Analysts' corner

M&M, Bharti Airtel, Thermax, Gujarat Pipavav Port

M&M
Reco price/date: Rs 865/March 26 ;
Current/target price: Rs 863/Rs 910
M&M seems to be where Maruti was three-four years back, that is when heavy competition was just upon it. While Maruti proceeded to withstand competitive pressures extremely well, the stock was under pressure till they proved their mettle. We now foresee the same happening with M&M. While only time will where their UV market share stabilises, till all OEMs of reasonable repute have had their fair shot at the relatively untapped UV space, we expect the stock to remain under pressure. Conversely, the support for the stock is an upcoming election year (huge industry tailwind), worst being behind for tractors (a money-spinner for them) and reasonable valuations (core auto biz FY15 P/E at Rs 10x). Maintain HOLD.

- Antique Stock Broking

BHARTI AIRTEL
Reco price/date: Rs 289/March 26;
Current/target price: Rs 297/Rs 350
Steep mobile termination rate cut in Nigeria a positive. The Nigerian Telecom regulator (NCC) has announced a steep cut in mobile termination rates (MTR) to 3.90 NGN/minute by April 1, 2015 through a glide path with a couple more intermediate cuts. The current MTR is 8.20 NGN/minute. In addition to the immediate Ebitda benefit, in terms of lower net interconnect costs, this development makes challengers (including Bharti) more competitive than MTN, Nigeria's dominant wireless operator. Challengers benefit from MTR cuts; a challenger can choose to retain the improved off-net profitability to shore up its P&L or decide to pass it on to customers to gain market share. Either way, they benefit; unless of course, they pass on the benefit and still don't gain market share. We remain constructive on the stock, maintaining a target price of Rs 350. Maintain ADD.

- Kotak Institutional Equities Research

THERMAX
Reco price/date: Rs 561/March 26 ;
Current/target price: Rs 551/Rs 648
Thermax's ability to bag base orders of Rs 700 to Rs 800 crore per quarter, increasing market share and strong management pedigree gives us a confidence that it will be able to tide the slowdown and participate in the upturn of the cycle meaningfully and continue to surprise positively in terms of order flow. We believe Thermax will continue to benefit from continued power shortage and strong product portfolio. The Company aspires to become a $2 billion company over next four-five years from $1 billion currently. The journey will largely be driven by increasing application of current product portfolio, increasing export foot print (plans to add $100 million from each geography like Africa, South East Asia, West Asia and rest of world).The stock is trading at 18x FY14E earnings. Maintain Accumulate.

- Prabhudas Lilladher Research

GUJARAT PIPAVAV PORT
Reco price/date: Rs 50/March 25;
Current/target price: Rs 50/Rs 65
Gujarat Pipavav Port (GPPL) has staged a smart recovery in container volumes, led by new customers. Profitability too has improved on the back of higher volumes and product mix. Long-term contracts for 30 per cent of expanded capacity in containers, and inroads into fertilizer and wheat cargo add to volume visibility. While uncertainty persists on trade recovery, we expect 17 per cent CAGR in GPPL's container volumes, largely led by market share recovery. On higher volumes and better efficiency, we see a 260bp rise in Ebitda margins and 45 per cent earnings CAGR for over CY12-14. Given its strong parentage, scalability and low leverage, we reiterate outperformer on GPPL with a 12-month price target of Rs 65. Maintain Outperformer.

- IDFC Institutional Securities