Buy stocks of Dish TV; target Rs 82

Dish TV :-

“Dish TV’s Q1FY13 result was in line with our expectation. The company reported net sales of Rs 520crs, a growth of 12% YoY driven by higher subscriber base and increase in ARPU. EBITDA stood at Rs 156crs, a robust growth of 27% YoY on account of higher revenue base and curtailed selling and distribution expenses. EBITDA margins jumped by 350bps over Q1FY12 to 29.9%. At net level, the company reported loss of Rs 32crs against loss of Rs 18crs over same period last year mainly because of increase in interest outgo and higher depreciation. Although digitization didn’t have any marginal impact on new subscriber addition in Q1FY13, the management is confident that new subscriber addition would happen in H2FY13E. With recent base pack hike, we expect increase in ARPU to continue. Strong revenue growth led by higher subscriber base, increase in ARPU and curtailed operating cost leave further room for margin improvement. With healthy free cash flow, we expect leverage ratios to improve in next 2 years.”

“The company reported 12% YoY net sales growth driven by 0.5mn new subscriber addition and 2% increase in ARPU. Gross subscriber base at the of the quarter stands at 13.6mn while net subscribers are 9.6mn. The management has guided new subscriber addition to continue and take a faster pace once digitization process progresses further. We believe the company will maintain in its numero Uno position in DTH market and will benefit the most from digitization. On ARPU front, 2%-3% ARPU growth can be seen for FY13E mainly on account of recent price hike taken in base price and incremental contribution from HD services.”

“Dish TV reported EBITDA margin improvement of 350bps YoY to 29.9% mainly on account of sustained SAC and lower ad spend in the quarter. With strong revenue growth, we expect further room for margin improvement for FY13E & FY14E; however increase in content cost due to renewal in programming contracts would be overhang in near term. Dish TV reported another strong quarter both on sales and EBITDA margins front. With ongoing digitization, we expect boost in new subscriber addition as the company is market leader and commands premium over its peers. Healthy growth in ARPU coupled with higher subscriber base support strong revenue growth. At current price, the stock is trading at 8.8x EV/EBITDA to its FY14E earnings. We recommend BUY with a target price of Rs 82,” says KRChoksey research report.

Buy stocks of Bajaj Auto; target Rs 1,933

Bajaj Auto:-

"Bajaj Auto 1QFY13 results are below estimates, with EBITDA margins at 17.9% (v/s est 18.7%) and adj PAT at INR7.2 (v/s est INR7.27b), impacted by adverse product/market mix and lack of operating leverage. Volumes de-grew by 1% YoY (+6% QoQ) to 1.08m units (v/s est 1.1m). Realizations up 4.7% YoY (-1.4% QoQ) to INR45,095/unit (v/s est INR45,440). Net revenues grew by 3% YoY (5% QoQ) to INR48.6b (v/s est INR49.8b). EBITDA margin declined by 190bp QoQ (+10bp YoY) to 17.9% (v/s est 18.7%), impacted by adverse product (lower 3W volumes) and market mix (lower exports), higher staff cost (+70bp QoQ) despite 6% QoQ higher volume growth and higher other expenses (no benefit of operating leverage). Higher other income at INR1.8b (v/s est INR1.3b) boosted adj PAT to INR7.2b (v/s est INR7.27b) - 1% YoY growth (-5% QoQ)."

"We cut FY13EPS estimates by 1% each to model higher cost push, impact of which is diluted by price increase in domestic market from Jul-12 of ~1% (over & above ~1.25% increase in April). However, we upgrade FY14 EPS by ~5% to INR138, as we change our USD/INR to 52 (v/s 50 earlier). We model volume growth of ~8%/13% for FY13/FY14 and EBITDA margins of 18.6%/18.9% respectively. We model USD/INR rate of 50 each for FY13 and 52 for FY14 (v/s 49.5 for 1QFY13 v/s 48.2 for FY12). Our estimates could see further upgrade as it hedges its FY14 receivables at favorable rate of over 55. If it hedges FY14 Fx exposure at 55, our EPS would see upgrade of ~5% to ~INR145. The stock is valued at 13.9x FY13E EPS of INR109.7 and 11x FY14E EPS of INR138.1, and ~3.3% dividend yield on FY13 basis. Maintain Buy with target price of INR1,933 (14x FY14E EPS)," says Motilal Oswal research eport.

Hold stocks of Axis Bank; target Rs 1205

Axis Bank:-

 "Axis Bank Ltd. has reported decent numbers, which were inline with our expectations, with healthy core performance but slight deterioration in asset quality during Q1FY13. PAT was aided on decent NII and lower operating expenses during the quarter. During Q1FY13, NII grew by a decent 26% YoY to Rs.21,799 mn, on the back of strong Advances growth. Its Advances grew 30% YoY (Ex-currency depreciation 25%), mainly from robust growth of 50% YoY in retail segment (as per outlined strategy). Its Deposits grew by 21% YoY, while CASA grew by 17% YoY. However, its CASA share in total deposit contracted by 148 bps YoY & 248 bps QoQ standing at 39.1%, mainly due to contraction in current deposit and high growth in term deposits. The share of bulk deposits stood at 37% of total deposits against 39% in Q1FY12."

