Adani Port & Special Economic Zone - Stock Ready to Soar

Adani port Ind is largest private sector port company currently operating at 2 ports Mundra and Dahej in India and one port Abott Point in Australia has managed to outperform the industry as well as its peers by wide margin on regular basis.
Result Update on 28 Jan 2013 : company announced that consolidated net profit rose 12.5% year on year to Rs 361 crore in 3rd quarter of financial year.
With target of increasing its annual cargo handling capacity group chairman Gautam Adani announced that company was seeking to acquire port in east coast of India and expect to complete acquisition by march 31st.To raise funds for acquisition and expansion company has plan for stake sale at Abott Point in Australia. The raised fund can also be used to reduce the current debt. Company has already signed a contract with Kandla Port Trust to set up dry bulk terminal near Tuna with expected cargo handling capacity of 20 million tonnes annually.
Stock has already rallied from Rs 125 to Rs 150 in very short term in context of above news and announcements. I foresee a very good buying opportunity at CMP and further accumulation if any correction of 7 to 10 % takes place.Because any precise details such as exact date of stack sale and confirmed acquisition in near future may push the stock to initial target of Rs 200 and further Rs 250 by end of the year.
Report prepared by
Dr. Raj Kumar Singh [?]

Adani Port is trading near to upper trend line of bearish channel which will act as a decent resistance in upcoming future. If stock sustains above this trend line which is almost placed at 150-160 zone then targets of 200 will be achievable in quick time.

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The week ahead will keep India Inc and Dalal Street on their toes : RBI, FOMC Policy Meet, Bharti, ICICI Bank results to set the tone.

The Reserve Bank of India will take key decision on interest rates. The US Federal Reserve will also decide its further course on bond buying programme. Bellwethers like Bharti Airtel, ICICI Bank, BHEL will declare their results, which will set the next direction for markets. Investors and analysts will closely watch the management commentary as this could cause revision in future earnings forecast of the company for fiscal year ahead.

The Reserve Bank of India is likely to announce its monetary policy on Tuesday, January 29. According to Reuter's poll most economists expect RBI to cut its policy repo rate by 25 basis points to 7.75%.

On the global front, US Federal Open Market Committee's (FOMC) is organising its two-day meeting on interest rates in United States on 29 and 30 January 2013. Chairman Ben Bernanke and his fellow policy makers may vote to continue the Federal Reserve's bond-buying program as they debate when to end the purchases. The Fed currently is buying $45 billion in treasury notes and $40 billion in mortgage bonds each month. Global equity markets will keep a close watch on US Federal Reserve's commentary.

Auto and cement stocks will be in focus as companies from these two sectors would start unveiling monthly sales volume data for January 2013 from Friday, 1 February 2013. Nifty is likely to trade in the range of 5950 on the downside and 6150 on the upside. Market valuations are still not very expensive there is further headroom of another 10 to 15 per cent rally. The earnings season is almost coming to an end, select bellwether companies are all set to declare their results. Analysts expect mixed set of results from corporates.

India's diversified financial company ICICI Bank is likely to announce its third quarterly results on Thursday, January 31. According to Bloomberg estimate net profit is expected to rise 20.8% and net income by 20.2%. The largest telecommunications services company Bharti Airtel is likely to unveil its third quarterly results on Friday, February 1. Net profit is expected to decline 14.7% however sales are seen rising by 8.08%. 

- Team HBJ Capital

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8 Blue Chip Large Cap Stocks To Buy

Veteran brokerage Prabhudas Lilladher has identified 8 Large Cap Blue Chip Stocks that are quoting at reasonable valuations and that should form a part of every investor’s portfolio Coal India:

