JM FINANCIAL
Reco price/date: Rs 26/ February 21;
Current/target price: Rs 26.1/Rs 36
JM Financial Q3FY14 earnings were largely in line with CRISIL Research's expectations. Owing to weak capital markets, the company's consolidated revenues declined by 10.4 per cent q-o-q to Rs 220 crore. Hence, consolidated PAT dropped by 12.4 per cent q-o-q to Rs 44.2 crpre. JM Financial discontinued its arbitrage business due to tax implications and partly exited alternative asset management investments, which resulted in cash accumulation. CRISIL Research expects the domestic economy to recover in FY15, but we believe investment activities will take time to pick up. We retain JM Financial Ltd's sum-of-the-parts based fair value of Rs 36 a share. Retain fair value.
-CRISIL Research
BHARAT FORGE
Reco price/date: Rs 368/ February 24;
Current/target price: Rs 373/Rs 415
The Buy rating on Bharat Forge (BFL) is supported by the improving economic outlook in the EU/US (60 per cent of revenues), which is resulting in a rebound in truck and passenger vehicle volumes in these regions. BFL is a key supplier to global automobile OEMs and continues to be a beneficiary of the upturn. We estimate the recovery will lead to Ebitda and EPS CAGRs (FY14-16E) of 20 per cent and 27 per cent and FCF generation of Rs 1,340 crore. Despite the one-year outperformance, the current valuation leaves room for further expansion as it remains below the long-term average. We reiterate Buy with a 13 per cent increase in target price to Rs 415. Buy.
-Deutsche Bank Markets Research
