Analysts' corner

Page Industries, Ballarpur Industries & Bharat Petroleum

PAGE INDUSTRIES
Reco price/date: Rs 3,319/December 26;
Current/target price: Rs 3,445/Rs 3,500
Page Industries’ (Page) management highlighted that the company has not witnessed any slowdown and continues to grow in the range of 18-20 per cent. The company expects to add to its capacity by 19 per cent every year and gave a capex guidance of Rs 30 crore per year till 2016-17. The current capacity stands at 136 million pieces. The management expects Ebitda margin to decline by 60-80 basis points in FY13. Analysts remain positive on the stock on the back of shift in consumer preference towards branded products. The stock is currently trading at 33.7 and 26.1 times FY13 and FY14 estimated earnings respectively. Maintain Add.

ICICI Securities

BALLARPUR INDUSTRIES
Reco price/date: Rs 22/December 27;
Current/target price: Rs 23/Rs 35
Ballarpur Industries due to its dominant position should be the prime beneficiary of turnaround in the paper sector. Its backward integration by raising pulp capacity should decrease its input dependency on imports significantly and lead to a strong margin expansion. Analysts estimate cost savings of $170-205 a tonne. The savings are expected to yield an incremental Ebitda of Rs 290 crore in FY14 over FY12. Additionally, another Rs 80 crore and Rs 150 crore Ebitda benefit should be from savings from power/fuel costs due to power plant purchase from Avantha and operating leverage benefits, respectively. This operating profit jump should translate into a net profit CAGR of 59 per cent over FY12-14. Initiate Coverage with Buy.

Elara Capital

BHARAT PETROLEUM
Reco price/date: Rs 356.10/December 31;
Current/target price: Rs 367.15/Rs 455
The market has rewarded BPCL (OW) well for its upstream successes, with the stock outperforming the Indian market by 23ppt in 2012. It has been a story of two halves, though, with the stock rising 56 per cent in H1 2012, but down four per cent since June as M&A news flow eased after Cove Energy's takeover by PTTEP. The East Africa M&A theme is at its early stages, though, in our view and we expect more valuation benchmarks to crystallise over time as the global majors step into the province. Even otherwise, we expect news flow for BPCL to stay supportive in 2013-14, as its consortium drills more exploration and appraisal wells in Mozambique and Brazil, as the Mozambique LNG project nears final investment decision in late 2013 for a 2018 start-up and clarity emerges on the E&P resource base and monetisation plan in Brazil. Maintain overweight.

Barclays Capital