Car News

BUY NATIONAL HYDRO POWER CORPORATION (533098)
CMP: 24
Target: 40 in 6 months
National Hydro Power Corporation, an entity of Government of India, is
country's largest hydro power producer.
NHPC is currently having an installed capacity of more than 5,300 MW
with 14 operational power stations and has a cash surplus of over Rs
4,000 crore.
Net profit of NHPC rose 47.19% to Rs. 791.05 crore in the quarter
ended June 2011 as against Rs. 537.42 crore during the previous
quarter ended June 2010. Sales rose 40.37% to Rs. 1431.41 crore in the
quarter ended June 2011 as against Rs. 1019.71 crore during the
previous quarter ended June 2010.
The state-run major is engaged in the construction of 10 projects at
various locations in the country, going to have an additional
capacity of 4,502 MW. It is planning to develop two hydro projects in
Myanmar.
It plans to increase the capacity to over 10,000 MW by end of 2012.
The coal price is expected to rise by 2012, which will result in
increase in power price by 20%. This will further boost the profit
margin of NHPC to a large extent
Spanning on Government's increasing emphasis on hydro power and NHPC's
strong hold, we recommend a BUY on NHPC at CMP of Rs 24, the stock is
trading at P/E of 12.7x and 10.1x on FY12E and FY13E EPS, respectively
to target 40 in 6 months, 75 in 18 months.

SELL BAJAJ AUTO (532977)
CMP: 1500
Target: 1150 in 3 months
BAL, the 2nd largest manufacturer of two-wheelers in India, reported
less growth compared to its peers, with production constraints,
diminishing brand image and market acceptance, coupled with
detoriating quality & inability to achieve target sale, the stock
looks struggling.
Bajaj Auto's results were below expectations in July 2011 as margins
due intense pressure of higher RM prices that continue to dent overall
profitability of the company and lower realisation due to changing
product mix from H2FY12. Series of petrol price hikes and increase in
interest rates led to sharp increase in cost of ownership.
Sales dropped by 1.5% on monthly basis. In July 2011, Bajaj sold
174099 motorcycles in domestic market which is same as the number of
motorcycles sold last year in Indian market showing the stagnant
condition of Bajaj. Comparing it with its peers like Hero Motors and
TVS which showed 15% and 12% increase in sales in domestic market
respectively, it is a clear indication of Bajaj losing grounds
domestically. Bajaj, which is highly dependable on exports, is soon
going to face tough times ahead with Hero's massive entry in exports
along with elimination of tax benefit given by Government to exporters
of auto.
Supply of two wheelers is on rise with players like Honda Motors
Cooperation (HMC), Hero Honda Motors Limited, TVS, M&M expanding their
capacities. Bajaj is to be most affected with this gap in demand and
supply as its brand preference has fallen from 2nd position to 4th
position in market.
With increase in competition, fall in demand, pressure rising due to
high input cost, tightening of export policies, Bajaj Auto is losing
grounds from domestic as well as export market. We recommend a STRONG
SELL at the current market price of Rs.1500 per share, BAL is
currently trading at a PE of 12.19x FY12E and considering the dark
future of Bajaj owing to the given reasons it is trading at 25.65x
FY13E earnings. We recommend a sell with target of Rs.1150 in 3
months.

BUY FIRST SOURCE LIMITED (532809)
CMP: 13
Target: 24 in 4 months

Firstsource is a global BPO (business process outsourcing) service
providers, and is ranked #25 amongst the world's leading Global
Outsourcing companies by IAOP. They provide customized BPO solutions
to category leading companies in several industries including Banking
& Financial Services, Telecom & Media and Healthcare sectors. FSL
utilize global delivery model with operations in the USA, UK, India
and The Philippines. They are expanding their Asia business unit.
With more than 27000 employees, its revenue earning for FY 2010-211 is
US $ 448 million.
Total income from operations rose to Rs 523 crore during the April-
June quarter of 2011, compared to Rs 490.70 crore in the same period
last year. The volumes have risen by 6.6% on a yearly basis.
FSL sees a significant growth in Asia business unit, which is a
positive trend. In June quarter, they expanded their workforce by 25%
by adding 3000 new employees.
The expansion of workforce gives light on the increasing work of FSL
which shall be reflected in the coming quarters.

With expansion in geographical dimensions, increasing capacity and
work load, FSL is bound to grow at a higher rate. We recommend a
strong BUY with target of 24 in 4 months.

DISCLAIMER:- Smart Profit has taken due care and caution in
compilation of data for its reports. The market view and investment
tips expressed on Smart Profit are in no way a guarantee either
express or implied. However, Smart Profit does not guarantee the
accuracy, adequacy or completeness of any information and is not
responsible for any errors or omissions or for the results obtained
from the use of such information.

FOR FUTHER DETAILS CONTACT:-

DIPAK MANGELA
(Research Analyst)
+919820260291
Email: dipak.mangela@smartprofit.in

MANSINGH RAI
(Sr. Executive)
+919320907684
Email: mansingh.rai@smartprofit.in

SHAILESH GOWDA
(Sr. Executive)
+919967394114
Email: shailesh.gowda@smartprofit.in

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