Analysts' Corner

Maruti Suzuki, Adani Power & Omaxe

MARUTI SUZUKI
Reco price: Rs 1,226
Target price: Rs 1,475
Management comments of a Rs 40 crore daily revenue loss on a production halt due to the Manesar plant strike leads us to see an inevitable but inconsequential impact just now on Maruti’s estimated FY12 earnings per share. In the near term, MSIL has adequate channel inventory to compensate for the production loss, though not on diesel cars. The stock trades at 12.4 times its estimated FY12 and 10.4 times its estimated FY13 earnings per share.

— Anand Rathi

ADANI POWER
Reco price: Rs 116
Target price: Rs 115
Adani Power (APL) aspires to become one of the largest private independent private producers in the country underpinned by a six-fold increase in capacity. Until date, it provides visibility for only 7.9GW where it achieved majority of the milestones. APL has long-term PPAs in place and has assured fuel linkages for a majority of its capacity. Nevertheless, we believe the company runs the risk of short supplies from the domestic market, which would translate into spot coal purchases.

— Pinc Research

OMAXE
Reco price: Rs 129
Fair value: Rs 146
Omaxe’s consolidated Q4FY11 revenues were marginally higher than Crisil Equities’ expectations driven by a pick-up in the ongoing construction projects. However, margins were lower than our expectations due to subdued realisation over the previous quarter; inflationary pressures have increased the cost of borrowing and construction costs.

—Crisil Equities