Buy stocks of TVS Motor; target Rs 43

"TVS Motor reported top-line revenue at Rs 16.2bn. The company sold ~205,000 motorcycles, ~134,000 scooters and ~193,000 mopeds. It sold ~9500 three wheelers in 4QFY12 compared to ~12,000 vehicles sold same period previous year. Its blended realisation per vehicle declined ~10%QoQ as a result of a lower 3W sales."

"The company’s operating margins declined 80bps QoQ to 6.1%. This is the lowest quarterly margins done by the company since FY09. This decline was purely led by lower realizations due to lower 3W sales. Market share- 14.1% in 2W, down 90bps YoY; 2.8% in 3W, down 150bps YoY TVS’s share in scooter segment declined from 21.6% in FY11 to 19.4% in FY12. In the motorcycle segment, it lost market share by 80bps YoY to 6.2% in FY12. Its market share in the three wheeler segment declined significantly from 4.3% in FY11 to 2.8% in FY12."

"3W sales continue to be under pressure. As a result, its blended realization will continue to be lower. The company plans to launch two products one each in the motorcycle and scooter segment. We have estimated a ~7% volume growth for two wheelers and 5% volume growth for three wheeler segment. This gives us a volume of 2.51mn in FY14. The stock has significantly underperformed over the last three months on fears of a slowdown in the 3W segment. It currently trades at 7.0xFY14E. We maintain Buy," says Dolat Capital research report.

Buy stocks of Tech Mahindra; target Rs 725

"Tech Mahindra reported subdued performance on the revenue front for 4QFY2012, however operationally the company did well. Non-BT business, surprisingly, was a major growth dampener, USD revenue of non-BT business declined by 5.5% qoq. Growth came from BT business due to some one-time discretionary spend done by BT. BT has started retendering its work; this poses risk to Tech Mahindra’s revenue run rate. However, due to the company’s stake in Mahindra Satyam, we maintain our Buy rating on the stock."

"For 4QFY2012, Tech Mahindra reported USD revenue of USD 281.6mn, down 2.5% qoq, due to a decline in revenue from two telecom clients from India, as these clients are ramping down their business after cancellation of 2G licenses. The company has in fact made a provision of Rs 68cr in lieu of the uncovered dues from these parties. The company’s EBITDA margin for the quarter increased by 63bp qoq to 16.8% because of increased utilization level and a decrease in employee base, which led to savings in employee cost."

"Management sounded optimistic regarding non-BT business and is currently chasing 6-7 managed services deal. We expect the non-BT business to post a CQGR of 2.8% over 1QFY2013-4QFY2014, with BT’s quarterly revenue expected to be flat from here. However, there is a caveat that BT’s revenue may see a downside if the company loses out its market share in the retendering process initiated by BT. Thus, we expect a 5.6% CAGR in USD revenue over FY2012-14E. The company’s core EPS is expected to merely post a 4% CAGR over FY2012-14E."

"The only potential upside is due to the company’s stake in Mahindra Satyam, which is improving its overall profitability. PAT of Tech Mahindra and Satyam for FY2014 is expected to be at Rs 658cr and `936cr, respectively. Taking the new share count of 23.08cr (post merger) into account, the consolidated EPS comes in at Rs 69.1. We value Tech Mahindra at 10.5x FY2013E EPS of `69.1 and maintain Buy on the stock with a target price of Rs 725," says Angel Broking research report.

Buy stocks of Maruti Suzuki; target Rs 1415

"Maruti has underperformed the Sensex by 10% over the past 1 month, impacted by weakening INR. MSIL faces 3 key challenges in the near term: (1) increasing diesel engine availability beyond 400,000 units in FY13 as diesel is the key volume driver, (2) pushing petrol vehicle sales without increasing discounts, and (3) adverse JPY/ INR movement significantly impacting margins."

