| IPO Note: Orient Green Power Company Ltd - Subscribe Price band Rs47-55
Orient Green Power Company Ltd (OGP) is a leading independent renewable energy-based power generation company focused on developing, owning and operating a diversified portfolio of power plants. Their current portfolio comprises of Biomass, Biogas and Wind Energy. OGP is a 94.75% (post issue 56%-59.5%) subsidiary of Singapore-based Orient Green Power Pte. Shriram EPC Ltd holds a 37.5% stake in this parent company, with the rest being held by two private equity investors. Through the IPO, OGP plans to raise Rs9bn, which will be used to fund capacity expansion and repayment of debt.
At the lower end of the price band, OGP is valued at 1.6x P/BV (post issue), and 1.8x P/BV at the upper end of the price band. With rising environmental concerns (greenhouse effect) and surging crude oil prices, sources of renewable energy will continue to attract investor attention over the longer term. We believe OGP provides a good investment opportunity for long term investors considering its strong capacity ramp-up plans over the next couple of years, translating into robust earnings profile. We recommend investors to subscribe to the issue.
http://content.indiainfoline.com/wc/research/researchreports/Orient_Green_Power_Compnay_210910.pdf |
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| HDFC – "Strong foundation" – BUY CMP Rs706, Target Rs787, Upside 11.4%
HDFC has transformed itself from a pure mortgage player to a financial services conglomerate that derives 38% of its value from non-mortgage businesses. Superior credit rating and access to retail deposits have helped the company borrow at competitive costs and maintain stable 2%+ spreads. Further, low operating costs and adequate check on credit quality have resulted in healthy growth and in turn best-in-class returns ratio. With immense potential in mortgage business, we believe HDFC would be the key beneficiary. The stock has underperformed its peers YTD and currently trades at attractive valuations. BUY. http://content.indiainfoline.com/wc/research/researchreports/HDFC_210910.pdf |
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| Oil India Ltd – "Deregulation gains" – BUY CMP Rs1,546, Target Rs1,750, Upside 13.2%
Government of India has shown a strong intent to ease out the subsidy burden on the upstream and downstream players in the domestic oil and gas industry. Bold moves such as complete de-regulation of petrol prices and 8-10% hike in product prices have been well appreciated by the street (10-15% stock price returns). Furthermore, the government has announced that even diesel prices would be completely de-regulated in the due course. Any such moves will enhance earnings visibility for companies such as Oil India Ltd (OINL). In another intrepid move the government hiked APM gas price by 130% to US$4.2/mmbtu which will lead to strong cash flows. Historically, OINL has been trading at a steep discount in terms of EV/BOE in comparison to global peers. With much more certainty on future earnings t he discount should narrow down. ecommend BUY with a target price of Rs1,750.
http://content.indiainfoline.com/wc/research/researchreports/Oil_India_210910.pdf |
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