JSW Steel
Reco price: Rs 1,221
Target price: Rs 1,400
JSW Steel reported a good set of March quarter figures on higher steel realisation and the turnaround in US operations. While the product mix would improve in 2010-11, increasing raw material costs may put pressure on margins. In the present quarter, JSW sold 1.52 million tonnes, around 7 per cent higher sequentially, as production was back to normal after a prolonged monsoon affected volumes last quarter. Blended steel realisation also improved 7 per cent sequentially to around Rs 34,300/tonne, resulting in 13 per cent sequential revenue growth. Margins improved 170 basis points (bps) sequentially on higher steel realisation as well as better performance at US operations, which posted an earnings before interest, taxes, depreciation and amortisation (Ebitda) of $ 2.25 million, contrasted with a negative $8.4 million last quarter. The stock is trading at 7x estimated 2010-11 EV/EBITDA (enterprise value/Ebitda). Maintain buy.
— Anand Rathi Research
Siemens India
Reco price: Rs 708
Target price: Rs 542
Ebitda margin stood at 12.9 per cent in the March 2010 quarter and, adjusting for a forex loss of Rs 70 crore, the margin stood at 16 per cent. However, this high margin is mainly due to high-yield historical projects, which are likely to be over soon. The margins are expected to stabilise at 11.5 per cent in 2010-11 and 2011-12. The management said there are pricing pressures in the projects business due to intense competition. Order inflows in the present quarter stood at Rs 2,240 crore and the order book stood at Rs 13,450 crore. The management said, though there was a good repeat demand in the automation and drives business, industry solutions remains soft currently. The stock is trading at 27 times September 2011 and 26 times September 2012 estimated earnings. Maintain under-perform.
— Macquarie Research
Tech Mahindra
Reco price: Rs 744
Target price: Rs 1,168
Tech Mahindra reported better-than-expected fourth quarter 2009-10 results, with a revenue lower 0.3 per cent sequentially at Rs 1,183 crore against an estimate of Rs 1,164 crore. Revenue growth in constant currency was 4 per cent at $264 million. However, the sharp fall in the Great Britain Pound (6 per cent) resulted in a revenue under-performance in the reported currency. Ebitda margins remained flat on a sequential basis at 23.6 per cent, despite rupee appreciation and strong net manpower addition of 3,120 employees. Profit after tax was up 31.3 per cent sequentially, on account of lower interest costs (down 32.3 per cent) and high other income of Rs 74 crore (including $13.5 million on account of forex gains). Maintain buy.
— Angel Securities
Titan Industries
Reco price: Rs 2,129
Target price: Rs 2,483
Titan’s March quarter performance exceeds expectation with (1) 48.3 per cent year-on-year growth in revenues to Rs 1,310 crore (2) 38 per cent year-on-year growth in operating profit to Rs 120 crore and (3) 8.2 per cent year-o-year growth in net profit to Rs 67.8 crore. The revenue growth was led by the jewellery and watch businesses. The brokerage is maintaining earnings estimates for FY11E (2010-11 estimated) and FY12E at Rs 65.2/share and Rs 79.6/share respectively. Better prospects in the jewellery business and favourable base effects for next three-four quarters. The stock is trading at 26x one-year forward earnings as there's relatively low risk to earnings estimates. Maintain accumulate.
— Emkay Research