Blue Chip Stocks

Coal India’s last Board meeting on July 31, 2012 turned inconclusive owing to apprehensions of the board associated with price pooling and revised penalty. This clearly vindicates the candid investor-friendly policy of the Coal India Board. The price pooling should be mechanized in a manner that it does not raise risks for pricing of its coal.
Thanks to 6 per cent volume growth and nominal 3 per cent increase in flat realisations, Coal India’s earnings can be expected to grow at a CAGR of 15 per cent during FY12-14, despite sharp increase in the wage cost.
Coal India is valued at Rs 390, P/E of 12.5x FY13E operational EPS of Rs 23.1 and cash per share of Rs 102. Coal India’s valuations are justified, given the sustainable RoEs in excess of 30 per cent.
Infosys Technologies:
Top client’s ramp-down which troubled Infosys through H2FY11 are bottoming out. The consistent underperformance from top clients is reaching a nadir. The ramp-down is expected to spill over in H1FY13. A 1 per cent negative impact due to the same in Q2FY13 is factored in.
Infosys is currently trading at 13.1x FY14E earnings estimate, a trough valuation at which it traded post Lehman crisis. Retain ‘BUY’ due to valuation comfort, with a target price of Rs 2,850.
HDFC:
HDFC has been delivering 20 per cent plus PAT growth consistently. Coupled with this, HDFC has excellent track record in maintaining robust asset quality. ZCB issuance has been in line with investments in subsidiaries (not consolidated) and there is limited impact from reserve accounting for ZCB interests.
Moreover, HDFC is moving to IFRS accounting from Q2FY13 and that would address investor concerns, if any. Consolidated ROEs remain at ~22-23 per cent even after factoring in ZCB interests.
ICICI BANK:
ICICI Bank seems to be coming out of the consolidation phase set in the aftermath of the global economic crisis. ICICI Bank’s Q1FY13 loan growth and margin performances has surprised positively and inspires confidence of improving core growth trends and sustenance of robust asset quality in FY13.
ICICI Bank’s current valuations are trading at 1.6x FY13 book. Improving ROEs, pending growth in balance sheet could imply better multiples. ICICI Bank has a Mar 13-target price of Rs 1,100 per share, implying FY13 P/B of 1.95x.
CAIRN INDIA:
Cairn upgraded its estimate of gross risked prospective resources to 530m boe from 250m boe in April 2012. However, as exploration period for the Rajasthan block expired in 2005, street has not accorded value to the exploratory upsides. As per news reports, DGH will soon convene a Management Committee meeting of the Block. There is no reason why the extension in the exploration period will not be granted, and thus, the news flows on exploratory upside is expected to be positive, going ahead. Investors should accumulate Cairn India with a target price of Rs 403.
Power Grid Corporation:
Power Grid’s capitalization is expected to increase to Rs167bn in FY17E from Rs 71bn in FY11 and regulated equity base to increase by 2.6x to Rs 435bn in FY17, resulting in earnings CAGR of 16 per cent over FY12-17E. The CWIP in Power Grid’s balance sheet has also increased 2x to Rs266bn in FY11 from Rs132bn in FY09, indicating higher capitalization over the next few years.
Power Grid remains the safest play in the Power Utilities space which has been facing multiple issue of coal shortage, deteriorating SEB finances etc. Power Grid is immune to fuel risk and faces relatively moderate land acquisition issues as compared to IPPs. Power Grid is expected to deliver 16 per cent EPS growth over FY12-17E with core RoEs of ~17.6 per cent over the same period and has a price target of Rs 133.
AXIS BANK:
AXIS BANK is being assigned discount valuations v/s peers, given the latter’s high exposure to SME book (~20 per cent). However, asset quality trends exhibits much better underwriting standards at AXIS BANK as against the PSUs.
AXIS BANK’s current valuations are trading at 1.65x FY13 book. Though restructuring and rating data suggest some inch-up in asset quality stress, the stress levels are manageable (net slippages of <1 per cent). AXIS BANK has a Sep-13 target of Rs 1,350 per share, implying FY13 P/B of 2.1x.
RANBAXY LABORATORIES:
Ranbaxy has already provided US$ 500 mn as a provision towards penalties (with respect to DOJ, USFDA issues) in Dec’11 quarter in its P&L statement. It has signed the consent decree with the USFDA and is currently working with the USFDA to get all outstanding issues sorted. It has also appointed a third party consultant for the same. The 2011 annual report clearly exhibit’s the management’s confidence in the prospects of the business (some excerpts from 2011 annual report).
Since 2009 Ranbaxy has been taking systematic corrective steps to upgrade and enhance the quality of Ranbaxy’s business and manufacturing processes. Regulatory issues are now almost through, Ranbaxy has strengthened its processes, restructured its businesses and Ranbaxy today has a new face and can be bought with a price target of Rs 625.

