Buy Asian Paints + RIL
Sunday, October 21, 2007
Asian Paints reported 49% increase in 2QFY08 profit (pre exceptionals), domestic growth (13% YoY) seems to be slowing down. On the positive side, margins expanded 258bps.Management has indicated that there is a slowdown in domestic construction activity which has impacted paint sales.International business growth was only 7.85%, adversely impacted by an appreciating rupee, EBIT margins have been improving sharply, especially for key areas such as Middle East and South Asia. Asian Paints is likely to report an EPS of Rs 36.62 for FY08 and Rs 44.08 for FY08 and FY09 respectively. Price target of Rs1102 is based on 25x FY09E consolidated EPS.
RIL:
Reliance Industries reported a solid Q2. Earnings upgrade of 17-42%, incorporating IPCL merger, higher GRMs/petchem margins, MA oil, and lower tax; Include RPL estimates; Greater confidence in sustainability of E&P cash flows.
Recent but not-yet-quantified discoveries in KG-D4 and CY-D5 vindicate this further and increase confidence to value E&P on EV/FCF of 12x FY11E (10x earlier). At US$35bn a 47% premium to NAV. Citi upgrades the stock to Rs 2,860 from Rs 2,005. Other brokerage recommendations on RIL - RELI.BO are also covered here.
Labels: Asian-Paints, RIL
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Published by Webmaster @ 12:27 PM IST.
Raising RIL's Target Price - Macquarie
Sunday, October 14, 2007
Macquarie Research just a while ago upgraded the stock of Reliance Industries Ltd with a new target price of Rs 3,100. 20.8% Potential upside from current levels.RIL plans to build one of the world’s largest cracker and petrochemicals complexes at Jamnagar. The proposed facility, with 2mtpa capacity, will be built at a capital cost of US$3bn and is expected to come on-stream by FY3/11.RIL has 4.4bn boe of 2P hydrocarbon reserves which are twice of that provided by partner in KGD6, Niko resources and compares with 1.5bn boe of 1P reserves stated in recently released annual report.
Sum of Parts Valuation of the company by Macquarie,
Core Business Rs 1161
IPCL Rs 70
Fuel Retailing Rs 85
E&P Business Rs 263
75% stake in Reliance Petroleum - Rs 386
Treasury Stock Rs 359
CBM-Sohagpur and NEC 25 Gas - Rs 198
Other E&P (D9, D3 and GS-01) Rs 119
Organised retail venture - Rs 165
2mtpa Ethylene Cracker - Rs 295
This is still very cheap as they have not factored in the vast Land Banks the company has been accumulating for its SEZ and Retail venture.
Coverage of Reliance Industries by Goldman Sachs, CLSA, Deutsche Bank
Labels: Reliance-Industries, RIL
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Published by Webmaster @ 1:50 PM IST.