Analysts' corner

HCC, SpiceJet

HCC
Reco price: Rs 110,
Target price: Rs 146

With a robust Rs 18,800-crore order book at the end of FY10, Hindustan Construction Company (HCC) is expected to chart a strong growth trajectory. With public-private-partnership projects gaining currency, HCC has drawn ambitious plans in the asset ownership space. Its current $120-crore portfolio comprises six road build-operate-transfer (BOT) projects, of which one is operational, two are under development, and three are yet to begin. The company plans to build a sizeable portfolio in the transportation and energy space. A robust order book and strong execution capabilities are likely to keep the core engineering, procurement and construction (EPC) business in fine fettle. Of the sum-of-the-parts based target price of Rs 146 — EPC accounts for Rs 59 per share, BOT Rs 16, Lavasa contributes Rs 52, with the balance coming from realty business. Maintain buy.

— Edelweiss Securities

SpiceJet
Reco price: Rs 110,
Target price: Rs 146

SpiceJet’s top line grew 34.3 per cent year-on-year during the fourth quarter of FY10, but fell 12.8 per cent sequentially to Rs 560 crore, slightly lower than the estimate of Rs 590 crore. The company reported net profit of Rs 27.5 crore during the March quarter, as compared to a loss of Rs 7.8 crore during the year-ago period. This was lower than estimates due to less revenues and higher advertisement costs. The company is well-equipped to service the growing passenger traffic demand, with an estimated addition of four aircraft during FY2011E. The stock is trading at 11.5x FY2011E and 8.1x FY2012E earnings. Maintain accumulate.

— Angel Securities