ULJK Securities has come out with its report on midcap stocks pick.
Pratibha Industries: We expect net revenue to grow at a CAGR of 24% over FY11- 13E. The growth prospects for PIL is expected to remain robust inline with strong order backlog led by growth in its core water supply management segment. PIL has entered into new verticals such as hydro carbon, power projects and real estate which should support revenue growth going forward. PIL is also collaborating with international players to grow its order book. At current price of Rs56, stock is trading at FY12E PE of 6.2x and EV/EBITDA of 4.9x We recommend a BUY on the stock with target price of Rs72 per share.
KEC International: We expect net revenue to grow at a CAGR of 19% over FY11- 13E driven by higher T&D orders in India and the international markets. We expect EBITDA margin to stabilize around 10.5-10.6% with the contribution from the high margin SAE towers business partially offset by the relatively low margin railway and water segment. At CMP Rs83, the stock is trading at a P/E of 11.4x and 9.4x for FY11-FY12E respectively. We recommend a BUY on the stock with target price of Rs108 per share. We assign a multiple of 11x our FY12E EPS to arrive at our target price on back of its strong order book and geographical presence.
Godawari Power and Ispat: We estimate a 16% and 27% CAGR in GPIL’s standalone revenue and EBITDA respectively in FY11-FY13, driven by higher sales volume and increased backward integration. Based on strong earnings growth outlook and attractive valuation, we initiate coverage on GPIL with a BUY rating and target price of Rs261/share, indicating an upside of 44% from the current levels. Our price target is based on SOTP method, valuing Rs241/share for standalone operations using discounted cash flow (DCF) analysis (or implied 3.9x FY12 EV/EBITDA) and R21/share for Ardent steel using 3.5x FY12 EV/ EBITDA multiple.
Gujarat State Petronet: We expect GSPL’s revenue and EBIDTA to grow at a CAGR of 6% each on the back of 10% growth in transmission volumes and stable tariffs at Rs750 per TSCM over the period FY10-13E. At CMP, the stock trades at a P/E of 11.6x and 10.4x for FY12E and FY13E respectively. Using the DCF valuation method, we arrive at a fair value of Rs119/share for the core natural gas transmission business of GSPL and assign Rs8/share for its investment in CGD business. We initiate coverage on GSPL with a BUY recommendation and price target of Rs127/share.
Yes Bank: In the rising interest rate scenario concerns regarding growth in loan book and increasing cost of fund remain which could create pressure on NIMs. At CMP of Rs283, the stock is trading at P/BV of 1.8x FY2013E with RoE of ~21% and RoA of ~1.3%. Buy the stock with a target of Rs 357.
Courtesy- Moneycontrol news
