MSFL Equity

SAIL (Hold)

CMP: Rs 92

Target: Rs 102

SAIL's net sales for the fourth quarter of FY12 grew by 12.2 per cent year-on-year to Rs 13,397 crore due to realisation growth and modest jump in volumes (2.1 per cent y-o-y to 3.2 million tonnes). For FY12, net sales grew by only 6.9 per cent to Rs 45,684 crore as 10 per cent realisation gain has somewhat been offset by 2.7 per cent fall in volumes. Though SAIL's performance will improve in coming quarters due to stable realisation and falling cost, we believe that it will continue to underperform compared with its peers due to delays in capex.

Nirmal Bang

Tecpro Systems (Hold)

CMP: Rs 158

Target: Rs 190

Revenues for the quarter grew by 15 per cent, year-on-year to Rs 1,101 crore, driven by execution of its strong order book. Revenues for FY12 increased by 28 per cent to Rs 2,529 crore, which was lesser than our expectation. Order book position as on May 25, 2012 stood at Rs 4,400 crore. This gives us good revenue visibility for FY13. It is L1 in orders worth Rs 162 crore. On the back of strong order book and management guidance, the company is expected to grow at approximately 18-20 pwer cent in FY13. The PAT margin is expected to improve in FY13 on the back of lower debt leading to lower interest expense for the company. However due to current macro environment, high debt and the company missing its order inflow guidance of Rs 2500 crore we have cut our FY13 earnings per share estimate by 23 per cent. At CMP the stock trades at 5.3x its FY13E EPS and we revise our rating from Buy to Hold with a target price of Rs 180.

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