Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strategy
Alpha Bet
Initiating three new trades and closing two. We are initiating the following
trades—(1) Long UTCEM, Short ACC, (2) Long TATA, Short JSPL and (3) Long M&M
Financial, Short Shriram Transport. We are also closing our Long CDH, Short RBXY
9.6% out of the money and Long ITC, Short Asian Paints trade 2% out of the money.
Initiating Long Ultratech, Short ACC
We recommend a Long Ultratech Cement (UTCEM), Short ACC trade to benefit from (1)
Ultratech’s cheaper valuations versus ACC’s, (2) relative underperformance of UTCEM compared
to ACC in the last three months and (3) likely re-evaluation of ACC’s valuation premium over
UTCEM, which may be questioned after weak 3QCY11 results.
Initiating Long Tata Steel, Short Jindal Steel & Power
We expect Tata Steel to outperform Jindal Steel & Power (JSPL) based on the following factors—
(1) favorable reward-risk balance for Tata Steel versus JSPL on our fundamental valuations, (2)
concerns regarding JSPL’s earnings growth due to the weak execution of expansion projects even
as Tata Steel will likely benefit from the commissioning of 2.9 mtpa domestic capacity in FY2013E
and (3) JSPL’s low likelihood of meeting aggressive commissioning guidance for its power projects
could act as a negative trigger for the stock while Corus’ issues may already be factored in Tata
Steel’s current price.
Initiating Long Mahindra & Mahindra Financial, Short Shriram Transport
We prefer Mahindra & Mahindra Financial (MMFS) over Shriram Transport (STFC) due to
(1) MMFS’s higher exposure to segments like tractors and UVs which continue to witness strong
growth as compared to STFC’s exposure to a slowing CV segment, (2) lower dependence on
securitization for MMFS as compared to STFC, which can witness 5-7% lower RoEs in a stress-case
scenario and (3) strong 2QFY12 growth along with a rural India focus makes MMFS a relatively
favorable play over STFC in the short term.
Closing previous trades
We close the Long Cadila, Short RBXY trade 9.6% out of the money and Long ITC, Short Asian
Paints 2% out of the money. Cadila has corrected ~16% since inception on the back of slowing
India business which accounts for 45% of its sales. This has brought down FY2012-13E EPS
estimates by 3-5%. In comparison, Ranbaxy outperformed, correcting ~6.2% during the same
period.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strategy
Alpha Bet
Initiating three new trades and closing two. We are initiating the following
trades—(1) Long UTCEM, Short ACC, (2) Long TATA, Short JSPL and (3) Long M&M
Financial, Short Shriram Transport. We are also closing our Long CDH, Short RBXY
9.6% out of the money and Long ITC, Short Asian Paints trade 2% out of the money.
Initiating Long Ultratech, Short ACC
We recommend a Long Ultratech Cement (UTCEM), Short ACC trade to benefit from (1)
Ultratech’s cheaper valuations versus ACC’s, (2) relative underperformance of UTCEM compared
to ACC in the last three months and (3) likely re-evaluation of ACC’s valuation premium over
UTCEM, which may be questioned after weak 3QCY11 results.
Initiating Long Tata Steel, Short Jindal Steel & Power
We expect Tata Steel to outperform Jindal Steel & Power (JSPL) based on the following factors—
(1) favorable reward-risk balance for Tata Steel versus JSPL on our fundamental valuations, (2)
concerns regarding JSPL’s earnings growth due to the weak execution of expansion projects even
as Tata Steel will likely benefit from the commissioning of 2.9 mtpa domestic capacity in FY2013E
and (3) JSPL’s low likelihood of meeting aggressive commissioning guidance for its power projects
could act as a negative trigger for the stock while Corus’ issues may already be factored in Tata
Steel’s current price.
Initiating Long Mahindra & Mahindra Financial, Short Shriram Transport
We prefer Mahindra & Mahindra Financial (MMFS) over Shriram Transport (STFC) due to
(1) MMFS’s higher exposure to segments like tractors and UVs which continue to witness strong
growth as compared to STFC’s exposure to a slowing CV segment, (2) lower dependence on
securitization for MMFS as compared to STFC, which can witness 5-7% lower RoEs in a stress-case
scenario and (3) strong 2QFY12 growth along with a rural India focus makes MMFS a relatively
favorable play over STFC in the short term.
Closing previous trades
We close the Long Cadila, Short RBXY trade 9.6% out of the money and Long ITC, Short Asian
Paints 2% out of the money. Cadila has corrected ~16% since inception on the back of slowing
India business which accounts for 45% of its sales. This has brought down FY2012-13E EPS
estimates by 3-5%. In comparison, Ranbaxy outperformed, correcting ~6.2% during the same
period.
No comments:
Post a Comment