HCL TECH ONGC Buy 53 13.31% Buy 45 Hold 8 31.96% Hold 5 Sell 3 Sell 2 CMP (~) 1,595.95 CMP (~) 341.20 Target price (~) 1,808.32 Target price (~) 450.26 Current PE (x) 16.42 Current PE (x) 11.53 t is a play on high-growth area of high-teen operating profit margin eforms by the government to and FY17, respectively. A rise in oil Iinfra management services (34.5 over the next three years. Strong deal Rstructurally bring down under- prices and an increase in post-sub- per cent of revenues). Well diversi- wins, confident management com- recoveries is expected to reduce the sidy realisation will lead to attrac- fied growth across its businesses is mentary, improving margin profile burden on upstream companies. tive gains for investors, as the stock another positive. HCL’s software serv- provide confidence, given the out- Even with upstream companies has seen a steep correction of 24 ices business (60.5 per cent of rev- look shared by some peers. The firm (ONGC, Oil India and GAIL) bear- per cent since September 2014. enues) has witnessed improving deal continues to invest in infrastructure, ing 50 per cent of the burden, Elara Analysts are valuing the company wins and revenue growth in recent engineering and digitisation, to drive Capital analysts expect ONGC’s at nine times its FY17 estimated quarters, while the business process growth. Valuation, at 13.8 times its post-subsidy net realisation to earnings, with ~21 being added on outsourcing (BPO) segment is turning FY16 estimated earnings, is attrac- improve from $41 a barrel in FY14 account of its stake in the around. Analysts expect it to post tive vis-à-vis peers. to $59.5 a bbl and $63.4 a bbl in FY16 Mozambique block. HDFC BANK SHRIRAM TRANSPORT Buy 48 Buy 24 7.80% Hold 9 26.10% Hold 10 Sell 3 Sell 4 CMP (~) 951.60 CMP (~) 1,110.25 Target price (~) 1,025.75 Target price (~) 1,400.00 Current PE (x) 24.95 Current PE (x) 19.95 onsistent financial perform- bank has one of the best asset qual- table freight rates, coupled with growth to pick up. The annual AUM Cance for several past years is a ity among peers and its well diver- Sdeclining operating costs for growth is pegged at 10-15 per cent key reason why HDFC Bank is a sified loan book provides comfort truck operators, a pick up in indus- over FY14-17. However, adopting a favoured pick of most analysts. The regarding any potential asset qual- trial activity and a gradual rise in 90-day NPA recognition norm ver- Street also ascribes premium valu- ity pressures. Its loan growth has CV sales are catalysts. These will sus 180-day prevailing (draft NBFC ations to this stock versus its peers, been ahead of the sector and it is improve cash flows of Shriram guidelines) could mean that the as a reward for this consistency. A looking to increase market share Transport’s borrowers and rub off NPA level will rise gradually. A fundraising of ~10,000 crore in the further, on the back of a revival in favourably on its asset quality, which strong provision coverage, though, near term will lead to a minute 4-5 private-sector capital expenditure has bottomed out. As macros provides comfort. Going ahead, per cent dilution for the bank and and a continued demand momen- improve, analysts expect RoE as well falling interest rates will lower fund- could be a minor overhang. The tum in the retail segment. as asset under management (AUM) ing costs and boost profitability. ICICI BANK SOBHA Buy 27 Buy 49 11.45% 12.54% Hold 10 Hold 4 Sell 1 Sell 1 CMP (~) 353.00 CMP (~) 482.40 Target price (~) 397.26 Target price (~) 537.64 Current PE (x) 19.42 Current PE (x) 19.32 he bank stands to gain from an loans will drive market share gains aunch of products in the lower- from its predominantly Bangalore- Teconomic recovery and reforms and lead to faster profit growth for Lticket-size segment is expected based projects. A pick-up in new push for the infrastructure sector. the bank. Strong earnings growth, to improve volumes. This will help launches is expected to improve At 12.2 per cent Tier-I capital ade- in turn, will boost return on equity the company achieve its pre-sales cash flow and further reduce lever- quacy ratio, the bank is well-fund- (RoE) ratio by 190 basis points over target of seven million square feet age to 0.6 times by the end of this ed for strong growth ahead and is FY15-17. The bank