Analysts' corner

NHPC, Raymond, IL&FS Transportation Networks & Deepak Fertilisers

NHPC
Reco price: Rs 21,
Target price: NA
NHPC reported net profit of Rs 220 crore for Q3FY12. Adjusted for several extraordinary /exceptional items, net profit stood at Rs 270 crore (up 51 per cent YoY), in-line with analysts estimates. Barring Loktak, all other NHPC projects reported degrowth in generation and average PLF stood at 38 per cent versus 37 per cent YoY. NHPC has lowered its capacity addition targets for FY12 and FY13 to 313Mw and 673Mw, respectively. It is facing regulatory and administrative bottlenecks for some projects in J&K and Arunachal Pradesh, and environment issues at Kotle Bel. This, has further diminished visibility on capacity addition ramp-up. MOSL has cut its FY12/FY13 estimates to factor in capacity delays. Maintain Neutral.

MOSL

RAYMOND
Reco price: Rs 341,
Target price: Rs 525
Nomura has raised its target price to Rs 525. Analysts view the current price level as an excellent entry point for a long-term secular growth story. Nomura has reduced its FY13 sales growth rate estimate from 11.1 per cent to 7.1 per cent on the back of Q3 results and expected moderation in realisation growth. Analysts incorporate a slowdown in the consumer sentiment in their FY12-FY13 estimates but expect growth to rebound in FY14. While Nomura has also reduced their margin assumptions for FY12, they have increase their FY13 Ebitda margin estimate by 220 basis points to factor in the fall in raw material price along with the closure of unprofitable businesses like Manzoni. Maintain Buy.

Nomura Equity Research

IL&FS TRANSPORTATION NETWORKS
Reco price: Rs 209,
Target price: Rs 227
IL&FS Transportation Networks (ITNL) has emerged as the lowest bidder for four-laning of the Kiratpur to Ner-Chowk project worth Rs 1,818 crore. This BOT project in Himachal Pradesh would be executed on a DBFOT basis under Phase-III. The project is on a toll basis, with a concession period of 28 years and construction period of three years. Further, NHAI would provide a grant of Rs 134.6 crore to ITNL. This is positive for the company, as ITNL had not won any project in FY12 owing to the aggressive bidding witnessed in the road sector. Considering the sharp run-up in the share price (39 per cent in one month), analysts recommend accumulate on the stock. Accumulate.

Angel Broking

DEEPAK FERTILISERS
Reco price: Rs 141,
Target price: Rs 220
Deepak Fertilisers’ (DFPCL) Q3FY12 adjusted net profit was in-line with analysts’ estimates at Rs 49 crore, owing to robust revenue growth of 60 per cent YoY, despite lower than estimated Ebitda margin (which declined 520 basis points YoY to 16.6 per cent). Even as margin pressures continued in the chemicals segment, with raw material prices coming off and rupee appreciating, analysts expect to see a margin improvement going forward. Edelweiss has maintained their EPS estimates for FY12 and FY13. Currently, the stock is available at 5.7 times and 4.7 times consolidated price/earnings and at 4.0 times and 3.2 times consolidated EV/Ebitda FY12 and FY13, respectively. Maintain Buy.

Edelweiss Securities