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Best Small & Mid-Cap Stocks To Buy

Microsec, which has an excellent track record of stock picks, has released its list of 9 stocks in the small and mid cap space which have the potential to give good returns

Multibagger Stock

Microsec points out that despite the current broad negative Equity investment scenario in India which is a result of weak domestic economic developments and uncertain global scenario, these companies have the ability to ride the waves and emerge stronger as India continues to remain a growth story based on various demographic factors. The selected stocks are filtered in a way that risks associated with equity investment are adequately addressed and valuations of these companies remain attractive given their sustainable business model and growth
potential.
The selected stocks are:

Stock Picks	CMP
Amara Raja Batteries	389
Cera Sanitaryware	350
Dhanuka Agritech	92
La Opala	127
PI Industries	521
Somany Ceramics	44
Tide Water Oil	7822
Wimplast	328
Zensar Tech	253

Microsec has an excellent track record of stock picking. Their earlier stock picks have shown huge profits:

Earlier Stock Picks				Recc  Price	CMP	Return
				13/08/2009	31/08/2012	3  yrs
Hawkins Cookers				367	1687	360%
TTK Prestige				157	3137	1893%
Greenply				112	184	64%
Pidilite				70	190	172%
Emami Ltd				193	489	153%
Castrol				112	298	165%
Bajaj Electricals				111	171	54%
Bata India				162	889	449%
Blue Star				345	177	-49%
Zodiac				133	173	30%
Navneet Publications				35	54	54%
Average  Return in 3  years						304%
Sensex				15519	17430	12%
BSE  MID  CAP				5608	6005	7%
BSE  Small CAP				6387	6395	0%

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12 Great Stocks To Buy Now

Angel Broking has released its list of 12 top-notch stocks that investors can buy for their portfolio. These are stocks of reputed companies with a good track record and which are expected to give good returns in 12 months

ICICI Bank

 

