Brokers call

| Updated on August 09, 2011


Titan Ind (Buy)

CMP: Rs 216

Target: Rs 240

TIL has reported robust growth in both top line and bottom line during Q1FY12. Sales revenue grew by 61.3 per cent Y-o-Y and 14 per cent QoQ to stand at Rs 2,020.5 cr. The growth in revenue as well as profitability of the company in Q1FY12 has been triggered by good retail growth across all its brands and retail chains. The company maintained the momentum of retail expansion across all its businesses and opened 30 stores in Q1FY12. Titan is targeting three-fold growth in revenue 5 five years to Rs 14,000 crore. Looking at the huge opportunity in both international and domestic markets for its jewellery (Rs 1,00,000 crore market), eye wear and engineering equipments, Titan is expected to dominate the retail industry.


Indian Hotels (Buy)

CMP: Rs 75

Target: Rs 106

IHCL posted a better operating performance at the standalone level in Q1FY12. We expect the second half of FY12 to be much better than the first half for the standalone business. However, any slowdown in the global macro environment would remain a key risk to the company's business. Also the key thing to watch out for is the performance of the US properties, which have remained a drag on the consolidated profitability of the company. Any improvement in the profitability of the US properties would act as a key trigger for the stock. We like IHCL in the hotel space largely on account of its diversified portfolio of hotels catering to each segment and its thrust on improving the balance sheet. We maintain our ‘Buy' recommendation on the stock with a price target of Rs 106.

Emkay Global

Aban Offshore (Buy)

CMP: Rs 422

Target: Rs 580

APAT at Rs 94.1 crore (54 per cent Y-o-Y) marginally below expectation on account of lower than expected revenues. Revenues declined 13 per cent — below estimates. EBIDTA at Rs 460 crore (12 per cent), came below estimates led by lower revenues. Only two rigs idle-see strong cash flow visibility for Aban $400 million of CFO over FY11-13, leading to accelerated de-leveraging. Leverage ratios could improve 40 per cent over FY11-13E. Stock decline of 20 per cent over last 3M, makes valuation of 4.9X & 0.8X P/B attractive providing downside support to stock.

IDBI Capital

Titagarh Wagons (Accumulate)

CMP: Rs 404

Target: Rs 423

The execution of wagon orders picked up pace in January post the receipt of IR orders in September 2010. Hence, the revenue traction is expected to sustain in the coming quarters with 2,000 wagons order book yet to be executed. For FY12 Indian Railways is expected to release an order book of 15,000 wagons in the next couple of months which constitutes 75 per cent of the total wagons to be acquired in FY12. In FY11, Titagarh had received 2,100 wagons order in the first round. Hence, TWL is likely to benefit of the higher acquisition plans, but with the entry of new players in the segment (Jupiter and Jindal Rail) the volume growth may remain at 12 per cent CAGR over FY11-13E.

Published on August 09, 2011

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