Prabhudas Lilladher has recommended a buy rating on Axis Bank with price target of Rs 850, in its report dated October 14, 2008.
"Axis Bank has reported an excellent set of numbers with PAT up by 77% at Rs 4.03 billion, which was higher than our (Rs 3.63 billion) and market expectations. The key drivers for the positive surprise were better than expected fee income (up 91%YoY and 17% QoQ) and net interest income (up 81% YoY and 13% QoQ). At the CMP of Rs 663, the stock is quoting at 13.4x FY10E EPS, 2.1x FY10E BV and 2.1x FY10E ABV. Axis Bank continues to remain among our top picks and we maintain our BUY recommendation with a reduced price target of Rs 850, " says Prabhudas Lilladher's research report.
Saturday, October 18, 2008
Mastek targets Rs 43-44cr PAT in Q2
Here is a verbatim transcript of the exclusive interview with R Desikan on CNBC-TV18. Also watch the accompanying video.
Q: Margins have slipped this quarter even though you have been able to meet your guidance what is the call going forward- Is this optimism likely to stay with the company?
A: Firstly, our year beginning is actually from July 1, and therefore all the wage increase reflect in July 1 as compared most other players who’s balance sheets reflect this on April 1. There other cause of this fall is due to some of the forex related charges there on mark to market basis. However, we have met the guidance for the quarter on the whole both on the topline as well as on the bottomline.
Q: Going forward what is the outlook given the kind of turmoil we see in the global financial markets? Do you think you can hold on to you year guidance and where do you see growth coming from?
A: We have always been giving a quarterly guidance and for the next quarter we have given a guidance of Rs 265 to 270 crore which is higher than the quarter which went by. We are looking at Rs 43-48 crore of PAT as compared to what we have reported Rs 41 crore for the previous quarter.
Q: Could you tell at what rate did you hedge the rupee?
A: We don’t have a major hedge as of now. As on September 30, we had an exposure of USD 17 million.
Q: At what rate was this hedging taken place?
A: That hedge had taken place at approximately Rs 42 to a dollar.
Q: Could you tell us about your National Health Service (NHS) ramp down, because you guided that it would take place over a one year period, but as we understand it will now take about two years?
A: At the beginning of the year we thought it would ramp down by the end of the year or a 12 month period. Based on whatever we have seen in Q1, there may be ramp down but it would take place over a period of 24 months instead of 12 months. So it is good for us because we get more business.
Q: Going forward in terms of order book position, what do you foresee for the company in the next few quarters because you have still three quarters to go before you close this year? What are the potential downside risks that you see right now for your business environment?
A: As a company, our exposure to the banking sector is much less as compared to most other players in the IT sector, where their dependence on the banking sector is about 40-45%. We are actually in single digit therefore the current turmoil is going to have much less of an impact on us as compared to most other players.
The second aspect is that we have very heavy dependence on government sector. Typically the government sector always balances out during the downturn period. They try to pump–prime the economy by having additional expenditure therefore there will be some amount of second order impact but all that has been considered when we gave the guidance.
Buy Sintex Inds, target of Rs 792: HDFC Securities
HDFC Securities has maintained its buy rating on Sintex Industries (SIL) with an 18-month target of Rs 792 in its October 14, 2008 research report. "Revenues and profits of SIL are expected to grow at a CAGR of 56% and 68% between FY08-10E. We expect it to re-rate positively and when coupled with the underlying earnings growth, should deliver significant out performance to investors in the long term."
"We believe that the overall business momentum of the company remains robust. However, the stock has significantly corrected owing to bad equity market conditions and to that extent valuations have taken a hit. We maintain our BUY rating on the stock with a target price to Rs 792 over an 18-month period, based on the steep discount to its NAV and expected upside potential based on valuation re-rating," says HDFC Securities' research report.
"We believe that the overall business momentum of the company remains robust. However, the stock has significantly corrected owing to bad equity market conditions and to that extent valuations have taken a hit. We maintain our BUY rating on the stock with a target price to Rs 792 over an 18-month period, based on the steep discount to its NAV and expected upside potential based on valuation re-rating," says HDFC Securities' research report.
Reduce Sasken: Angel Broking
Angel Broking has downgraded its rating on Sasken Communication Technologies from buy to reduce in its October 16, 2008 research report. "Sasken recorded a disappointing 4.9% qoq growth in its 2QFY2009 Top-line to Rs 176 cr. Going ahead, we expect Sasken to record a 19.0% and 17.6% CAGR growth in Top-line and Bottom-line respectively, over FY2008-10E. Given the disappointing performance recorded this quarter, we have downgraded our numbers for Sasken and consequently, our EPS estimates for FY2009E and FY2010E are 28% and 26% lower respectively, compared to our earlier estimates."
