Buy Jyoti Structures; target of Rs 215: Angel Broking

Angel Broking is bullish on Jyoti Structures and has recommended buy rating on the stock with a target of Rs 215 in its November 01, 2010 research report.

“Jyoti Structures (JSL) reported broadly in-line results for 2QFY2011, with revenue and net profit registering 14.7% and 19.0% yoy, respectively. The transmission, substation and rural electrification segments contributed 66%, 8% and 26% to 2QFY2011 revenues, respectively. Order intake increased 72% yoy to Rs 700 crore.”

“Revenues reported steady growth of 14.7% yoy to Rs 542 crore, while EBITDA margin rose by 26bp to 11.6%, resulting in 17.3% increase in EBITDA to Rs 63 crore. The growth in top-line coupled with stable EBITDA margins resulted in a 19% increase in PAT to Rs 25 crore. The proposal to raise ~Rs 300-400 crore through the issue of NCD with detachable warrants to finance its long-term working capital requirements is likely to be scrapped as the company now plans to fund the same through internal accruals. The proposal to issue sweat equity to the promoters has also been shelved.”

“Transmission EPC companies are expected to register increase in order inflow on the back of the ongoing investments in the domestic power sector. Over the next two years, PGCIL is expected to accelerate its capex schedule leading to higher order inflows for transmission EPC companies such as JSL. Apart from the transmission projects, JSL is also expected to garner significant portion of orders from RAPDRP and RGGVY schemes. At Rs 135, the stock trades at 10x and 8.2x FY2011E and FY2012E earnings, respectively. We maintain a Buy on the stock, with a target price of Rs 215,” says Angel Broking research report.
SOURCE: MONEYCONTROL.COM

Sell Hero Honda Motors: Anand Rathi Securities

Anand Rathi Securities is bearish on Hero Honda Motors and has recommended sell rating on the stock with a target of Rs 1783 in its November 3, 2010 research report.

“Hero Honda Motors’ (HHML) results were disappointing for the second successive quarter, with the company registering lower-than-expected operating performance. We maintain our Sell recommendation.”

“The 2QFY11 net sales growth of 12.1% yoy was fuelled by 8.7% volume growth and 3.2% better realisations, which was in line with expectations. EBITDA margin during the quarter was 13.4%, 60bp lower qoq and 490bp lower yoy, on account of the higher raw material cost. As a result, profit for the quarter declined 15.3% yoy.”

“We expect HHML to be pressured due to: i) limited potential of incremental benefits from higher production at the Haridwar plant, ii) margin pressure sustaining, iii) competition resulting in yoy slide in market share, and iv) uncertainty regarding future structure of the HHML joint venture.”

“We lower our FY11e earnings 13% (and by 13.5% for FY12) on expectation of lower EBITDA margin ahead. Also, we introduce our FY13e EPS at Rs 139.4 (15.3% yoy rise). We lower our target price to Rs 1783 from Rs 1800 based on 13.5x FY12e core EPS (~15% discount to the past five-year core PE average). We maintain Sell,” says Anand Rathi Securities research report.

SHORT-TERM TRADING TIPS - Navneet Publications (Rs 66.05): Buy

Investors with short-term trading perspective can consider buying the stock of Navneet Publications. The stock is in a strong uptrend since last March that helped it recoup the entire losses made in 2008.

A short-term correction is, however, in progress currently from the recent peak at Rs 75.8.

This correction halted at the support around Rs 60 and the stock reversed sharply higher on Monday accompanied by strong volumes.

A bullish engulfing candle is apparent in the daily candlestick chart. This move also helped the stock close above its 21 and 50-day moving averages.

Oscillators in the daily chart are beginning to signal a buy. Rate of change oscillator moved above the zero line into bullish territory, while relative strength index is rising in the neutral region.

The moving average convergence divergence oscillator in the daily chart registered a buy signal on Monday. The stock has the potential to rise to Rs 68 or Rs 70 in the days ahead. Short-term investors can buy the stock with stop at Rs 65.