Analysts' corner

HDIL, Bajaj Electricals, LIC Housing Finance & Century Plyboards

HDIL
Reco Price: Rs 184,
Target Price: Rs 302
HDIL sold the seven-acre Popular Car Bazar plot in Andheri (East) for approx Rs 800 crore to the Kanakia Group. The deal was struck at approx Rs 26,230/sq ft, which is higher than a recent deal by Sheth Developers where they had bought an 18-acre plot from Borosil Glass Works in the near-by Marol area for Rs 875 crore. Notably, HDIL had bought the plot from the Thakur family two years ago for Rs 400 crore. HDIL has a net debt of 0.32x, with an unpaid land cost of Rs 300 crore to be cleared over the next two years and majority of the repayment obligation starting from 2011-12. Maintain Buy.

—Angel Broking

Bajaj Electricals
Reco Price: Rs 228,
Target Price: Rs 263
Bajaj Electricals' business can be broadly classified into two segments — consumer appliances and electrical infrastructure. The small appliances segment is present in all price points. This segment contributes over 66 per cent of the overall revenue of BEL. Its strategy to outsource manufacturing helps in maintaining higher returns on investments. The E&P projects division contributes 33 per cent of total revenue of BEL. As of November 2010, the company had a strong orderbook of over Rs 1,150 crore. Maintain buy.

—Reliance Securities

LIC Housing Finance
Reco Price: Rs 182,
Target Price: Rs 250
LIC Housing Finance (LIC HF) has maintained its full-year loan growth guidance of 30 per cent. Brokerages expect the company to grow its disbursements and sanctions at 35 per cent and 40 per cent respectively in the coming quarter. Even if newer provisioning norms prescribed by NHB (which the management feels should not be applicable on the ‘Fix-o-Floaty’ loans) were to apply, the estimated net impact would be 4.4 per cent of FY12 net profit. Maintain buy.

—IIFL

Century Plyboards
Fair Value: Rs 73,
Current Price: Rs 57
Crisil Equities has assigned fundamental grade of 3/5 to Century Plyboards (India), indicating good fundamentals. The company has a strong position in the Indian plywood and laminate industry with one of India’s biggest brands - ‘Centuryply’. The company is expected to benefit from the 20 per cent growth in the organised plywood industry due to strong growth in real estate sector. It is also the largest cement manufacturer in the north-eastern region (NER), the fastest growing region in India with 13-15 per cent growth in demand. Crisil Equities expects revenues to grow at a CAGR of 19 per cent to Rs 1,700 crore over the next two years

—Crisil Equities