"Given that top-tier software companies are trading at P/E ratios of 7-11x FY2010E EPS, we expect a mid-sized player like Sasken to trade at 50-60% discount. Consequently, even though at the CMP, the stock is trading at 5.1x FY2010E EPS, we believe such a discount is warranted. We have given around 20% discount to other mid-sized software companies like Tech Mahindra as well. We downgrade the stock to Reduce from Buy," says Angel Broking's research report.
"Given that top-tier software companies are trading at P/E ratios of 7-11x FY2010E EPS, we expect a mid-sized player like Sasken to trade at 50-60% discount. Consequently, even though at the CMP, the stock is trading at 5.1x FY2010E EPS, we believe such a discount is warranted. We have given around 20% discount to other mid-sized software companies like Tech Mahindra as well. We downgrade the stock to Reduce from Buy," says Angel Broking's research report.
Buy HCL Tech, target of Rs 235: Motilal Oswal
HCL Technologies 1QFY09: Below estimates; US$ revenues flat QoQ; margins down 100bp: HCL Tech
reported flat QoQ US$ revenue growth at US$505m (v/s our est. of US$534m). The revenues were negatively
impacted by: (1) degrowth with respect to a BFSI client (US$10.5m), (2) loss of revenue in voice-based BPO client
(US$4.5m); and (3) cross currency impact (~US$9.9m). Revenues of the current quarter include BPO acquisitions
(Liberata and Control Point) consolidated during the quarter to the extent of US$6.8m.
? Deal wins strong, bidding for US$2b worth deals: HCL Tech won 8 deals worth US$270m in 1Q, indicating a
strong demand pipeline. Client addition at 29 was flat QoQ with 4QFY08 addition of 30 clients. According to
management, ~US$2b deals are close to being finalized over the next 3 months (higher versus normal times), suggesting
that clients are looking at IT spending as a cost rationalization measure in the current crisis. Revenues could receive
a boost if the company emerges a winner in even a fragment of these deals. The company hired 2,124 employees in
IT services compared with almost nil in 4QFY09, indicating good visibility for 2QFY09.
? Downgrading estimates for FY10: We are downgrading our FY09 US$ revenue growth estimates by 6 percentage
points to 15% from ~21%, on account of renewed concerns about demand visibility and cross currency volatility. Our
rupee estimates would have a muted impact owing to our revised INR/US$ assumptions. Our FY09 EPS stands
revised to Rs26.1 from Rs23.2 and for FY10 to Rs24.8 from Rs25.6. Management’s assurance of maintaining the
dividend policy (600% annualized), is expected to protect the downside in the stock. Currently, the dividend yield
works out to ~7.5%. At the current market price, HCL Tech is trading at 6x FY09 and 6.3x FY10 earnings respectively.
Maintain Buy.
HDFC Q2 net profit up 32.14% to Rs 534 cr
Housing Development Finance Corporation, HDFC has announced its second quarter results. The company's Q2 net profit was up 32.14% from Rs 404.1 crore to Rs 534 crore. (Net Profit excluding extraordinaries).
Its net interest income, NII was up by 29% at Rs 857.8 crore versus Rs 664.9 crore.
Its other operating income was up at Rs 111.7 crore versus Rs 48.7 crore.
Total income increased by 38.18% to Rs 2615.1 crore from Rs 1892.5 crore. Other income rose to Rs 5.49 crore versus Rs 3.9 crore.
In the H1FY09, the company's approvals grew by 28% to Rs 18,948 crore and disbursements grew by 25% to Rs 17,788 crore.
Its net interest income, NII was up by 29% at Rs 857.8 crore versus Rs 664.9 crore.
Its other operating income was up at Rs 111.7 crore versus Rs 48.7 crore.
Total income increased by 38.18% to Rs 2615.1 crore from Rs 1892.5 crore. Other income rose to Rs 5.49 crore versus Rs 3.9 crore.
In the H1FY09, the company's approvals grew by 28% to Rs 18,948 crore and disbursements grew by 25% to Rs 17,788 crore.