has multiple val- by FY17-18 from the current annual financial year, from the current lev- better placed to meet Basel-III ue-unlocking avenues through list- rate of about four million square els of 0.7 times. Lower interest rates norms. It will have an edge over its ing/stake sale in various feet. Higher-ticket-size projects (company and consumer) PSU counterparts as they dilute subsidiaries at its disposal (insur- are in Gurgoan, Kozhikode and and strong demand in its core their equity to comply with Basel- ance, AMC, Securities, etc) which Coimbatore and should help it Bengaluru market continue to be III norms. A higher focus on retail could boost its overall valuation. diversify its product basket further key triggers for the stock. L&T SUN PHARMA Buy 34 17.93% Buy 41 Hold 13 18.79% Hold 11 Sell 3 Sell 1 CMP (~) 1,496.50 CMP (~) 826.15 Target price (~) 1,764.86 Target price (~) 981.41 Current PE (x) 27.45 Current PE (x) 28.14 ost analysts agree that Larsen crore in FY15 and rise further to he key trigger would be the themes of strong India growth, led M& Toubro is the best play to ~1,82,053 crore by FY17, estimates Tmerger of Ranbaxy Labora- by fast-growing chronic therapy ride on the India growth story. Kotak Institutional Equities. tories with itself which will make sales and profit boost from niche Emkay Global believes L&T’s diver- Despite the slowdown and the dif- Sun Pharma the largest player in product sales in the US from the sified presence across infrastruc- ficulties faced in its hydrocarbon the Indian pharmaceutical market. Taro and Sun stables. The valua- ture segments puts it in a sweet business, L&T has been able to In addition, product synergies tion premium (23-25 times FY16 spot against weaker peers, allow- maintain margins in the 17-18 per across key markets, cost savings estimates) of the company vis-à-vis ing it to take advantage of the trend cent range over FY11-14. It is top and the research pipeline should peers is justified, given the compa- reversal. The consolidated order pick for Macquarie in the industri- aid margins and growth for the ny’s stellar track record of inorgan- flow, which stood at ~92,461 crore in al segment and is likely to outper- merged entity going ahead. The ic growth, excellent execution and FY13, is likely to touch ~1,28,908 form after a fall in crude oil prices. stock will continue to gain on twin cash on balance sheet. MARUTI SUZUKI ULTRATECH CEMENT Buy 50 9.13% Buy 33 Hold 6 7.55% Hold 9 Sell 7 Sell 11 CMP (~) 3,328.30 CMP (~) 2,671.25 Target price (~) 3,632.28 Target price (~) 2,873.00 Current PE (x) 40.91 Current PE (x) 31.86 eturn of the first-time buyers, sized sedans (Ciaz) and new seg- he pan-Indian leader has added cent in FY14), is pegged at 7-8 per Rhigher sales enquiries and low- ments like sports utility vehicles, Tcapacities — both organically cent by FY16/FY17 while prices are er operating costs for customers crossovers, large sedans and light and inorganically — (the latest seen rising 7-8 per cent annually. indicate a revival in car sales. commercial vehicles, among oth- being JPA’s MP plant) and will Macquarie estimates profits to grow Volumes are expected to grow at 17 ers. Margins are also expected to benefit from the expected surge in annually at 26.7 per cent over the per cent annually over the next see a sharp 250-basis-point uptick cement demand and realisations. next three years, versus 17.7 per cent three years, not only from the over the next three years. This is Its current capacity of 60.2 million in the past five years. Ambit ana- uptick in entry-level segments that due to higher operating leverage, tonnes per annum (mtpa) will lysts, however, say that UltraTech’s the company dominates but increased localisation, higher pro- reach 75 mtpa by 2016. Cement vol- growth could restrict RoCE expan- Maruti’s traditionally weak seg- portion of premium products and ume growth, which has picked up sion even though it might enjoy ments as well. These include mid- lower discounts. to 6-7 per cent in FY15 (three per superlative volume growth. E: Estimates. CMP: Current market price. PE is based on trailing 12-month earnings. Target price is for one year. Figures inside the arrows indicate the potential upside. Buy, Hold & Sell are analysts’ ratings. Source: Bloomberg. Data compiled by BS Research Bureau.