Six More Stocks Worth Buying After Q2FY15 Results: Amar Ambani IIFL

Amar Ambani of IIFL has recommended six more stocks which he claims have good upside left in them

Tata Steel Ltd (Q2 FY15) – BUY
CMP Rs468, Target Rs565, Upside 20.7%

Tata Steel consolidated results were lower than our estimate on account of weaker results in its South East Asia operations
Standalone operational results were inline as the impact of higher costs was negated by a jump in realisations
Adjusted EBIDTA/ton at Corus stayed higher at US$46, higher than our estimate of US$43/ton on account of superior product mix
Performance of South East Asia operations remained below par due to dumping of cheap steel from China and lower steel-scrap spreads
The company has managed to reduce its debt marginally even after incurring a capex of Rs33.5bn in Q2 FY15
Near term headwinds persists; However, long term positive view intact; Maintain BUY with a revised price target of Rs565

Click here for the detailed report on the same.

Power Grid (Q2 FY15) – BUY
CMP Rs143, Target Rs187, Upside 30.7%

Power Grid’s operational numbers were a tad lower than our expectations due to the change in norms and lower contribution from consultancy division
Topline of Rs41.8bn was higher by 6% qoq on account of higher capitalization in Q1 FY15
Reported PAT was lower by 2.7% yoy and was lower than our estimate due to marginal miss on revenues and higher depreciation
The company continued to report higher capitalized projects during the quarter at Rs47bn; 125% higher on a yoy basis. Capex for the quarter stood at Rs48.5bn
Capitalized projects till date jumped to Rs132bn, increasing the upside risks to our estimates
We maintain our BUY rating on the stock with 2-yr target price of Rs187

Click here for the detailed report on the same.

Indraprastha Gas (Q2 FY15) – BUY
CMP Rs430, Target Rs500, Upside 16.3%

Net sales at Rs9.5bn were higher than estimates owing to stronger than expected CNG volumes and realizations
CNG volumes at 207mn kgs were higher by 4.2% yoy and 6.7% qoq. PNG volumes were at 90scm a growth of 0.6% yoy and 8.4% qoq
Gross margins/unit increased by 4.4% yoy but declined 2.5% qoq to Rs11.5/unit. This was better than our expectations owing to decline in LNG prices and hike in CNG prices
OPM at 22.8% came in line with our expectations and was higher by 289bps yoy but lower by 118bps qoq
Maintain BUY with a revised price target of Rs500

Click here for the detailed report on the same.

Eicher Motors (Q3 CY14) – BUY
CMP Rs13,159, Target Rs15,350, Upside 16.7%

Consolidated performance better than expected on the back of stronger than anticipated standalone performance and VECV performance
Royal Enfield reported highest ever OPM of 25%, a surge of 571bps yoy driven by significant benefits of operating leverage
VECV performance was above estimates as volumes were up 3.7% yoy leading to above estimate OPM
We upgrade our rating to BUY with a revised price target of Rs15,350 as we believe the company deserves premium multiples given strong earnings growth forecast in both its two wheeler business and the commercial vehicle business

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IPCA Laboratories (Q2 FY15) – BUY
CMP Rs658, Target Rs760, Upside 15.5%

Q2 much weaker than expected as revenues, PAT miss estimates; sales decline 7.8% yoy
Gross margins hold up even as overall margin impacted by negative operating leverage in the wake of fall in API, formulation exports
Cut FY15/16 estimates on potentially delayed Ratlam resolution but retain BUY with revised 9-12mth target of Rs760

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Oil India Ltd (Q2 FY15) – BUY
CMP Rs580, Target Rs720, Upside 24.1%

Net sales at Rs21.9bn were much lower than estimates owing to substantially higher than projected subsidy burden
Oil production was at 0.88MT a decline of 4% yoy but sequential rise of 4.1% while gas production was at 0.69bcm a rise of 4.2% yoy and 2.5% qoq
Net realizations for crude oil were at US$45.25/bbl a fall of 13.5% yoy and 13.5% qoq as crude oil prices have fallen yoy while subsidy burden has remained flat for Oil India; gas realizations were at Rs6,431 flat on both yoy and qoq basis
OPM was substantially below estimates at 36.9% owing to sharp fall in crude oil realizations
We maintain our BUY rating with a revised price target of Rs720 as the company would be a big beneficiary of the expected freeing of diesel prices and gas price hike

Click here for the detailed report on the same.

Warm Regards,

Amar Ambani