Particulars Sep-08 Jun-08 Mar-08 Dec-07 Net Sales / Interest Earned / Operating Income 2615.1 2313.48 2312.21 2150.35 Other Income 5.49 5.14 8 4.37 Total Income 2620.59 2318.62 2320.21 2154.72 Expenditure -99.07 -1665.09 -1224.1 -1269.13 Interest -1757.26 - - - Profit Before Depreciation and Tax 764.26 653.53 1096.11 885.59 Depreciation -4.28 -3.67 -4.49 -4.41 Profit before Tax 759.98 649.86 1091.62 881.18 Tax -225.75 -181.75 -323.5 -232.25 Net Profit 534.23 468.11 768.12 648.93 Equity Capital 284.23 284.21 284.04 281.57
Buy Bank Of India, target of Rs 386: Karvy
Karvy Stock Broking has recommended a buy rating on Bank Of India with a target of Rs 386 in its October 17, 2008 research report. "In 2QFY09, we expect that the bank would report around 30% (Y/Y) growth in global business on the back of 29% growth in deposits and 32% growth in advances. The bank's net interest income is expected to grow by 22% (Y/Y) to Rs 12 billion. We estimate 49% growth in bottomline to Rs 6.07 billion. We rate the stock as a BUY with a price target of Rs 386 at 1.68x adjusted book value FY2010," says Karvy Stock Broking's research report.
Below Rs 64, Hindalco can slip to Rs 50: Bose
Technical Analyst, Rajat K Bose is of the view that below Rs 64, Hindalco can slip to Rs 50.
Bose told CNBC-TV18, "Hindalco is even worse compared to Tata Steel. It is in a strong downtrend and now for this to show any kind of sustainable recovery it should actually sustain above Rs 76-77 levels. On the other hand, if it were to fall below Rs 64, then I would not be surprised if some day we see Hindalco at Rs 50. It may sound pretty surprising, but actually that is the kind of strength the trend is displaying."
Disclosure: It is safe to assume that analyst & his clients may have an investment interest in the stocks/sectors discussed.
Bose told CNBC-TV18, "Hindalco is even worse compared to Tata Steel. It is in a strong downtrend and now for this to show any kind of sustainable recovery it should actually sustain above Rs 76-77 levels. On the other hand, if it were to fall below Rs 64, then I would not be surprised if some day we see Hindalco at Rs 50. It may sound pretty surprising, but actually that is the kind of strength the trend is displaying."
Disclosure: It is safe to assume that analyst & his clients may have an investment interest in the stocks/sectors discussed.
| Share Price Movement During The Last 12 Months | ||||
| Period | Price | Latest Price | Gain/Loss (Rs.) | % Gain/Loss |
| 3-Days | 88.75 | 69.75 | -19.00 | -21.41 |
| 5-Days | 90.80 | 69.75 | -21.05 | -23.18 |
| 7-Days | 90.80 | 69.75 | -21.05 | -23.18 |
| 15-Days | 97.70 | 69.75 | -27.95 | -28.61 |
| 1-Month | 114.85 | 69.75 | -45.10 | -39.27 |
| 3-Month | 125.38 | 69.75 | -55.63 | -44.37 |
| 6-Month | 157.57 | 69.75 | -87.82 | -55.73 |
| 9-Month | 179.58 | 69.75 | -109.83 | -61.16 |
| 1-Year | 171.46 | 69.75 | -101.71 | -59.32 |
Above Rs 65-67, IDFC can test Rs 71-72: Bose
Technical Analyst, Rajat K Bose is of the view that above Rs 65-67, IDFC can test Rs 71-72.
Bose told CNBC-TV18, "IDFC has actually fallen considerably from higher levels and now it is trading around Rs 62. If it were to cross Rs 65-67 range, then you can expect it to move up to something like Rs 71-72 but that is also dependent on the market maintaining its upswing. Otherwise, put a stoploss below Rs 59 and hold on to the long position and book profits around Rs 65-66."
Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.
Bose told CNBC-TV18, "IDFC has actually fallen considerably from higher levels and now it is trading around Rs 62. If it were to cross Rs 65-67 range, then you can expect it to move up to something like Rs 71-72 but that is also dependent on the market maintaining its upswing. Otherwise, put a stoploss below Rs 59 and hold on to the long position and book profits around Rs 65-66."
Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.
Buy GE Shipping, target of Rs 407: PINC Research
PINC Research has recommended a buy rating on Great Eastern Shipping Company with a target of Rs 407 in its October 13, 2008 research report. "Recently, its wholly owned subsidiary Greatship (India) Ltd. (GIL) formed a joint venture with Norway based DOF Subsea (world’s leading subsea project player) to explore opportunities in deep sea projects off the east coast of India. We believe that its expansion will improve the quality of earnings by enhancing the presence of offshore segment to total earnings."
"Based on SOTP calculations, we have arrived at a fair value of Rs 582 per share in FY10. We have further discounted the fair value by 30% to reflect trough valuations. Hence, we initiate coverage with a ‘BUY’ recommendation with a price target of Rs 407 on an 18 month investment perspective," says PINC's research report.
"Based on SOTP calculations, we have arrived at a fair value of Rs 582 per share in FY10. We have further discounted the fair value by 30% to reflect trough valuations. Hence, we initiate coverage with a ‘BUY’ recommendation with a price target of Rs 407 on an 18 month investment perspective," says PINC's research report.
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