HDFC Securities has recommended buy rating on Punjab National Bank with a target of Rs 1148 in its July 28, 2010 research report
The bank has reported decent numbers in Q1FY11 amongst the other public sector banks. The asset quality of the bank though came
down in Q1FY11 is still at healthy levels with Net NPA% at 0.66% of the net advances. This is still one of the healthiest asset qualities
in the industry. PNB managed to grow its Net Interest Margin in Q4FY10 to 3.94%. This is one of the highest in the industry.
HDFC Securities has recommended buy rating on Punjab National Bank with a target of Rs 1148 in its July 28, 2010 research report
PNB offers one of the best investment profiles due to its strong liability franchise, good earnings visibility, healthy asset quality, strong
CASA ratio, adequate provisioning and reasonably healthy CAR. PNB could also benefit out of the rural thrust of the government as
three fifth of its branches are in the farm rich belt of Punjab, Haryana and Rajasthan. It also has a strong presence in the Indo Gangetic
plains, which helps the bank lend more to the MSME sector. Aggressive lending during the credit crunch period has resulted in increase in the restructured assets.
In our Q4FY10 result update on PNB dated May 11, 2010, we had mentioned that the stock could in the Rs.899 (1.45x FY11 (E) Adj.
BV) to Rs.1054 (1.70x FY11(E) Adj. BV) band over the next quarter. Post the report; the stock achieved a high of Rs 1103.75 on 5th
July 2010 and a low of Rs 933.10 on 26th May 2010.
We are keeping our FY11 estimates unchanged at the moment, though there is a good chance that the bank could report higher net
interest income and net profit than our estimates. We feel that the bank, which is currently trading at 1.67x FY11E Adj. BV, could trade
in the range of Rs 960 (1.55x FY11E Adj. BV) and Rs 1148 (1.85x FY11E Adj. BV) over the next quarter.
Wednesday 28 July 2010
Jaiprakash Associates
ICICI Direct has recommended buy rating on Jaiprakash Associates with a target of Rs 151 in its July 27, 2010 research report.
At the CMP, the stock is trading at 23.5x FY12 earning estimates and 2.7x FY12 P/BV. We have downgraded our earnings estimates and expect the stock to remain range bound in the near term due to volatility in the construction division margin, higher interest & depreciation expenses.
However, we see significant value over the medium term in the stock. We continue to value the stock using the SOTP methodology and value it at Rs 151 per share. We have valued the company’s cement division at an implied EV/ tonne of US$103 per tonne, construction business at 6x FY12 EV/EBITDA, power division using FCFE methodology and Jaypee Infratech at a 20%discount to current market price. We maintain our STRONG BUY recommendation on the stock.
However, we see significant value over the medium term in the stock. We continue to value the stock using the SOTP methodology and value it at Rs 151 per share. We have valued the company’s cement division at an implied EV/ tonne of US$103 per tonne, construction business at 6x FY12 EV/EBITDA, power division using FCFE methodology and Jaypee Infratech at a 20%discount to current market price. We maintain our STRONG BUY recommendation on the stock.
Buy Sterlite Industries target Rs 228
Angel Broking has recommended buy rating on Sterlite Industries (India) with a target of Rs 228 in its July 26, 2010 research report.
“Sterlite is currently trading at 6.5x and 4.4x FY2011E and FY2012E EV/EBITDA, respectively. We have revised our FY2011E and FY2012E estimates to factor in lower metal prices at LME, lower sales volume estimates and other bookkeeping changes. We maintain a buy on the stock with a revised target price of Rs 228 (earlier Rs 245),” says Angel Broking research report.
“Sterlite is currently trading at 6.5x and 4.4x FY2011E and FY2012E EV/EBITDA, respectively. We have revised our FY2011E and FY2012E estimates to factor in lower metal prices at LME, lower sales volume estimates and other bookkeeping changes. We maintain a buy on the stock with a revised target price of Rs 228 (earlier Rs 245),” says Angel Broking research report.
GSK Pharmaceuticals
Emkay Share & Stock Brokers is bullish on GlaxoSmithKline Pharmaceuticals and has recommended buy rating on the stock, in its July 27, 2010 research report.
“GSK Pharma’s net sales for 2QCY10 grew 9% YoY to Rs4.98b (v/s our estimate of Rs5.2b) while adjusted PAT grew 6% YoY to Rs1.4b (v/s our estimate of Rs1.46b). Supply constraints resulted in lower vaccine sales, which in turn impacted topline growth. The management has indicated that the supply of vaccines has begun improving towards the end of June 2010. Domestic pharmaceutical revenues grew 12% YoY while overall sales (including exports) grew 9% YoY.”
“The stock deserves premium valuations due to strong parentage (giving access to large product pipeline), brand-building ability and likely positioning in post patent era. Based on lower than estimated 2QCY10 results, we have downgraded our EPS estimates. We now estimate EPS at Rs68 (up 14.2%) for CY10 and Rs78.2 (up 15%) for CY11. The stock trades at 30.2x CY10E and 26.3x CY11E earnings. Maintain Buy.”
“GSK Pharma’s net sales for 2QCY10 grew 9% YoY to Rs4.98b (v/s our estimate of Rs5.2b) while adjusted PAT grew 6% YoY to Rs1.4b (v/s our estimate of Rs1.46b). Supply constraints resulted in lower vaccine sales, which in turn impacted topline growth. The management has indicated that the supply of vaccines has begun improving towards the end of June 2010. Domestic pharmaceutical revenues grew 12% YoY while overall sales (including exports) grew 9% YoY.”
“The stock deserves premium valuations due to strong parentage (giving access to large product pipeline), brand-building ability and likely positioning in post patent era. Based on lower than estimated 2QCY10 results, we have downgraded our EPS estimates. We now estimate EPS at Rs68 (up 14.2%) for CY10 and Rs78.2 (up 15%) for CY11. The stock trades at 30.2x CY10E and 26.3x CY11E earnings. Maintain Buy.”
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