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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Credit downgrade for the US by S&P and fiscal distress in Eurozone
have clearly dominated sentiment across world markets. Indian
equities were no exception and suffered over the past three weeks,
correcting 7.5%. While many headwinds prevail and will continue to
impact the Indian economy in the medium term, the extent of the
fall in equities has made valuation reasonably attractive; Nifty is
trading at 12.5x FY13E earnings. Furthermore, crude prices have
cooled off and the RBI is likely to maintain status quo in next meet.
News reports also indicate towards a possible surprise by the
government on the policy front. Already, the CoS has recommended
51% FDI in multi-brand retail while urea decontrol has been cleared
by a GoM. We can expect a relief rally in the near to medium term
taking the Nifty to ~5400 levels. We have identified nine stocks for
investment which are trading at compelling valuations.
Stock details
Stock
CMP
(Rs)
Target
(Rs) Investment Rationale
Axis Bank 1,209 1,575
1) System outperforming loan growth to continue
2) NIM has bottomed-out; estimated at 3.5% for
FY12 3) Asset quality to remain strong 4)
Valuation attractive both in absolute and relative
terms
Hindalco 151 202
1) Aluminium production to witness volume
CAGR of 14% over FY11-13 2) Novelis has
benefited from strong demand across product
categories and increasing margins 3) Earnings
from Novelis would be resilient enough to
withstand any global shocks
ICICI Bank 940 1,275
1) On firm growth trajectory after a successful
transformation 2) NIM would remain resilient in
the longer term 3) Asset quality has been stable;
capital position is robust 4) RoE to improve;
valuation would re-rate
ITC 198 232
1) Strong brand portfolio and substantial pricing
power will result in robust growth for cigarettes
business 2) Other-FMCG segment to break even
by FY13 3) Recent decline in tobacco prices to
result in margin accretion
Lupin 453 520
1) Only Indian company having healthy
performance in branded business in US 2)
Growth in US market would continue led by
stabilized branded sales and growing generic
portfolio 3) Its recent tie-up with Eli -Lilly to
augment domestic growth
M&M 740 820
1) Tractor volumes to remain strong on better
credit availability and increased MSP for crops 2)
M&M leadership in Uvs to continue 3) Ssanyong
volume and financial performance to see
meaningful recovery
Manappuram 53 77
1) Fastest growing gold loan company 2) New
branches to drive 51% AUM CAGR over FY11-
13E 3) Operating leverage to cushion RoA while
RoE to improve 4) Valuation extremely attractive
in the light of robust earnings CAGR
Tata Motors 801 1,025
1) Valuations attractive at P/E of 5x FY13E EPS
2) JLR performance would remain strong
considering strong demand traction in emerging
economies 3) JLR margins to remain resilient on
back of TML's cost cutting initiatives
TCS 951 1,180
1)Relative out-performance to continue; recent
sharp correction provides a good entry point
2)Margin management strong; expect it to remain
range bound 3)Discretionary exposure relatively
less; well-diversified service mix to sustain growth
Source: India Infoline Research, Prices as on August 12, 2011
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Credit downgrade for the US by S&P and fiscal distress in Eurozone
have clearly dominated sentiment across world markets. Indian
equities were no exception and suffered over the past three weeks,
correcting 7.5%. While many headwinds prevail and will continue to
impact the Indian economy in the medium term, the extent of the
fall in equities has made valuation reasonably attractive; Nifty is
trading at 12.5x FY13E earnings. Furthermore, crude prices have
cooled off and the RBI is likely to maintain status quo in next meet.
News reports also indicate towards a possible surprise by the
government on the policy front. Already, the CoS has recommended
51% FDI in multi-brand retail while urea decontrol has been cleared
by a GoM. We can expect a relief rally in the near to medium term
taking the Nifty to ~5400 levels. We have identified nine stocks for
investment which are trading at compelling valuations.
Axis Bank - BUY
Hindalco Industries - BUY
ICICI Bank - BUY
ITC - BUY
Lupin Pharma – BUY
Mahindra & Mahindra - BUY
Manappuram Finance Ltd - BUY
Tata Consultancy Services-BUY
Tata Motors - BUY
Stock details
Stock
CMP
(Rs)
Target
(Rs) Investment Rationale
Axis Bank 1,209 1,575
1) System outperforming loan growth to continue
2) NIM has bottomed-out; estimated at 3.5% for
FY12 3) Asset quality to remain strong 4)
Valuation attractive both in absolute and relative
terms
Hindalco 151 202
1) Aluminium production to witness volume
CAGR of 14% over FY11-13 2) Novelis has
benefited from strong demand across product
categories and increasing margins 3) Earnings
from Novelis would be resilient enough to
withstand any global shocks
ICICI Bank 940 1,275
1) On firm growth trajectory after a successful
transformation 2) NIM would remain resilient in
the longer term 3) Asset quality has been stable;
capital position is robust 4) RoE to improve;
valuation would re-rate
ITC 198 232
1) Strong brand portfolio and substantial pricing
power will result in robust growth for cigarettes
business 2) Other-FMCG segment to break even
by FY13 3) Recent decline in tobacco prices to
result in margin accretion
Lupin 453 520
1) Only Indian company having healthy
performance in branded business in US 2)
Growth in US market would continue led by
stabilized branded sales and growing generic
portfolio 3) Its recent tie-up with Eli -Lilly to
augment domestic growth
M&M 740 820
1) Tractor volumes to remain strong on better
credit availability and increased MSP for crops 2)
M&M leadership in Uvs to continue 3) Ssanyong
volume and financial performance to see
meaningful recovery
Manappuram 53 77
1) Fastest growing gold loan company 2) New
branches to drive 51% AUM CAGR over FY11-
13E 3) Operating leverage to cushion RoA while
RoE to improve 4) Valuation extremely attractive
in the light of robust earnings CAGR
Tata Motors 801 1,025
1) Valuations attractive at P/E of 5x FY13E EPS
2) JLR performance would remain strong
considering strong demand traction in emerging
economies 3) JLR margins to remain resilient on
back of TML's cost cutting initiatives
TCS 951 1,180
1)Relative out-performance to continue; recent
sharp correction provides a good entry point
2)Margin management strong; expect it to remain
range bound 3)Discretionary exposure relatively
less; well-diversified service mix to sustain growth
Source: India Infoline Research, Prices as on August 12, 2011
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