Friday, April 22, 2011

Analysts' corner Bse Nse Stock

        IDBI Bank, Sunteck Realty & Persistent Systems

Reco: Rs 150,
Target: Rs 182

IDBI Banks Q4FY2011 net profit, which grew by 62 per cent year on year (YoY) to Rs 516 crore was above estimates. Profit growth was driven by a sharp reduction in the provisions and a 51 per cent sequential growth in the non-interest income (NII). However, NII growth was lower than estimated at 46 per cent YoY, mainly due to the contraction in the margin (down 18 basis points sequentially to 2.1 per cent). The gross non-performing assets (NPAs) declined to 1.76 per cent from 2.22 per cent in Q3FY2011, led by aggressive write-offs (Rs 449 crore in Q4FY2011). IDBI Bank’s advances grew 14 per cent and 8 per cent YoY, respectively. Going forward, the growth in its profits will be driven by an improvement in the margin and a reduction in the NPA provisions. Maintain buy.

— Sharekhan

Reco: Rs 347,
Target: Rs 545

Sunteck’s Bandra Kurla Complex (BKC) projects have already sold units worth almost their total cost. Cash from the sales will fund any expansion plans. Owing to change in analysts valuation stance, they have cut their target price to Rs 545 from Rs 811. Analysts estimate the total BKC projects cost at Rs 1,700 crore. Management stance for higher pricing is likely to stretch sales till FY16. Also, Sunteck plans to acquire stake in a couple of large-ticket transactions. Better cash flows will largely depend on execution & sales strategy. Maintain buy.

— Anand Rathi Research

Reco: Rs 392,
Target: Rs 480

Persistent came up with an organic 8.8 per cent QoQ revenue growth with a topline growth of 9.2 per cent (including the Infospectrum acquisition). The dip in the Ebitda margin was led by wage hikes effected in January, the slight dip in utilisation, increased investment in sales and marketing (50bps impact) and the one off provision for doubtful debt (margin impact of 50bps QoQ). This quarter saw IP revenue increase to 10.3 per cent of revenue from 7.5 per cent last quarter. While IP revenue is lumpy on a qoq basis, the management expects it to at least sustain at current levels in FY12. A pricing increase of 2 to 3 per cent is baked, which analysts believe is very achievable. Maintain buy.

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