Stock Idea: BHEL

Emkay Research has maintained its buy rating on Bharat Heavy Electricals with a price target of Rs 2330 in its May 27, 2008 research report. "BHEL declared its Q4FY2008 results with net sales of Rs 72 billion and net profit at Rs 11.1 billion. However the same is below our expectation. The net sales growth of barely 4.1% clearly shows execution problems with the company. The order book position is at Rs 85.5 billion which was ahead of expectations."
"In order to factor in a lower earnings growth we are downgrading our price target to Rs 2330, which is based on 22.5X its FY2010 earnings. At CMP of Rs 1655, BHEL is trading at 16X its FY2010 earnings and 10.4X its FY2010 EBIDTA, which is near the lower range of its trading band. We believe that BHEL is taking steps in right direction to address issue of supercritical order, increasing pace of execution and expanding capacity. Key positive triggers are negotiated orders for 800MW supercritical units from NTPC, visibility on execution of projects in JVs like that with TNEB for supercritical projects and award of 800X2 MW supercritical units from Krishnapatnam project. Faster execution of delayed order shall also improve near-term earnings growth. Maintain BUY," says Emkay's research report.

Stock Idea: Idea Celluler

By monetising 20% of its holding in Indus Towers, Idea has reduced its leverage from 1.5x to 0.6x, and armed itself with enough cash and debt capacity to undertake both network growth in its existing circles and footprint expansion in new circles, including potentially inorganic growth. We revise our revenue estimates for existing operations upwards by 6% and 8% for FY09 and FY10 respectively, on the back of stronger-than-expected performance on the subscriber addition and ARPU front. Idea also has been allocated spectrum in Tamil Nadu and Orissa circles, and will likely begin operations this year. We include these two circles in our estimates, and this takes 12% off our FY10 earnings estimate. We retain BUY with a DCF-based target price of Rs156 (previously Rs148).
Funding problem solved for the present: By raising US$640m through compulsorily convertible preference shares (CCPS) as an investment into its subsidiary Aditya Birla Telecom Limited (ABTL), Idea has reduced its debt-equity ratio to 0.6x. Idea can raise its cash reserves to nearly Rs130bn within a debt–equity ratio of 2x. With this, network growth in its current 11 circles as well as rollout in new circles can be executed for the first year, especially since rollout in the new circles will be staggered. While Idea will need more funds to fund its longer-term capex for the remaining seven circles, the dilution of stake in Indus is a positive move, especially as no dilution of rights in Indus Towers is involved. Operations in existing circles strong, rollout to accelerate: By managing to raise usage minutes on its network by 9% sequentially in 4Q, Idea managed to increase its ARPU by nearly 3%, leading to a strong revenue growth of 15% QoQ.
With subscriber additions now averaging more than 1.1m per month, we raise our subscriber forecast for Idea (in its current circles plus Mumbai and Bihar), for FY09 by 5% to 36m and for FY10 by 4% to 46m. We continue to model declining ARPU as we believe that for the present, new subscriber addition will continue to be strong and drag ARPU down. Spectrum in three new circles obtained; expect service launch by December 2008: Spectrum in Tamil Nadu (including Chennai) and Orissa has already been obtained and the company expects to start service by December. We expect spectrum in the remaining seven circles, including the prominent Punjab and Karnataka circles, to come Idea’s way in the next 12 months. We are adding these two circles in our model.

