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Kotak Securities
NCC (Buy)
CMP: Rs 54
Target: Rs 90
Nagarjuna Construction Company (NCC) has acquired 55 per cent equity stake of M/s Nelcast Energy Corporation Limited (NECL) during FY11, which is developing a 1,320-MW Thermal Power Project at Krishna Patnam, Nellore Dist, Andhra Pradesh. The stock is currently trading at very attractive valuations and is factoring in most of the concerns related to de-rating of the sector due to lower order inflows as well as higher interest rates. We tweak our estimates to factor in higher interest rates and ascribe lower multiple for the core business.
PINC Research
Bajaj Auto (Buy)
CMP: Rs 1,455
Target: Rs 1,665
With the success of Pulsar135 and Discover twins (100cc and 150cc), Bajaj Auto's brand-centric strategy has been validated. In its attempt to leverage these brands, Bajai Auto recently launched Discover125cc and is all set to launch Pulsar250cc in September. The high-margin brands, Pulsar and Discover, now account for 70 per cent of the company's motorcycle sales. In addition, continued demand for 3-wheelers and robust exports would help Bajaj Auto achieve volume growth of 16.2 per cent in FY12 and 11.9 per cent in FY13. We have a ‘Buy' recommendation on the stock with a target price of Rs 1,665, discounting FY13E earnings at 13.5x. Our FY12 earnings estimate is 6.1 per cent higher than consensus estimate of Rs 101.3.
Jagran Prakahsan (Buy)
CMP: Rs 111
Target: Rs 148
We like JPL for its leadership in the UP market (the largest print market in terms of readership and print ad value). The company's well-entrenched position in growing regions such as Bihar and Jharkhand, and its phased and planned expansion into new media businesses and a wide portfolio (including Mid-day, I-next and Cityplus) strengthen our belief that it is well poised to benefit from steady growth in the print media sector. We take comfort from JPL's well-balanced business model as it derives more than 30 per cent revenue from circulation and other media businesses. Moreover its growth strategy to further increase penetration in its current market and monetisation of its high readership base insulates it from slowdown in the advertising market.
MSFL
Hindalco (Buy)
CMP: Rs 144
Target: Rs 222
Post 28 per cent correction in past two months due to ongoing credit crisis in western world, the company is now trading around P/E of 7.5x and 6.3x of its FY12E and FY13E earnings. The valuation looks comfortable at this level. However, we are cautious about the growing speculation and volatility in the LME prices and sustainability of recovery in the western world. Moreover, delays in expansion projects and cost overrun may hurt company. Nevertheless, we foresee very marginal change in our assumptions as we have already factored in considerable delays in capex programme. Moreover, Novelis results and management commentary discards fears of considerable slowdown. We believe that the correction in stock is overdone.
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