Analysts' pick: Jain Irrigation, Yes Bank, Godawari & Ispat, KEC International, ELGI Equipments
Jain Irrigation
CMP: Rs 636 Target price: Rs 762
Morgan Stanley has maintained ‘overweight’ on Jain Irrigation Systems as it expects the company’s margins to expand over the next three to five years with faster growth in micro irrigation systems (MIS).
“We believe that Jain Irrigation Systems is an interesting play on
Strong growth momentum in micro-irrigation systems and fruits & vegetables processing continues to drive strong growth, it adds. According to the brokerage, MIS and fruits & vegetables (FV) processing businesses have registered a growth of 71% and 86% year-on-year for the first nine months of the current financial year.
Yes Bank
CMP: Rs 257.40 Target price: Rs 300
CItigroup Global Markets has maintained its ‘buy’ rating on Yes Bank while raising the target price from Rs 230 to Rs 300 to factor in the proposed capital raising and continued strong growth of the bank.
“We rate Yes Bank with a buy/medium risk rating and an EVA-based Rs 300 target price,” says the report. The foreign brokerage feels that even though Yes Bank is relatively young, it has strong execution skills.
“It has built a focused asset portfolio, has strong treasury and advisory income businesses, and has kept risks relatively low. Moreover, we believe the bank offers aggressive growth potential,” the report adds. It further adds that the key catalysts for the stock's medium-term performance are likely to be easing domestic interest rate & liquidity environment, fresh capital raising and strong growth in investment banking fees.
Godawari & Ispat
CMP: Rs 292.65 Target price: Rs 400
India Infoline has maintained a ‘buy’ on Godawari Power & Ispat as it feels that the company’s capacity additions will lead to robust volume growth thereby driving the bottomline in the coming years.
“Capacity additions, which were commissioned 100% in September 2007, will lead to robust volume growth for the company. GPIL’s strong volume growth coupled with higher realisations, will lead to its revenues rising by a CAGR of 50.9% over the period FY07-10E,” says the report. Operating margins are expected to remain flat at 19.8% in FY08 and 19.9% in FY09 and then expand to 22.9% in FY10, it adds.
KEC International
CMP: Rs 730.15 Target price: Rs 870
HSBC has reiterated an ‘overweight’ recommendation on KEC International due to factors like strong order backlog and improvement in EBITDA margin. “KEC International has a Rs 50.5-billion order backlog with international orders contributing 68%, which includes the
The foreign brokerage has increased its EBITDA margin forecast to 13% for FY08E and FY09E after the company reported an improvement in EBITDA margin for the first nine months of the current fiscal. However, an increase in interest costs has led to a marginal impact on net profit, it adds. The brokerage also notes that the high court has given its approval for the merger between the two group companies, RPG Transmission and NITEL. HSBC believes that the company has continuously improved its EBITDA margin and is currently either above or in line with peers. “Thus, we expect the valuation discount to peers like Jyoti Structures and Kalpataru Power to narrow,” it adds.
ELGI Equipments
CMP: Rs 63.55 Target price: Rs 98
Geojit Financial Services has recommended a ‘buy’ rating on ELGI Equipments after factoring in the company’s new assembly unit in
The brokerage feels that vast opportunities in gas compressor sector offers huge growth potential and margin improvement for ELGI. The report also notes that the company will be setting up an assembly unit in
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