Standard Chartered

Asian Paints (Outperform)

CMP: Rs 3,049

Target: Rs 3,454

Despite a very low base, standalone volume grew only 13 per cent as an extended monsoon prevented painting activities. As per management, demand for repainting has remained buoyant. Standalone sales growth was higher at 25.5 per cent, aided by 12-13 per cent realisation growth driven by price hikes. Slowdown in many markets and political uncertainty in geographies such as West Asia led to muted sales growth in international business (up only 9 per cent in 1H FY12). International business EBIT declined 15 per cent in 1H FY12. Overall, consolidated sales was up 24 per cent y-o-y, but higher costs led to a 2.6 per cent and 3.3 per cent decline in consolidated EBITDA and adjusted PAT, respectively. We roll forward to September 13 earnings and revise price target to Rs 3,454 (earlier Rs 3,350), based on forward P/E of 24x.

Kansai Nerolac Paints (In Line)

CMP: Rs 836

Target: Rs 932

KNPL posted steady sales growth of 20 per cent in 1H FY12; however, decline in EBITDA margin by 100 bps y-o-y to 14.5 per cent resulted in lower PAT growth of 12.1 per cent y-o-y. Going forward, decorative paints should witness steady growth, but challenging and uncertain auto OEM demand can result in earnings volatility. At one-year forward P/E of 19x, the stock fully factors in the EPS CAGR of 17.7 per cent over FY11-14E and offers limited upside. We roll forward to September 13 earnings and revise our price target to Rs 932, based on forward P/E of 18x. Re-iterate In-Line.

MSFL

Axis Bank (Buy)

CMP: Rs 1,169

Target: Rs 1,455

The bank has delivered better-than-expected numbers on earnings front though we remain cautious on the slippages front. The risk on the balance sheet has increased with decline in top-rated clients (both large and mid-corporate and SME) and increasing proportion of stressed assets. While margins would provide comfort on the earnings front, we have built-in higher slippages and credit cost for FY13E given the comparatively higher proportion of unseasoned loan book and relatively weak macro economic environment and cut our earnings estimates by 5 per cent. We expect the bank to deliver an earnings growth of CAGR 20 per cent through FY11-13E with an average RoE of 19.4 per cent. We maintain our ‘buy' recommendation with revised target price of Rs 1,455.

Aditya Birla Money

Bank of Baroda (Buy)

CMP: Rs 736

Target: Rs 989

Bank of Baroda (BoB) is the third largest public sector bank (PSU), differentiating itself on account of higher share of international business together with an excellent track record of consistent and qualitative growth reflected in better branch and employee productivity in comparison to its peers. Over the past few years, the bank has created a strong brand name for itself in the PSU banking space by gaining market share and through consistent performance on the operating front. We initiate coverage on BoB with a ‘buy' rating and a price target of Rs 989 a share, implying an upside potential of 31.9 per cent from current levels.

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