"The latest petrol price hike of ~INR7.5/ltr (~11%) is the steepest in last 4 years. Expect adverse impact on recovery in petrol vehicles demand, which has already been weak for the last 12 months. Widening of gap between petrol and diesel to INR32/ltr would further boost dieselization, capacity for which is a constraint for Maruti. Weak petrol vehicles demand would ensure discounts remain at all-time high levels of 4QFY12. Further, weaker INR will put pressure on profits of Maruti. For every 1% JPY/INR change, MSIL's EBITDA margin changes by 15-20bp and EPS 2.5%."

"We are downgrading earnings estimates by 16%/11% for FY13/FY14 to INR74.5/ INR98.3 to factor in a) petrol price hike impact on volumes (10% volume growth v/ s 22% earlier), and b) weaker INR at 0.65/JPY. The stock trades at 15.4x FY13 consol EPS of INR74.5 and 9.8x FY13 Cash EPS of INR118. Maintain Buy with revised price target of INR1,415 (~12x FY13 CEPS), says Motilal Oswal research report."

Buy stocks of Infinite Computer; target Rs 168

"Infinite Computer’s management is optimistic about the growth of the company due to some big deals wins expected in the near term and ramp up from existing accounts, thus have given a guidance of 20% top line growth and 11% PAT growth in US$ terms for FY13. In INR terms it expects top line to grow come at Rs 13.8 bn up 31% y-o-y and PAT to grow 21% y-o-y to Rs 1.46 bn. This high growth expectation is despite the decline in revenues from largest telecom client in FY12 and concerns over IT spending especially in Europe. We believe new deals wins, growth from existing clients and rupee depreciation will fuel the growth going forward."

"Management indicated only 21% increase in PAT for FY13E (top line expected to rise 31%) despite higher portion of revenues from non linear revenue models, significant rupee deprecation and no major hiring plans, which suggests that margins are going to be under pressure going forward. Main reason cited were reinvestment in business and increased SG&A expenses, which we believe is required in the tough environment to boost sales."

"We increase our top-line estimate on account of expected clients wins (yet to be announced), rupee depreciation and increase in business from existing clients. Our top line estimates for FY13E and FY14E now stand at Rs 13.7 bn and Rs 16.2 bn up 29.9% and 18.2% respectively. EBITDA margins for FY13E will contract by 81 bps to 16.5% due to reinvestment in business. We estimate EPS for FY13E and FY14E to stand at Rs 32.2 and Rs 39.5 respectively. The stock currently trades at a P/E of 3.2x and 2.6x FY13E and FY14E earnings which we think is at a steep discount to its peers considering its healthy deal pipeline, high cash reserve of Rs 56/share, healthy return ratios and pretty good cash flows generation. We maintain our "BUY" rating on the stock and maintain our target price of Rs 168 an upside of 63.3% from current levels," says BP Equities research report.

Buy stocks of IndusInd Bank; target Rs 352.5

"IndusInd Bank has a strong deposit franchise with high share of low cost CASA deposits (~27%) in its liability profile. However, we believe there is still much headroom for improvement in terms of CASA per branch for the bank (amongst the lowest in the peer group). Going forward with the bank witnessing strong traction in savings deposits, the proportion of savings deposit is expected to move higher thereby making its liability profile more broad based. We expect share of CASA deposits to increase from 27.3% currently to 30.5% by FY14E growing at a CAGR of 35.7% as against CAGR growth of 28.4% in deposits."

"The bank has a strong and diversified fee income mix with 90% of the fee income coming from the steady sources. The bank’s strategy to cross sell wide range of financial products and services by leveraging the existing client relationships is likely to boost profits through fee and fund based income. We expect the non interest income to grow at a CAGR of ~29.3% over FY12-14E."

"We estimate IIB to report an EPS CAGR of 30.1% over FY12-FY14E. ABV is estimated to grow at 20.1% CAGR during the same period. The bank’s strong asset quality, superior return ratios, strong asset growth and adequate capitalization bodes well for its future growth. IIB has historically commanded a premium valuations vis-à-vis its peers due to its track record of consistent growth in earnings and assets. We initiate coverage on Indusind Bank with a BUY rating and March’13 price target of `352.5 /share (based on 2.5x March-14E ABV which is one year average one year forward multiple), implying an upside of 15.4% from current levels," says Aditya Birla Money research report.