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Ashok Leyland, Aban Offshore make a good buy

MONEY TODAY scans dozens of research reports from investment houses every fortnight to present you the six most relevant stock recommendations.

Print Edition: November 15, 2007

MONEY TODAY scans dozens of research reports from investment houses every fortnight to present you the six most relevant stock recommendations.

AXIS BANK

RecommendationHOLD
Stock PriceRs 866
One-year returns107.1%
Profit Margin53.4%
Q1 PE ratio135.6

IL&FS Investsmart: “Axis Bank’s operating profit increased sharply by 69% in the second quarter of 2007-8, despite an 11% increase in employee costs due to more branches.

The stock trades at 3.56 times 2007-8 ABV and 3.23 times 2008-9 ABV. The current valuations are fair and do not leave any investment opportunity.”

IGATE GLOBAL SOLUTIONS

RecommendationHOLD
Stock PriceRs 356
One-year returns63.6%
Profit Margin228.5%
Q1 PE ratio47.42

SSKI: “iGate’s revenues increased 0.7% in the second quarter, which is below expectations. We have downgraded 2007-8 and 2008-9 revenue estimates by 1.6% and 2.6% primarily due to rupee appreciation.

iGate has announced its intention to delist from Indian bourses. We maintain Neutral rating due to poor topline growth.”

ABAN OFFSHORE

RecommendationBUY
Stock PriceRs 4,255
One-year returns286.8%
Profit Margin83.4%
Q1 PE ratio332.71

SSKI: “Aban has reported better than expected second quarter results. Sales rose 28.3% YoY to Rs 165 crore. We have revised our consolidated earnings forecast for 2007-8 and 2008-9 to Rs 167 and Rs 486 respectively.

We maintain an Outperformer rating with a target price of Rs 4,377 (PE of 9 times 2008-9).”

POWER FINANCE CORP.

RecommendationBUY
Stock PriceRs 214
Returns since listing*92.1%
Profit Margin 54.6%54.6%
Q3 PE ratio 87.1187.11
*Listing date - 23 February 2007

Enam Securities: “PFC’s net profit growth at 23% in the second quarter was below expectations, largely due to Rs 23 crore forex loss on unhedged foreign borrowings.

Otherwise, core profits were better than our expectations. We remain bullish and maintain our sector Outperformer rating.”

ASHOK LEYLAND

RecommendationBUY
Stock PriceRs 37
One-year returns-18.6%
Profit Margin2.4%
Q1 PE ratio61.83

Religare Research: “Ashok Leyland has cut its annual volume target by 13% for 2007-8 due to sluggish growth in domestic commercial vehicle sales.

We have therefore revised Ashok Leyland’s earnings downwards by 3% for 2007-8 and 4% for 2008-9. We expect a potential 17% upside from current levels.”

CONTAINER CORP. OF INDIA

RecommendationBUY
Stock PriceRs 1,870
One-year returns-3.5%
Profit Margin1.5%
PE ratio69.82

Edelweiss Securities: “Concor’s second quarter results were below expectations, with sales registering 6.4% growth and net profits declining 8.1% YoY.

However, growth in domestic and export-import container traffic continues to be strong. We expect the firm’s underperformance to ease in the coming quarters.”

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