By Indiainfoline

Markets Today

Markets closed in red after a good morning start. During the day’s trade, it was trading almost volatile and suddenly slipped before the last half hour, as trade wound up. The BSE auto index has underperformed the other sectoral indices; it closed down over 3%. Bank, oil & gas, power realty, consumer durable & FMCG indices were witnessing selling pressure.
However, capital goods index closed with good gains; this sectoral was led by Larsen & Toubro as it came out with good financial numbers.
The Sensex closed down 209.11 points or 1.27% at 16316.26, and the Nifty was down 83.05 points or 1.69% at 4835.30.
About 1230 shares have advanced, 1670 shares declined, and 210 shares are unchanged.
The BSE midcap index down 0.17% and smallcap index down 0.68%.
The BSE auto index tumbled 3.24% or 147.69% at 4414.34.Tata Motors, Mahidra and Mahindra, Hindustan Motors, Hero Honda, TVS Motors closed down.
The BSE bankex fell 2.79% or 221.14 at 7712.36. SBI, ICICI Bank, Allahabad Bank, Bank of India, Canara Bank ended in red.
The BSE oil & gas index plunged 1.91% or 206.27 at 10571.64. ONGC, Reliance, RNRL, Gail, Petronet LNG, Essar Oil closed negative.
The BSE realty index dropped 1.45% or 105.04 at 7125.38. Puavankara Projects, HDIL, Ansal Properties, Unitech, Peninsula Land, DLF slipped.
The BSE power slipped 1.35% or 41.81 at 3062.48. Suzlon, GMR Infra, NTPC, GVK Power ended down.
The BSE FMCG index cut down 0.99% or 24.21 points at 2419.47. Colgaste, HUL, ITC, Nestle fell.
However, the BSE capital goods index surged 2.03% or 255.12 points at 12827.03. Larsen, Alstom Projects, Bharat Elec, Carborundum, BEML, Jyoti Structure surged.
The BSE metal moved up 0.58% or 96 points at 16745.65. Jindal Steel, Jindal Saw, JSW Steel,Sesa Goa, JindalStainless flared.
The NSE cash turnover was at Rs 18136 crore and the NSE F&O turnover was at Rs 64758.96 crore. The BSE cash turnover was Rs 6206.67 crore. Total market wide turnover was at Rs 89101.63 crore.

Source: moneycontrol.com

Intraday Trading Calls for 29th May

Today Indian Stock Market may open positive and remains same for the day. Little bit volatility can be seen because of expiry day. Overall market may see good rally today with positive closing.

Today's Intraday Trading Calls/Stock Tips:

RENUKA SUGAR

NEYVELI LIGNITE

PRAJ INDUSTRIES

INDIABULLS REALEST

RELIANCE INFRA

UNION BANK

For Levels and Targets download the file by CLICK HERE.

Others: Sitashree Food, Mundra Port.

Corporate News
IOC to ration supplies in order to cut revenue losses. (BL)

Tata Motors plans 3 types of rights issue having differential voting rights as part of its plan to raise Rs72bn for the Jaguar-Land Rover acquisition. (BL)

ITC raises the prices of 3 of its cigarette brands by 10%. (BS)

Sun Pharmaceuticals’ US$454mn proposal to acquire Israeli drug-maker Taro has been called off. (BL)

Ranbaxy gets mixed verdict on Pfizer’s Lipitor in Australia. (BL)

Tata Steel-Corus raised prices for structural sections by £90 per ton from its Europe operations. (BL)

Unitech is in final stages of negotiation with Lehman for a US$500mn PE investment in its two commercial projects in Mumbai. (BL)

ONGC may reimburse part of service tax to shipping companies. (BL)

Tata Power to invest Rs5bn for wind power expansion. (BL)

GMR to set up ONGC’s proposed refinery in Kakinada. (BL)

HPCL-Mittal energy JV has approached the Petroleum Ministry to seek tax incentives.Infosys Technologies to implement Finacle Universal Banking Solutions at BVA. (BS)

RIL and HPCL bid for control of three state-run sugar factories in Bihar. (BS)

Orbit Corp to foray in beachfront projects through SPV. (BS)

Reliance Communication to start due diligence of MTN.(BS)

Parsvnath to buy 30% stake in Nano City. (BS)

Adani Energy has been slapped with legal proceedings claiming US$100mn in losses by Petronas for violating an agreement to buy and sell LNG. (Mint)

Cipla has filed pre-grant oppositions for over 50 drugs. (ET)

Good Luck