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February 7, 2015

Amar amabanis stock picks

Petronet LNG (Q3 FY15) – Accumulate
CMP Rs183, Target Rs200, Upside 9.3%
  • Net sales at Rs111bn was in line with our estimates; represented a growth of 19.4% yoy and 2% qoq
  • Total volumes were at 139.6 TBTUs as compared to 123.6 TBTUs in Q3 FY14 and 150.5 TBTUs in Q2 FY15, mix however changed substantially with tolling volumes jumping from 18.8 TBTUs in Q3 FY14 to 28 TBTUs in Q3 FY15
  • OPM at 3% was substantially below our and street expectations
  • PAT at Rs1.6bn was lower than our estimates on the back of a weak operational performance
  • While Kochi ramp up continues to be a concern recent developments such as stakeholders meeting by state government, leasing out of storage tanks and trucking of gas have been positive
  • We maintain our Accumulate rating as clarity should emerge on Kochi terminal in medium term and current soft LNG prices should ensure robust demand for LNG
Click here for the detailed report on the same.

Tata Motors (Q3 FY15) – BUY
CMP Rs589, Target Rs685, Upside 16.3%
  • Consolidated net sales grew by 9.5% as JLR sales grew by 10.3%
  • Growth in JLR revenues was driven by 5.3% yoy rise in volumes and 4.8% rise in realizations
  • JLR OPM was at 18.6% was lower than our estimates, margins were lower by 45bps and 76bps qoq, favorable geographic mix, better product mix was offset by less favorable realized hedges
  • OPM for standalone business were lower than estimates at a negative 9.6% and was down 371bps yoy mainly on back of operating de-leverage
  • Maintain our BUY rating as we believe JLR is set to see sustained momentum in volumes from Q4 FY15 onwards
Click here for the detailed report on the same.

Magma Fincorp (Q3 FY15) – BUY
CMP Rs99, Target Rs198, Upside 100.0%
  • Disbursement growth continues to be healthy; asset growth to improve gradually
  • NIM continues to expand; outlook remains strong
  • Sustained asset quality pressure depresses the bottomline
  • RoA/RoE to improve sharply over FY14-17; Retain BUY with 24-month target of Rs198
Click here for the detailed report on the same.

Greaves Cotton (Q3 FY15) – BUY
CMP Rs143, Target Rs232, Upside 60.8%
  • Revenues at Rs4.3bn was higher by 1.8% yoy; lower than our estimates, Robust growth in three-wheeler engine sales was offset by weakness seen in other segments
  • OPM at 11.9% was higher by 76bps yoy but saw a decline of 80bps qoq, yoy expansion was driven by cost cutting initiatives implemented
  • Recurring PAT was at Rs424mn as compared to a profit of Rs391mn in Q3 FY14, exceptional item of Rs407mn mainly pertaining to exit from the infrastructure segment resulted in a PAT of Rs18mn
  • Maintain our rating to BUY with a 2-year price target of Rs232
Click here for the detailed report on the same.

KEC International Ltd (Q3 FY15) – BUY
CMP Rs86, Target Rs120, Upside 28.9%
  • KEC Q3 FY15 operational results were quite lower than our expected on account of weaker execution and depreciation of currency
  • Topline for the quarter was lower by 6.7% yoy to Rs20.5bn as contribution from SAE was lower and domestic T&D remained sluggish
  • Margins contracted 135bps yoy and 47bps qoq due to operating loss at SAE and slower execution
  • Order inflow at Rs11bn was quite lower than estimate on account of delay in order finalization; KEC has indicated that it is L1 in orders worth Rs40bn
  • Bottomline jumps 3x on a yoy basis due to proceeds from sale of land
  • Receivables days reduced on a qoq basis from 194 days to 188 days
  • Management remained confident of delivering margins close to 8% in FY16 and 10% growth in topline
  • Maintain Buy on the stock with a revised price target of Rs120
Click here for the detailed report on the same.

Bharti Airtel (Q3 FY15) – BUY
CMP Rs365, Target Rs450, Upside 23.3%
  • Bharti Q3 a mixed bag with India wireless EBIDTA momentum intact even as Africa disappoints yet again
  • Domestic wireless EBIDTA up 5.8% on 1.4% volume growth and data share gain of 170bps qoq; voice pricing marginally down qoq
  • Africa margin slips further to 21.8% amongst the lowest since acquisition though capex spending ramped up to 26% of revenues
  • A well rounded spectrum portfolio and an effective play on the robust ongoing data growth supports our BUY reco for revised 9-12mth target of Rs450
Click here for the detailed report on the same.

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