Analysts' corner

ING Vysya Bank, McLeod Russel India, Hitech Plast Ltd

ING VYSYA BANK
Reco price/date: Rs 562/January 29
Current/target price: Rs 585/Rs 657
ING Vysya reported a strong set of numbers for Q3FY13, with net profit exceeding consensus estimate by seven per cent. The result surprised analysts positively on NIMs (16 bps QoQ expansion) and asset quality (NNPA per cent of 0.05), as the bank had enough revenue momentum to increase provisioning coverage to 97 per cent. While there are early signs of a pickup in retail advances (+4.6 per cent QoQ vs -1.2 per cent in Q2FY13), retail liabilities lagged during the quarter, as new-to-bank customer momentum marginally declined. Analysts expect the bank to re-rate to 1.9 times FY14 estimated price/book. Maintain Buy.

Espirito Santo Securities

MCLEOD RUSSEL INDIA
Reco price/date: Rs 349/January 29
Current/target price: Rs 349/ Rs 410
With domestic tea production expected to fall by 5million kg from FY12 levels, McLeod Russel India expects auction prices to head further north on conclusion of the plucking season in FY13. Additionally, the drop in production in CY12 in major tea-producing countries like Kenya and Sri Lanka is reflecting in export prices of Indian CTC tea, which have risen by Rs 25 a kg in the last couple of months. This could play out favourably for McLeod Russel, as it works the arbitrage between domestic and international prices and diverts its output accordingly. The stock trades at FY14 estimated P/E and EV/Ebitda of 9.8 times and 6.1 times respectively. Maintain Buy.

Anand Rathi Securities

HITECH PLAST LTD
Reco price/date: Rs 57/24th January
Current/target price: Rs 56/Rs 80
CRISIL Research has assigned a fundamental grade of 3/5 to Hitech Plast Ltd (Hitech), a leading player in the domestic rigid packaging industry. It has a market share of 35 per cent in the paint container segment and is one of the largest non-paint container manufacturers. The company's strong relationship with Asian Paints has ensured repeat business. Business momentum is expected to pick up, after a tough FY12, due to expected end-user industry growth and new client additions. High revenue contribution from Asian Paints, inability to timely pass on raw material price increase and slowdown in end-user industries are key risks. Hitech's revenues are expected to grow at a three-year CAGR of 15 per cent to Rs 590 crore in FY15. Adjusted net profit is estimated to increase by 26 per cent over FY12-15 to Rs 21 crore.

CRISIL Research