Daiwa Capital
Tata Chem (Buy)
CMP: Rs 305
Tata Chemicals Ltd's (TTCH) 4QFY12 adjusted PAT of Rs 189 crore was lower than our forecast of Rs 207 crore, due mainly to higher-than-expected interest costs and higher-than-expected depreciation. We are lowering our six-month target price for TTCH to Rs 390 (from Rs 405) now based on our FY13E earnings (formerly FY12E) and on slightly reduced FY13E EV/EBITDA multiples. We reaffirm our ‘Buy' rating on the stock, as we believe its PERs (price-to-earnings ratio) of 9.4x for FY13E and 8.2x for FY14E remain supportiveRobust soda-ash sales volumes and any increase in government subsidy support towards the phosphatics business through FY13 could be positive catalysts for the stock. A sudden and deep correction in soda-ash demand would be a key risk to our call.
Angel Broking
Sadbhav Engg (Buy)
CMP: Rs 130
Target: Rs 182
For 4QFY2012, Sadbhav Engineering (SEL) reported a mixed set of numbers, with revenue coming marginally higher than our estimates while earnings coming in lower than our expectations. For FY2013, SEL has given a flat guidance on the revenue front primarily due to completion of Dhule Palesnar and Bijapur Hungund projects. Further, the two recently won road BOT projects — Gomti ka Chauraha and Solapur Bijapur — will start contributing to construction revenue post September 2013. On the EBITDAM (earnings before interest, income taxes, depreciation, amortisation, and management fees) front, the company expects its margin to stay at 10.5-11 per cent. SEL's management has reiterated that the company would continue to focus on the sustainability of its margins. SEL had an order inflow of Rs 2,844 crore (majority contribution by the two recent road BOT projects) during FY12, taking its order book to Rs 7,554 crore (2.8x FY2012 revenue), which provides good revenue visibility.