1) Larsen & Toubro:
L&T is the best play on domestic industrial and infrastructure recovery with sustained competitive and scalability advantage that separates it from the rest. While we expect L&T to meet FY13E growth guidance, sale of non-core business and revival of non-infrastructure businesses over next 2-3 years would be key value drivers.
The stock currently trades at a P/E of 18.8x &16.1x its FY13E & FY14E earnings respectively on a consolidated basis. With encouraging guidance in its order intake and sales growth for FY13 in this tough market condition, we recommend buy on the stock.
2) LIC HousingBSE -2.22 % Finance:
Despite an overall slowdown in industry due to high mortgage rates and high price level specially in Tier 1 cities, LIC Housing has still been able to grow at higher rate than industry and increased its market share. The outstanding mortgage portfolio of the company in FY12 was Rs 63,080.15 crores as against Rs 51,089.84 crores in FY11, registered a growth of 23.47%.
The share of developer loan has declined to 5% in FY12 from 10.9% in FY10. However, the management expects to bring its loan book back to its historical level. The company's move is likely to improve business margins. Generally, developer loans yield are 3-4% higher as compared with the individual loans.
3) NMDC:
NMDC's realizations are expected to improve due to its shift to import parity price mechanism from net back pricing mechanism to match the international benchmarked iron ore prices. So far, NMDC's domestic iron ore prices were at more than 100% discount to the international benchmark prices. The difference in both the prices has come down to ~50% at $80/tonne.
4) Tata Chemicals:
On account of the strong urea demand scenario along with the assurance of 12-20 per cent post tax return from government, Tata ChemicalsBSE -2.18 % is likely to double its urea capacity at Babrala unit at an estimated cost of $850 million that may help to generate stable cash flow. The plant may commission in three years.
Tata Chemicals is currently trading at P/E of 10.9. We believe that at current valuations, the company is attractively priced and can be good investment bet from long term perspective. However, erratic monsoon and adverse global scenario impede our optimism a bit.
5) Tata Consultancy Services:
Key number to pick from TCS' Q3 FY2013 results was the attrition level of 11.2%. The reported attrition level is the lowest in its peer group. Additionally, the company is consistently reporting ex-trainees utilization levels of more than 80% since Q3 FY2010. In addition, these factors helped TCSBSE 2.58 % to sustain its operating margins above 26% levels since then.
In Q3 FY2013, TCS announced dividend of Rs 3 per share, which was its 34th consecutive quarterly dividend. The company's initiatives to reward shareholders provide its investors consistent periodical returns.
L&T is the best play on domestic industrial and infrastructure recovery with sustained competitive and scalability advantage that separates it from the rest. While we expect L&T to meet FY13E growth guidance, sale of non-core business and revival of non-infrastructure businesses over next 2-3 years would be key value drivers.
The stock currently trades at a P/E of 18.8x &16.1x its FY13E & FY14E earnings respectively on a consolidated basis. With encouraging guidance in its order intake and sales growth for FY13 in this tough market condition, we recommend buy on the stock.
2) LIC HousingBSE -2.22 % Finance:
Despite an overall slowdown in industry due to high mortgage rates and high price level specially in Tier 1 cities, LIC Housing has still been able to grow at higher rate than industry and increased its market share. The outstanding mortgage portfolio of the company in FY12 was Rs 63,080.15 crores as against Rs 51,089.84 crores in FY11, registered a growth of 23.47%.
The share of developer loan has declined to 5% in FY12 from 10.9% in FY10. However, the management expects to bring its loan book back to its historical level. The company's move is likely to improve business margins. Generally, developer loans yield are 3-4% higher as compared with the individual loans.
3) NMDC:
NMDC's realizations are expected to improve due to its shift to import parity price mechanism from net back pricing mechanism to match the international benchmarked iron ore prices. So far, NMDC's domestic iron ore prices were at more than 100% discount to the international benchmark prices. The difference in both the prices has come down to ~50% at $80/tonne.
4) Tata Chemicals:
On account of the strong urea demand scenario along with the assurance of 12-20 per cent post tax return from government, Tata ChemicalsBSE -2.18 % is likely to double its urea capacity at Babrala unit at an estimated cost of $850 million that may help to generate stable cash flow. The plant may commission in three years.
Tata Chemicals is currently trading at P/E of 10.9. We believe that at current valuations, the company is attractively priced and can be good investment bet from long term perspective. However, erratic monsoon and adverse global scenario impede our optimism a bit.
5) Tata Consultancy Services:
Key number to pick from TCS' Q3 FY2013 results was the attrition level of 11.2%. The reported attrition level is the lowest in its peer group. Additionally, the company is consistently reporting ex-trainees utilization levels of more than 80% since Q3 FY2010. In addition, these factors helped TCSBSE 2.58 % to sustain its operating margins above 26% levels since then.
In Q3 FY2013, TCS announced dividend of Rs 3 per share, which was its 34th consecutive quarterly dividend. The company's initiatives to reward shareholders provide its investors consistent periodical returns.
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