Best Stocks To Buy

ICICI Bank’s substantial branch expansion and strong capital adequacy at 18.5% have positioned it to gain CASA and credit market share. The bank improved its market share of savings deposits by ~5bp in FY2012 compared to FY2011, capturing a substantial 5.7% incremental market share.
The ICICI Bank stock is trading at an attractive valuation of 1.5x FY2014E P/ABV. Hence, Angel maintains its Buy view on the stock with a target price of Rs 1,169, valuing the core bank at 1.9x FY2014E P/ABV and assigning a value of Rs 153 to its subsidiaries.
Wipro
Wipro has identified four momentum industry verticals to focus uopn: 1) BFSI, 2) energy and utilities, 3) retail and 4) lifesciences and healthcare. These verticals account for 65 per cent of Wipro’s revenue.
Angel expects a 12.2% and 11.1% CAGR in EBITDA and PAT respectively over FY2012-14E. The Wipro stock is currently trading at inexpensive valuations of 13.0x FY2014E EPS. The stock is valued at 15x FY2014E EPS of Rs 28.0, which gives a target price of Rs 420 and it is recommended as one of the top picks with a Buy rating.
Larsen & Toubro
Larsen & Toubro’s strong balance sheet, a sound execution engine, wide array of capabilities, integrated operations tailored to suit India’s infrastructure growth story and multiple, recurring value unlocking triggers over the medium term lead Angel to place faith in this default India’s infrastructure story.
On the valuation front, the L&T stock is trading at a PE of 13.3x FY2014E earnings, adjusted for subsidiary value, which is lower than its historical PE of 15-20x. Hence, a BUY is recommend with a sum of the parts (SOTP) target price of Rs 1,568.
Tata Motors
Jaguar – Land Rover is expected to sustain its volume momentum (expect a ~14% volume growth in FY2013) driven by the success of Evoque and new XF 2.2 coupled with the launch of the new Range Rover and Jaguar XE in FY2013. Further, strong growth in China (sales up 98% in FY2012) will also benefit the overall volume growth of Tata Motors.
At Rs 235, the Tata Motors stock is attractively valued at 5.4x and 2.9x FY2014E earnings and EV/EBITDA, respectively. A ‘Buy’ rating on the stock is recommended with a sum of the parts (SOTP) target price of Rs 292.
Axis Bank
Axis Bank has increased its current account – savings account market share multi-fold over the past nine years on the back of robust branch and ATM network expansion.
Axis Bank is expected to raise capital in the next 12-18 months as the bank’s capital adequacy at the end of FY2012 stood at 9.5 per cent. Dilution is likely to be book-accretive and will aid in further enhancing the bank’s credit market share going forward.
Axis Bank is trading at 1.3x FY2014E ABV (~60% discount to HDFC Bank). Angel remains positive on Axis Bank, owing to its attractive CASA franchise, multiple sources of sustainable fee income, strong growth outlook and A-list management. A Buy recommendation on Axis Bank is recommended with a target price of Rs 1,373.
Crompton Greaves
Crompton Greaves’ power and industrial segments have been facing several headwinds on the international and domestic business fronts.
However, Crompton Greaves’ margins have bottomed out and its EBITDAM is expected to improve going forward. Crompton Greaves’ EBITDAM is expected to reach 8.5% by FY2014 from 7.1% in FY2012. Angel maintains its positive stance on Crompton Greaves. The pessimism surrounding Crompton Greaves’ profitability has clearly been factored in the stock price, given the PE multiple de-rating. A multiple of 14x is assigned to arrive at a target price of Rs 128.
Multi Commodity Exchange
Since its inception in FY2004, the number of products offered by MCX has grown from 15 to 49 in FY2012. MCX registered a 35.3% and 63.1% CAGR in its revenue and adjusted PAT, respectively, over FY2009-12. MCX is expected to continue to focus on offering futures trading in commodities, which is significant in the Indian and global contexts.
Currently, MCX is trading at 16.1x FY2014E earnings, which is attractive owing to its zero-debt and high-margin business and presence in an highly under-penetrated and oligopoly business. A Buy is recommended with a target price of `1,440, valuing the stock at 20x FY2014E earnings.
United Phosphorous
United Phosphorus figures among the top five generic agrichemical players in the world, with a presence across major markets such as the US, Europe, Latin America and India.
United Phosphorus enjoys an edge over competition and is placed in a sweet spot to leverage the upcoming opportunities in the global generic space. Over FY2012-14E, United Phosphorus is expected to post a 10% and 18.4% CAGR in its sales and PAT, respectively. Currently, the United Phosphorus stock is trading at an attractive valuation of 7.0x FY2014E EPS. Hence, a Buy view on the stock is recommended with a target price of Rs 170.
DB Corp
DB Corp is one of the leading publishing houses in India, with seven newspapers and 65 editions in four languages across 13 states. DB Corp leads its nearest competitor in its market with a huge margin in terms of circulation.
The recent underperformance of the DB Corp stock can be attributed to OPM pressure on account of higher newsprint costs and the cyclical nature of ad revenue growth (sluggish due to slower GDP growth).
Considering the structural positives of the print business (high brand loyalty and significant entry barriers) and DBCL’s multi-state leadership, in our view, the DB Corp stock deserves a premium to the Sensex. Hence, it is assigned a target multiple of 17x FY2014E EPS, benchmarking it to the print media sector valuations and a BUY view on the DB Corp stock is maintained with a target price of Rs 236.
Mahindra Lifespaces
Mahindra Lifespaces Developers is a mid and premium housing developer catering to strong demand in tier-1 cities and small metros in the country.
Mahindra Lifespaces’ strong balance sheet (D/E ratio – 0.2x), good corporate governance, diversified land bank and solid brand name sets it apart from its peers. A Buy view on the Mahindra Lifespaces stock is recommended, valuing it on sum-of-the-parts (SOTP) basis to arrive at a value of Rs 495. A 20% discount to our SOTP value is applied to arrive at the target price of Rs 396, implying a PB (FY2014E) of 1.2x.
Tata Sponge Iron
Tata Sponge Iron has a long-term supply agreement with Tata Steel for assured supply of iron ore, thus leading to uninterrupted production. Transportation issues which led to iron ore shortage since one year witnessed a revival during 1QFY2013, but continue to be an overhang in the short term due to unstable political scenario. The issue is expected to be resolved completely by FY2014.
Tata Sponge Iron is debt free with cash reserves of Rs 331 crore and RoIC of 32.8 per cent for FY2014E. A Buy rating on the stock is recommended with a target price of Rs 424 based on a target P/B of 0.9x for FY2014E.
Ceat
Ceat is ramping up its radial capacity at the Halol plant to 150TPD, which is likely to be fully operational by 4QFY2013. With the completion of the proposed expansion, the product mix of truck: non-truck is likely to improve to 55:45 resulting in a better product mix, thereby fetching better margins.
The Ceat stock is currently trading at an attractive valuation of 2.7x its FY2014E EPS. The Buy view on the Ceat stock is retained with a target price of Rs 164, valuing it at 4x FY2014E EPS.

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