Analysts' corner

Last Updated: Mon, Nov 12, 2012 19:42 hrs

United Spirits Ltd
Reco price/date: 1,360.50 / November 11
Current/Target price: Rs 1,834.60/Rs 2,100
Diageo PLC has acquired a controlling stake (27.4 per cent) in United Spirits for Rs 1,440 a share, which is a significant positive for minority shareholders. The company is likely to receive a cash infusion of Rs 3,300 crore, which would improve its capital structure as well as margin profile in the medium to long term through premiumisation and operational efficiencies. The Analysts thereby upgrade FY14 and FY15 earnings by about 50 per cent each and revise the September 2013 target price from Rs 750 to Rs 2,100 based on 30x Sep’14 earnings per share leading to a 54 per cent upside. Maintain 'Buy'.

Religare Institutional Equities

Coal India
Reco price/date: Rs 347 / November 10
Current/Target price: Rs 344.60/Rs 375
Coal India (CIL) reported second quarter FY13 earnings in-line-with our expectation. However, the analysts were deeply disappointed with the sharp fall in e-auction realisations. The impact of the same was contained by one-time write-back of prior year provisions. In the backdrop of concerns associated with approval of proposed Mines and Mineral development regulations bill in the upcoming session of parliament, continued weakness in e-auction realisations and strong likelihood of disappointment on volume and cost guidance the analysts downgrade the stock with revised target price from 'Buy' to 'Accumulate'.

Prabhudas Liladher

Tata Steel
Reco price/date: Rs 391 / November 9
Current/Target price: Rs 383.85/Rs 522
Tata Steel’s consolidated Earnings Before Interest Tax Depreciation and Amortization (Ebitda) of Rs 2,300 crore disappointed (being seven per cent below estimates) despite higher volumes (10 per cent above estimates). Ebitda per tonne was below expectation for both India as well as overseas operations largely due to a drop in realisations. While second half FY13 will see a sequential improvement due to benefits of higher volume and low coking coal prices, the dismal performance in September’12 quarter is still leading to a nearly seven per cent drop in FY13 Ebitda estimates. FY14E estimates remain unchanged.We maintain ‘BUY’ with target price of Rs 522. Maintain 'Buy'.

Edelweiss Securities ltd

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