Analysts' corner

HCL Technologies, Eicher Motors & GMDC

HCL TECHNOLOGIES
Reco price: Rs 403
Target price: Rs 578
HCL Tech will be establishing a software delivery centre in Dublin, Ireland, which will employ 80 graduates over three years. With this, it will be servicing a growing number of clients and increasing its prospects in financial services, insurance and healthcare and pharmaceutical industries. Plans for the centre were provoked by a forecast for rapidly increasing demand for IT services in this region. HCL Tech has global delivery centres in the UK, Poland, Finland, US, Brazil, China, India, Malaysia and Northern Ireland and employs 4,500 people across Europe. Maintain buy.

— Angel Broking

EICHER MOTORS
Reco price: Rs 1,556
Target price: Rs 1,965
Following the recent management meetings, the analysts' bullish view is strengthened on Eicher Motors. BofA Merrill Lynch raised its target price by 15 per cent, based on the higher valuation multiples of key operating segments (i.e. CVs/engines, two wheelers), which reflects solid business fundamentals driving a superior earnings growth. The management targets 100,000 unit sales (21 per cent CAGR) by 2015, largely predicated on the 16-40T heavy-duty trucks. A multi-pronged strategy to expand product range, applications and the spare parts business could make this achievable. Light vehicles continue to grow ahead of the industry, which is impressive, given the tough economic environment. Analysts expect margins to trend up from 13 per cent, currently operating well below the peers. The global engine platform (five-eight litre) will enhance the technological capability of the JV with respect to the scale (85k units, phase I), emissions (euro three-six compliant) and also improve the positioning of the domestic trucks. Buy.

— BofA Merrill Lynch

GMDC
Reco price: RS 179
Target price: Rs 195
On the back of the increased sales of lignite and bauxite, GMDC registered a good growth in Q1FY11. Both top line and bottom line were up 36 and 46 per cent YoY, respectively. Higher lignite and bauxite volumes, better power plant performance and the ongoing capacity expansion plans make the company reliable for investment. More, it has a huge reserve base to cater to the demand potential of Gujarat. It has been growing at a CAGR of 28 per cent for the past five years, whereas the Ebitda and the net profit have registered a CAGR of 22 and 23 per cent, respectively. Buy.

— Bonanza Portfolio