"The Bank reported a sluggish non interest income growth of 9% YoY, supported by fee from retail and agri & SME banking. Treasury income saw a growth of 114% YoY, which includes stake sale from Max India (Rs.890 mn). The Bank expects non interest income growth to track B/S growth. Axis Bank’s operating expenses increased by 16% YoY with employee expenses increasing by 14% YoY and other operating expenses increased by 18% YoY on higher network expansion. Its Cost to Income ratio improved to 44.1% in Q1FY13 as against 46.1% in Q1FY12. Axis Bank’s total provisions in Q1FY13 increased by 47% YoY to Rs.2,588 mn on account of higher provisioning required on loan losses & standard assets (Rs.2.75 bn against Rs.1.37 bn in Q1FY12) from higher slippages. Write back on investment depreciation aided provisions. As a result, the Bank’s Net Profit saw a growth of 22% YoY and stood at Rs.11,535 mn."

"Axis Bank has grown at a very healthy pace in past few years with strong build-up in liability franchise, diversified loan book, stable asset quality and high return ratios. We have largely retained our estimates and going forward, we expect its Advance & Deposit to grow by 19.1% & 17.7% respectively in FY13E and 19.5% & 18.4% respectively in FY14E, while Net Profit to grow at 7% in FY13E & at 16% in FY14E. The steady performance, higher than system growth outlook, focus on retail assets and better deposit franchise will emerge as key value drivers for the stock in medium term. Axis Bank currently trades at an attractive valuation of 1.4x FY14E ABV & 8.2x FY14E Earnings. We change our rating to “Hold” with a price target of Rs.1205," says Sushil Finance research report.

Buy stocks of Sterlite Industries at current level

Sterlite Industries:-

"Sterlite Industries chart looks good. Firstly it has gone through a deep correction and that correction stopped almost exactly at Rs 105, which is a significant support level. That is the point at which we thought the stock should find some support and stem its decline. That happened because nifty was better yesterday. At this point Sterlite is a buy, the stops are very tight. If yesterday’s lows are broken then clearly the trend has not changed. So with a very small risk it’s possible to get a reward, again towards Rs 120-125. It is a very good trade."
He further added, "We have been downbeat on Hexaware Technologies for a long time now. I had suggested that the trend there is giving a distribution pattern and Hexaware has fallen and yesterday it cracked its final support. So even if it rallies a bit today that would be a selling opportunity. I think the stock is going much lower, probably it will go below Rs 90. It is a disappointment but it had a very good rally and it is coming back again that is the way market is."

Buy stocks of Exide Industries at current level

Exide Industries:-

 "I would buy Exide Industries because we have seen improvement in market share and growth coming back over last couple of quarters. Two things for Exide going forward over the next 3 quarter perspective, this is a period which coincides with the strong recovery in auto sales which you saw three years back post the financial crisis. So, the replacement cycle looks very well positioned for them and they make most of the money in replacement market anyway. So, that should board well in terms of growth rate and margins."
He further added, "Second a slightly more medium term perspective is a huge opportunity - two wheeler batteries, they are the dominant player in two wheeler batteries, but two wheeler has seen a massive shift from kick start to push start which mean battery becomes much more critical and after market demand for that has still not come through. That should start coming through from the December quarter. Two wheeler market is much bigger than car market. So, that is a big medium term driver for them."

Buy stocks of Tata Power at current level

Tata Power:-

 “Tata Power is a stock that is now entering in uptrend and therefore it is a share that we want to buy every time we can. At current prices assuming that this market is bottoming out in the short-term, Tata Power becomes a buying opportunity.”
He further added, “The same cannot be said for the other power stocks either it is Adani or even Reliance Power , it is best to avoid them, it is too early. The rally is about one hour old; I don’t think we need to rush into it.”

Tata Power`s trailing 12-month (TTM) EPS was at Rs 5.36 per share. (Mar, 2012). The stock's price-to-earnings (P/E) ratio was 18.36. The latest book value of the company is Rs 52.29 per share. At current value, the price-to-book value of the company was 1.88. The dividend yield of the company was 1.27%.

Buy Stocks of MindTree; target of Rs 708

Buy MindTree:-

 “MindTree reported in-line operational performance for 1QFY2013, with PAT coming in ahead of our expectation because of higher than expected forex gain. MindTree has been one of the good performers on the revenue ass well as margin front in the Indian IT mid-cap space, posting a 3.6% CQGR in its revenue over the past eight quarters. Management sounded confident of meeting Nasscom’s average revenue growth guidance for FY2013. We maintain Accumulate rating on the stock.”

“For 1QFY2013, MindTree reported USD revenue of US$105.5mn, on the back of 0.2% and 0.4% qoq volume and pricing growth, respectively. EBITDA margin improved by 211bp qoq to 20.9%, aided by 230bp qoq gain form INR depreciation and 80bp qoq benefit derived from operational efficiency. EBITDA margin was negatively impacted by 100bp qoq due to wage hikes given to 80% of the employee base from June 1, 2012.”

“Management is confident that its IT services business would continue its momentum and has given offers to 3,000 campus graduates for FY2013. Overall, the management indicated that the company will achieve Nasscom’s current industry growth guidance of 11-14% yoy in FY2013. To achieve this, the company requires minimum ask rate of 3.8% from 2QFY2013- 4QFY2013, which looks a bit stretched. Keeping that in notice, we expect USD revenue to grow by 9.5% yoy in FY2013. Overall, we expect the company to record a 9.8% and 14.8% CAGR in USD and INR revenue, respectively, over FY2012-14E. We expect the company’s EBITDA margin to increase from 15.3% in FY2012 to 18.6% in FY2013. Further, we expect the company to record a 22.4% CAGR in its EBITDA over FY2012-14E. We value the stock at 10x FY2014E EPS, i.e., with a target price of Rs708, and maintain Accumulate rating on the stock,” says Angel Broking research report.