683 crore. However, weak operational performance (margin pressures) dented the company's overall profitability — PAT remained flat with 1.1 per cent y-o-y growth to Rs 39crore.
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