Balaji Telefilms
Current market price: Rs 157.45
Target price: Rs 220
Recommended by: Kotak Securities
Balaji Telefilms (BT) and the Star group have ended the four-year long exclusivity contract under which the Star group had the right of first refusal, on content produced by BT and BT could not air any other content on the rival channels during the time when its shows were being aired on Star Plus.
Content exclusivity relaxation will prove to be a positive for BT, in the longer term. The entry of a slew of new channels in the general entertainment channel space- Colors, 9X and NDTV Imagine are a source of opportunity for popular content players like BT. The company’s ability to capitalise on the same and ramp up volumes profitably will be the key issue to watch out for.
The company is expected to counter multiple headwinds of lower realisations from a key client-STAR, waning popularity of its content and expenses towards new show launches.
BT is now hoping to address them through different programming formats, expected releases in the near term, outcome of which will be critical for renewed financial performance. At Rs 173, the stock trades at a reasonable 13.1x FY09E earnings. Maintain Buy with a price target of Rs 220 (Rs 225 earlier).
Lloyd Electric & Engineering
Current market price: Rs 83.70
Target price: Rs 142
Recommended by: Emkay Global Financial Services
One of India's largest air conditioner coil manufacturer, Lloyd Electric & Engineering (LEE) witnessed muted growth of 6 per cent year-on-year (y-o-y) in topline to Rs 187.1 crore during Q1 FY09.
This was primarily on account of demand for air conditioner in North India getting impacted due to the early monsoon arrival this year. High depreciation and interest expenses impacted the net profit, which declined by 11.3 per cent y-o-y to Rs 14.6 crore during Q1 FY09.
The company recently acquired a Prague-based Czech company called Luvata Czech, a leading manufacturer of customised finned-pack heat exchanger coils in the world. LEE would be introducing refrigeration coil as a new product line, with technology transfer from Luvata Czech, which will help the company diversify its product portfolio.
Labour arbitrage and an opportunity to increase market share in Europe and Russia are the other benefits that would arise out of the acquisition. LEE will be investing Rs 20 crore in Luvata Czech in FY09 for brownfield expansion, which in turn will result into higher economies of scale. The stock currently trades at a P/E of 4x FY09E and 3x FY10E earnings.
Crompton Greaves
Current market price: Rs 250.70
Target price: Rs 367
Recommended by: Sharekhan
During FY08, the overseas power system business of Crompton Greaves (CG) reported a 28 per cent y-o-y growth in revenues to Rs 2,959.7 crore (43.3 per cent of total revenue), aided by strong performance of its key subsidiaries Pauwels and Ganz. The power business continues to be the revenue driver for the company.
However, the revenue growth in the domestic power business was sedate, as the company faced manufacturing road blocks during the two quarters of FY08 (fire in a transformer plant in Q2 FY08 and logistical issues in Q3 FY08). Aided by steady revenue growth and improved operating performance, the net profit of the company grew |
