Arihant Capital

Federal Bank (Buy)

CMP: Rs 406

Target: Rs 480

Kochi based, Federal bank posted good set of earnings growth for Q4FY12 with healthy PAT at Rs 238 cr that accounts to 38 pre cent growth y-o-y boosted by lower credit costs and healthy growth in advances. But, top-line was not very impressive with subdued NII performance. The quantum of bad loans is showing declining trend. We continue to remain confident with reference to the fundamentals of the bank and given its balance sheet strength, comfortable provision coverage, healthy capital adequacy and good return ratios.

Dolat Capital

Bajaj Auto (Accumulate)

CMP: Rs 1,533

Target: Rs1,705

Bajaj Auto reported top-line revenue at Rs 4,650 crore, up 11 per cent y-o-y led by seven per cent y-o-y volume growth. The company sold around 9 lakh motorcycles and 1.2 lakh three wheelers in 4QFY12. The company reported a three per cent q-o-q decline in its blended realisation a vehicle as a result of a lower three-wheeler sales. Operating margins decline 120 bps q-o-q to 19.8 per cent. The stock has underperformed over the last three months on fears of a slowdown in the three- wheeler segment. It currently trades at 12.0xFY14E.

Mahindra Satyam (Buy)

CMP: Rs 71

Target: Rs 92

We believe the company has made commendable progress in its financial performance in FY12 with a 24 per cent top-line growth and 730 bps improvement in the operating profitability. The pipeline continues to be robust and the strong hiring (4000+ in FY12 — total count 33,000) indicates sustained business traction. We believe that the settlement of various claims and strong recovery in the financial performance would help it build in investor interest. We maintain our positive view with a ‘Buy' rating on the stock with a target price of Rs 92, valued at 8x of its FY14E earnings of Rs 11.5 a share.

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