Analysts' corner

Cairn India, P&G Hygiene and Healthcare, Dish TV & BGR Energy Systems

CAIRN INDIA
Reco price: Rs 252
Target price: Rs 350
With a 20 per cent correction over one month, analysts believe the stock is pricing in the worst. The royalty and the cess have already been factored into the price. Any near-term concerns on global macro have also been built in. The stock price also factors in a long-term oil price of $60 per barrel. With Cairn Plc (52 per cent stake) having already opted and Vedanta (28 per cent stake) likely to opt for a deal, analysts think shareholder approval is a formality (the approval is slated for September 14). Other conditions (like no objection from partners and the home ministry's clearance) should not take long. Maximisation of resource potential is likely under a new ownership, feel analysts. Maintain buy.

— Nomura Equity Research

P&G HYGIENE AND HEALTHCARE
Reco price: Rs 1,975
Target price: Rs 1,634
P&G Hygiene and Healthcare's Q4FY11 sales growth was ahead of estimates, as it grew 23.6 per cent y-o-y to Rs 25 crore. Higher input costs and inferior product mix led to a lower-than-expected Ebitda margin of 9.9 per cent -- an all-time low. Net profit increased three times to Rs 36 crore on the back of higher other income, lower depreciation and tax gains. Standard Chartered Research has cut its EPS estimates for FY12 and FY13 by 7.2 and 6.9 per cent, respectively. At FY12 P/E of 33.5 times, the company continues to trade at irrational valuations. Maintain underperform.

— Standard Chartered Equity Research

DISH TV
Reco price: Rs 75
Target price: Rs 84
Subscriber growth may moderate as base gets larger and as big cricket events are now behind us. Even as the forecast for addition to subscriber base, at 2.7 million, remains healthy, it is less than 3.5 million in 2010-11. Benefits of higher pricing (as five to eight per cent YTD) and HD acceptance will help ARPUs. This should make up for any moderation in subscriber growth and/or content cost renegotiations. One per cent ARPU rise leads to four per cent Ebitda increase. Also, one per cent rise in the number of subscribers leads to the same increase in Ebitda. The stock trades at 12 times FY13 estimated EV/Ebitda - reasonable, given the high growth (72 per cent Ebitda Cagr expected over FY11-13). Maintain buy.

— Citigroup

BGR ENERGY SYSTEMS
Reco price: Rs 312
Target price: NA
After a dry spell of nearly eight months, BGR Energy Systems (BGR) has won a contract from the Nuclear Power Corporation of India, valuing Rs 448 crore. Its scope includes supply, erection, testing and commissioning of the main plant's electrical systems (including the nuclear island's electricals) at Kota, Rajasthan and Kakrapara, Gujarat. Notably, the stock has reacted positively and gained five per cent, closing at Rs 312. Analysts, however, believe that while the order value is decent, it will do little to magnify growth prospects for FY2013. BGR needs bigger order wins to chart a more meaningful growth trajectory. Maintain neutral.

— Angel Broking