Analysts' corner

ONGC, Tata Steel & Bosch

ONGC
Reco price/date: Rs 276/September 10
Current/target price: Rs 278/Rs 309
Oil & Natural Gas Corporation (ONGC), through its subsidiary ONGC Videsh (OVL), has signed a definitive agreement to acquire Hess Corp's 2.72 per cent stake in the ACG (Azeri-Chirag-Guneshli) group of oil fields and 2.36 per cent in the Baku-Tbilisi-Ceyhan pipeline for $1 billion. ACG, located in South Caspian Sea, about 95 km off the coast of Azerbaijan, is the largest oil & gas field complex in Azerbaijan and one of the largest producing oil fields in the world. The oil field, operated by UK's BP, produced about 6,40,000 barrels of crude oil per day in the first half this year. OVL's share of the output would be about 19,000 barrels of crude oil per day. Maintain 'Hold'.

Nirmal Bang Institutional Equities

TATA STEEL
Reco price/date: Rs 351/September 7
Current/target price: Rs 380/Rs 430
Tata Steel's stock price seems to have factored in the worst (Europe operations expected to hit a bottom in the quarter ending September 2013 and improve thereafter) and valuations look attractive (five-year price/book low of 1.1 times), after underperforming the Sensex by 32 per cent over the past year. Analysts expect the Europe business to improve in 2013-14 (better volumes and restructuring) and earnings to remain stable in India (32 per cent margin); iron ore integration is 100 per cent and coking coal 40-45 per cent. Upgrade to 'Buy' from 'Neutral'.

Citigroup

BOSCH
Reco price/date: Rs 8,443/September 10
Current/target price: Rs 8,370/NA
To avoid unnecessary inventory build-up at its plants and align the production with market demand, Bosch has announced it would suspend manufacturing operations at the Bangalore facility (partially for five days) and the Jaipur plant (for four days completely) in September. Bosch has started adjusting production at its plants in Bangalore, Nashik and Jaipur by varying degrees since June, owing to the economic downturn and the declining demand in the medium and heavy commercial vehicle and tractors segments. The stock is trading at 19.4 times the 2013 estimated earnings. Maintain 'Neutral'.

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