Standard Chartered

Ashok Leyland (Outperform)

CMP: Rs 25

Target: Rs 32

With steady recovery in its key Southern market, we expect ALL to gain back lost market share in FY13E. We also expect its operating performance to improve, led by the recent pricing action and ramp-up of the Pantnagar facility. Given steady volume recovery and margin expansion, we expect the company to post strong 38 per cent earnings growth in FY13E. At 8.9x FY13E earnings and 6.3x EV/EBITDA, the stock appears attractively valued. Maintain Outperform with a revised price target of Rs 32 — valued at 10x Sep'13E earnings (Rs 31 earlier).

Reliance Ind

(In-line)

CMP: Rs 685

Target: Rs 751

We estimate the three projects under implementation (petcoke gasification, off-gas cracker, polyester expansion) to add EBITDA and value accretive at a healthy RoCE of 25 per cent. Upside comes from the low-cost ethylene cracker and savings from lower cost syngas (vs LNG), in addition to the capacity expansion in the polyester chain. This we believe will provide the next leap in RIL's earnings. Maintain In-Line. We factor in FY12 annual report disclosures, lower oil reserves and reduced shale gas valuation in our price target of Rs 751 (Rs 797 earlier).

Nirmal Bang

Eicher Motors (Buy)

CMP: Rs 2,060

Target: Rs 2,578

Eicher Motors has constantly focused on improving its volumes and market share by expanding its distribution and production capabilities along with effective cost management. At CMP, the stock is trading at P/E of 14.5x CY12E and 11.8x CY13E. We arrive at a target price of Rs 2,578 based on P/E multiple of 15x on CY13E EPS of Rs 172 indicating a potential upside of 27 per cent from current levels. We maintain our ‘Buy' rating on the stock from a long-term perspective and believe that the stock can be purchased on any decline.

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