Axis Capital, in its ‘India Strategy’ report claims that the said 10 stocks stand to gain the most as a result of easing global commodity prices & increase in liquidity.
Target price: Base case: Rs 400
Bull case: Rs 542
Bear case: Rs 285
The stock has underperformed in the last three years due to hyper competition and regulatory concerns (reserve price at 7x 2008 license fee). Factors like easing India competition, receding India regulatory overhang and upside potential in Africa are likely to help Bharti Airtel.
Target price: Base case: Rs 313
Bull case: Rs 415
Bear case: Rs 256
Demand driven by China growth of 25 per cent while flat growth in developed markets would require increased discounts. New product launches — new Range Rover and Sportsbrake in Q4FY13, F-Type in Q1FY14, new Range Rover Sports (2HFY14) – and dealership expansion to bring volume growth.
Target price: Base case: Rs 2,400 Bull case: Rs 3,390
Bear case: Rs 1,941
Infosys Technologies is expected to benefit the most from uptick in discretionary global IT spend, market share gains in ADM and IMS, higher capacity utilization, PE discount to TCS narrows to 10 per cent at 18x (currently 25 per cent). Infosys will continue to invest in products, platforms & solutions; hence don’t expect increasing margins with volume recovery.
Target price: Base case: Rs 203
Bull case: Rs 227
Bear case: Rs 151
NTPC will benefit by private gencos stalling expansions. The government will facilitate execution through faster clearances for captive coal mines and power projects. Falling interest rates benefit P/B multiples of NTPC as CoE comes down and dividend yield of 2.8 per cent cushions downside.
Target price: Base case: Rs 434
Bull case: Rs 522
Bear case: Rs 360
Coal India will benefit by faster regulatory clearances on PMO’s directives which will provide volume growth. Coal India’s FY13 YTD volume growth has been 8 per cent vs expectation of 5 per cent at the beginning of the year. The washed coal sales (realization 2x that of raw coal) will rise from 5 per cent to 25 per cent of total sales by FY18.
Target price: Base case: Rs 720
Bull case: Rs 855
Bear case: Rs 545
Thermax’s FY14 order inflow is expected to be Rs 75 billion (up 35 per cent YoY), which is ~30 per cent higher than street. Higher order to result in higher sales growth in FY14 at 22 per cent YoY v/s street’s estimate of 10 per cent. Thermax will have higher orders (& hence customer advances) which will result in lower net working capital and higher FCF of Rs 4-6 billion pa – third highest amongst Capital goods after L&T and Siemens.
Target price: Base case: Rs 396
Bull case: Rs 428
Bear case: Rs 316
Cairn India’s enhanced Oil Recovery project (results expected by mid CY 13) will increase recoverable reserves by 0.3 billion boe from 1.1 billion, thus increasing production visibility to 300 kbpd from 175 kbpd.