Saturday, August 30, 2008
Analysts'Picks: Tata Motors
27 Aug, 2008.
Tata motors
cmp: Rs 433.50
target price: Rs 454
HDFC Securities has maintained its ‘sell’ rating on the stock with a revised target price of Rs.454 (from Rs.431 earlier). The brokerage believes due to uncertainties looming over the company’s Nano project at Singur and 24-35% equity dilution would cap the upside in the stock.
Also the Jaguar-Land Rover (JLR) acquisition would continue to be an overhang on Tata Motors’ stock, the note added. “We are revising our earnings per share estimate upwards by 9% (Rs.29.9 earlier) mainly on account of lower equity dilution by reducing the amount of funds raised through the equity route. We value the company on an SOTP basis with the core business valued at Rs 293 per share and subsidiaries at Rs 161 per share,” the note to clients said.
Thursday, August 14, 2008
Analysts' picks:Future Cap Holdings, HCL Infosystems
13 Aug, 2008,
Future Cap Holdings
cmp: Rs 360.50
target price: NA
Edelweiss has initiated coverage on Future Capital Holdings with an ‘accumulate’ rating as it feels that the company with its vertically-integrated model is likely to capture value across the chain in the high-growth consumption space.
“The company is building a vertically integrated capital-cum-agency business model through its investment advisory, financing and financial products distribution businesses,” says the report. The company is a focused investment advisor with $1.5 billion funds under advice in consumption-related sectors, it adds.
The brokerage expects its assets under management to grow to $5 billion by FY11E. It also expects the “company’s net revenues to grow seven-fold to Rs 7.7 billion in FY10E and profit after tax to grow to Rs 1.8 billion in FY10E”. The stock is trading at 12.6 times FY10E earnings and 2.5 times FY10E book, says the report. Edelweiss recommends investors to accumulate the stock at current levels from a long-term perspective (2-3 years).
HCL Infosystems
cmp: Rs 121.80
target price: Rs 155
CLSA has maintained an ‘outperform’ rating on HCL Infosystems while lowering the target price from Rs 230 to Rs 155 due to the further slowing down of PC sales. “HCL Infosystems’ sales are slowing down further and we now expect flat to negative year-on-year revenue growth in the segment in the June’08 quarter,” says the brokerage.
Around 30% of the company’s PC sales go to the retail segment, where the slowdown observed since late CY2007 has deepened, it says. Lower computer systems revenue assumptions are driving around 4-11% further cut in EPS estimates for FY08-10, it goes on to add.
According to CLSA, the demand of PC seems to be waning due to “cost-led 5-7% price hikes passed on by vendors, plus the lower financing options available (higher interest rates plus cut back in new loans from financiers)”. A 6.4% dividend yield provides some buffers to the stock, but upsides seem limited as a weak quarter looms, it adds.
Vishal Retail
cmp: Rs 415.90
target price: Rs 485
Kotak Institutional Equities has initiated coverage on Vishal Retail with a ‘add’ rating as it feels that the company would benefit from its ‘value’ model that has national scalability, thereby offering economies of scale.
“The company’s transformation to an integrated retailer dilutes its dependence on apparel while its emphasis on private labels is likely to support margins,” says the report.
It goes on to add that the company’s product mix is likely to under go significant changes in the near future, with negative margin impact of FMCG sales offset by higher share of private labels. The brokerage, however, feels that the “proposed rollout is aggressive” and that it would be “tempered by funding constraints”.
“We expect the total retail space to grow at 48% CAGR to 7 million sq ft by FY2011E, which is 30% lower than management estimates, after factoring in funding constraints,” says the report. Inflation and economic slowdown are concerns given the company’s concentration on lower income categories, it adds.
Wipro
cmp: Rs 433.30
target price: NA
ICICI Securities has maintained a ‘buy’ rating on Wipro even while viewing that the risk-reward is unfavourable at current valuations owing to deteriorating earnings visibility. The brokerage believes that Wipro’s upswing in the past weeks and the resulting par-valuations with Infosys is unjustified in the short term and expects profit booking at current levels.
“With FY09E and FY10E PE at 17.2 times and 14.1 times (versus 17 times and 14.9 times for Infosys), we believe Wipro will witness profit booking in the short term given lower earnings visibility and similar EPS CAGR through FY08-11E,” says the report.
As against a historically strong second quarter, Wipro’s Q2FY09 dollar-denominated revenue growth guidance indicates that the company is witnessing client-specific ramp downs in Q2FY09, it adds. ICICI Securities, however, believes that client-specific issues in material accounts (GM, Nokia-Siemens, Alcatel-Lucent) are likely to lead to a bounceback in revenue growth only post Q2FY09.
Saturday, August 9, 2008
A positive opening on the cards
August 10, 2008,
The major indices are likely to open strong on Monday due to extremely positive cues from the US markets. Market internals suggest selling bias at higher levels. While the indices managed to hold crucial support levels, an impending correction may see the indices break below the support levels in the coming days.
Sensex, has gained nearly 13 per cent (1,714 points) during the period. The index moved in a range of 919 points last week – it rallied from a low of 14,504 to a high of 15,423 - and finally ended with gains of 511 points at 15,168.
Among the Sensex stocks, Maruti zoomed over 21 per cent. HDFC Bank, ICICI Bank, Tata Motors, Grasim, Mahindra & Mahindra and ACC rallied 9-16 per cent each. Tata Power and Tata Steel, however, dropped 5 per cent and 4 per cent respectively.
The Sensex crossed the resistance level of 15,200 in intra-day trades during the last three days. However, the index could not close above it. The index may target 17,150 in the medium-term. But a sharp correction is not ruled out, given the high 14-day relative strength index (RSI) at 72 per cent. An RSI of above 70 per cent indicates overbought zone.
The index may face resistance around 15,625-15,740 this week, above which it may spurt to the 16,000-mark. On the downside, the index may seek support around 14,600 and 13,350-13,500.
The Nifty moved in a range of 253 points - rallying from a low of 4,363 to a high of 4,616 - before settling 116 points higher at 4,530.
The index has closed above the 4,500-mark for the last four straight days and looks set to target its 200-DMA (daily moving average) at 5,135 in the coming days.
However, it is likely to face resistance around 4,700-4,800 in the near term, and profit-taking at these levels could see the index slide to 4,170-4,050.
The Nifty is likely to face resistance around 4,625-4,690 and may find support around 4,430-4,370 this week.
Wednesday, August 6, 2008
Tata Steel makes it to Fortune Global 500 list for first time . 6 Aug, 2008.
MUMBAI: Steel major Tata Steel has for the first time made it to the prestigious Fortune Global 500 list of the world's largest corporations, a company statement said on Wednesday.
The company ranks 231 in terms of revenue, the statement said.
Interestingly, Fortune magazine in its July 21, 2008 issue, had for the first time included Tata Steel in its Global 500 list but the company was ranked 315th in terms of revenue.
This ranking was, however, based on the company's total revenues in the first three quarters of the current fiscal and the last quarter of the previous fiscal.
Following the announcement of the company's annual results, Fortune has re-ranked Tata Steel.
In a clarification on its website, Fortune has said: "Tata Steel's revenue for fiscal year end March 31, 2008 -- released by the company after the Global 500 publication deadline -- was $32.8 billion. Had the information been available, the company would have placed 231 on the list. The company ranked 315th in the listing, based on revenue for the four quarters ended Dec. 31, 2007, of $25.7 billion."
