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Analysts' corner

Source : BUSINESS_STANDARD
Last Updated: Thu, Oct 04, 2012 18:00 hrs

RELIANCE INDUSTRIES
Reco price/date: Rs 837/October 1
Current/target price: Rs 835/NA
Media reports suggest a government panel has approved Reliance Industries Ltd’s (RIL) revised field development plan (FDP) for MA oilfield in the KG-D6 basin, which is likely to boost production. As a part of the new FDP, RIL will drill one gas well and convert six oil wells into gas wells on the MA oilfield to raise production. However, there is lack of clarity on the timelines and quantity of increase in production currently. In its revised FDP, RIL has scaled down the investment required for developing the MA oilfield by $ 276 million to $2 billion. Currently, RIL is producing 28mmsmcd of gas from MA field. Maintain Neutral

Angel Broking

CROMPTON GREAVES
Reco price/date: Rs 126/October 1
Current/target price: Rs 126/Rs 137
Analysts met Avantha Power & Infrastructure Ltd (APIL). APIL is an unlisted IPP and associate of Crompton Greaves (CRG) with 1.2GW of power projects under construction and 1.2GW in development. Key takeaway from the meeting was that there could be a technical overhang on CRG’s stock price till the promoter group (Avantha) meets the equity gap of Rs 760 crore in APIL by December. Investors are concerned on a potential deal where CRG’s stock can be used as collateral by the promoter to fund the equity gap. However, recent news of promoter looking to sell its bromine business, and equity infusion by new PE suggest that alternatives are being worked out. Maintain Buy

Bank of America Merrill Lynch

MANAPPURAM FINANCE
Reco price/date: Rs 39/Sept 28
Current/target price: Rs 40/Rs 45
Manappuram’s valuation has witnessed wild gyrations in the recent past driven by a mix of internal and external factors. While corporate governance has been strengthened, the evolving business dynamics have been reassuring. With major regulations behind, the key valuation driver for the stock would be emerging business clarity. Lower loan-to-values, reducing assignments and a high capital base (Tier-1 at 20 per cent) are credit positives for Manappuram. According to IIFL estimates, Manappuram’s net profit could decline by nine per cent in FY13; in contrast to a significant decline feared a quarter before. Valuations remain undemanding at 1 time FY14 Price/adjusted Book Value.Maintain Buy

IIFL

S MOBILITY LTD
Reco price/date: Rs 43/Sept 27
Current/target price: Rs 42/Rs 50
CRISIL Research has assigned a fundamental grade of 2/5 on mobile handset and mobile value-added services (VAS) player S Mobility Ltd (S Mobility). The mobile industry is expected to see strong growth driven by an increase in share of smart phones and higher usage of data services. Though the company is expected to benefit from this growth, analysts are concerned about the low profitability - expected to continue over FY13-14 - across its three businesses. CRISIL Research expects S Mobility’s retail business to drive topline growth as it is one of the larger organised retail players and has been able to break even at the EBIT level faster than its peers. CRISIL Research expects revenues to register a two-year CAGR of 19 per cent to Rs 3,090 crore in FY14.

CRISIL Research




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