Analysts' corner

Coal India, Sintex industries, Adani Ports and DCB

COAL INDIA
Reco price: Rs 343;
Target price: NA
Media reports suggest Coal India has agreed to raise the wages of its non-executive staff by 25 per cent. This is in line with analysts' estimates and management's guidance. Coal India's wage bill for its workers stood at Rs 15,000 crore in FY2011 (total staff costs - Rs 18,211 crore). The raise is expected to increase wage costs to Rs 18,750 crore a year. The new wage agreement is also expected to provide a three per cent increase annually for the coming five years. Analysts maintain their total staff cost estimates at Rs 22,085 crore and Rs 23,899 crore for FY2012 and FY2013, respectively. Neutral.

Angel Broking

SINTEX INDUSTRIES
Reco price: Rs 72;
Target price: Rs 78
Sintex Q3FY12 top line was in line with analysts estimates. However, a steep decline in margins of the monolithic and custom molding business led to lower-than-expected net profit at Rs 82 crore. Analysts believe the company's monolithic business will face further slowdown due to delay in payments and orders from the government, even as its working capital cycle continues to deteriorate. Edelweiss has cut its estimates for FY12 and FY13 earnings a share by 49 and 66 per cent, respectively, and target price to Rs 78 (earlier Rs 196). Reduce the rating from buy to hold.

Edelweiss securities

ADANI PORTS AND SEZ
Reco price: NA;
Target price: Rs 177
Adani Ports and SEZ's consolidated operating cash flows are set to multiply 1.8 times in three years, driven by volume growth of an 1.6 times and firm rates. Analysts believe 18 per cent stock correction in the last two months factors concerns to a large extent on the Abbot Point acquisition (worth Rs 8,800 crore) and high leverage. Recent debt refinancing alleviates financing concerns. Despite gross debt/equity ratio of 2.9 times, the current low interest rate of five per cent on Abbot Point debt results in a comfortable estimated interest cover of 3.4 times in FY12. Maintain buy.

Enam Securities

DEVELOPMENT CREDIT BANK
Reco price: Rs 41;
Target price: Rs 60
Development Credit Bank (DCB) reported net profit of Rs 15.6 crore, above the analysts' estimates of Rs 11.7 crore; boosted by net interest income (NII) growth of 21 per cent year-on-year (Y-o-Y), despite lower credit growth at 8.9 per cent Y-o-Y and lower NPA provisions. Zero tax provisions continued since Q1FY12. Maintain buy.

ICICI Securities