Analysts' corner

Thermax, Bajaj Corporation & CMC

THERMAX
Reco price/date: Rs 601/Jan 15;
Current/target price: Rs 590.55/Rs 624
Analysts are building in order inflow of Rs 4,700 crore for FY13E, Rs 5,400 crore in FY14E and Rs 61 crore in FY15E. Their estimates adequately factor in a revival in business over FY14-15, in their view. They remain positive from a long-term perspective, given management’s conservative strategy and track record. Near term upside is limited, though, with the stock trading at 18x one-year forward EPS and is pricing in a significant pick up in business environment, too soon. Maintain Outperform.

HDFC Securities Institutional Research

BAJAJ CORPORATION
Reco price/date: Rs 255/Jan 14;
Current/Target price: Rs 253.9/Rs 253.35
Analysts upgrade FY13E and FY14E estimates by six per cent and 11 per cent as they build in higher volume growth in Almond Drops and benefit of gross margin expansion. Their positive view stems from our confidence in (1) strong brand equity of Almond Drops and its leadership position in hair oil market, (2) high growth potential of the light hair oil market; we expect the market to post 18 per cent CAGR over FY2013-15E and (3) high entry barriers in the light hair oil market. Analysts increase their target price from Rs 225 earlier and Maintain Buy.

Kotak Institutional Equities Ltd

CMC
Reco price/date: Rs 1,331/Jan 11;
Current/target price: Rs 1,345.9/Rs 1,371.25
CMC reported Q3FY13 results exceeding analysts/consensus expectation. The revenue growth has been consistently supported by System Integration (cumulative quarterly growth rate of around nine per cent over the last three quarters), while IT-enabled services remained relatively muted in Q3FY13. The margin profile continues to be stable as reiterated by the management. The management is confident of maintaining Ebitda margin in the 15-17 per cent range, despite rupee appreciation. We expect offshore leverage to kick in from Q1FY14, which will aid margin expansion. Analysts have revised their target price and reiterate ‘Accumulate’ rating.

Prabhudas Lilladher Research