Fw: Company Report - Talwalkars Better Value Fitness

 

Talwalkars Better Value Fitness: Best Fit – BUY CMP Rs180, Target Rs235, Upside 30.6% Talwalkars Better Value Fitness (TBVF) offers a unique opportunity to play the growing importance of fitness combined with increased penetration of organized players. TBVF itself has been on a strong growth momentum as reflected in 1) ~2x jump in owned gym base and 2) robust revenue/PAT cagr of 36%/68% over FY10-12. In addition, company has unveiled fresh initiatives like 'HiFi' gyms (for rural reach), 'NuForm Studios' (standalone high street studios aimed at upper end of consumer strata) and 'Zumba' (aerobics) which would increase penetration and raise brand awareness. We project consolidated gym base of 199 by end of March 2014 of which 13%/17% would be housed in subsidiaries/HiFi gyms. Stock currently trades at the lower end of its historic 1-yr fwd PE range; valuations are supportive at ~11x FY14 PE given an estimated 35% PAT cagr over FY12-14. We retain our BUY rating with a revised 9-mth target of Rs235 (earlier Rs190). Click here for the detailed report on the same. Warm Regards, Amar Ambani

Fw: Investor's Eye: Update - Bajaj Corp; Special - Q2FY2013 Auto earnings preview, Q2FY2013 Pharma earnings preview

 

 

Investor's Eye [October 08, 2012]  Sharekhan www.sharekhan.com

Summary of Contents STOCK UPDATE Bajaj Corp Cluster: Ugly Duckling Recommendation: Hold Price target: Rs208 Current market price: Rs187 Price target revised to Rs208 Result highlights  Results marginally ahead of expectation: Bajaj Corp Ltd's (BCL) Q2FY2013 results are marginally ahead of our expectation (by 5%), largely on account of a higher than expected gross margin (GPM) during the quarter. The net sales grew by 27.2% year on year (YoY) to Rs135.9crore (in line with our expectation of Rs134 crore) in Q2FY2013. With an improvement of around 375 basis points in the GPM, the reported profit after tax (PAT) grew by 33.6% YoY to Rs38.4 crore, which is marginally ahead of our estimate of Rs35.6 crore. Another quarter of close to 20% growth in sales volume: The second quarter of FY2013 was the seventh consecutive quarter of close to 20% growth in sales volume. It reported a sales volume growth of ~19% in Q2FY2013 on the back of sustained strong volume growth in its flagship brand Bajaj Almond Drops Hair Oil (ADHO). The sales volume of Bajaj Kailash Parbat Cooling Oil (KPCO) almost doubled on a year-on-year (Y-o-Y) basis to 12,745 cases during the quarter. The strong volume growth can be attributed to sustain conversion of the consumers from coconut oil to light hair oil category and an improvement in the distribution reach.  Profitability improved significantly: In Q2FY2013, the GPM of the company improved significantly, by 375 basis points YoY and 150 basis points quarter on quarter (QoQ), to 57.2%. The strong improvement in the GPM can be attributed to sustained strong volume growth, close to 7.3% YoY improvement in the blended realisations and around 5% Y-o-Y decline in the price of light liquid paraffin (LLP), a key input for the company. The operating profit margin (OPM) improved by 312 basis points YoY to 28.7% during the quarter. With the LLP prices showing a downward trend and vegetable oil prices likely to decline from the current level, we expect the GPM to remain firm in the coming quarters. Outlook and valuation: The second quarter of FY2013 was yet another quarter of strong operating performance by BCL. The highlight of the quarter was a strong improvement in the GPM on both Y-o-Y and sequential bases. We broadly maintain our earnings estimates for FY2013 and FY2014. With the volume growth likely to sustain at around 20%, we expect BCL's top line and bottom line to grow at compound annual growth rate (CAGR) of 23.2% and 26.3% respectively over FY2012-14.  At the current market price, the stock is trading at 17x its FY2013E earnings per share (EPS) of Rs11.0 and 14.4X its FY2014E EPS of Rs12.9. In view of the consistent strong performance for the past several quarters, we have revised upwards our target multiple for the stock to 16x, which is a 40% discount to the current valuation of our fast-moving consumer goods (FMCG) basket. Our revised price target for BCL now stands at Rs208. However, due to the minimal upside, we maintain our Hold recommendation on the stock. The key monitorables would be any development on acquisition front in the domestic and international markets, and the company's ability to adequately utilise the cash for improving the business fundamentals. SHAREKHAN SPECIAL Q2FY2013 Auto earnings preview    Tough quarter; expect earnings to pick up in H2FY2013  Widespread earnings decline to make Q2FY2013 the weakest quarter of recent times The Sharekhan automobile (auto) tracking universe (consisting of coverage and non-coverage auto companies) is expected to report a 7% year-on-year (Y-o-Y) earnings decline for Q2FY2013. Barring Eicher Motors and a few auto ancillaries, the quarter is expected to remain weak for most of the companies. The lower double-digit growth in the top line lost traction with a mid single-digit operating profit growth and ultimately failed to translate into a positive bottom line.  M&M and Eicher Motors to outperform OEMs, Apollo Tyres and Exide Industries to lead the ancillary pack Automobile original equipment manufacturers (OEMs) are expected to report an 11.3% Y-o-Y decline in profit after tax (PAT). Eicher Motors and, Mahindra and Mahindra (M&M) are expected to report a flat growth in an otherwise broad-based decline. A few ancillaries, such as Apollo Tyres and Exide Industries, are expected to report a significantly higher growth on the low corresponding base.  Maruti Suzuki (Maruti), TVS Motor Company (TVS Motor) and Ashok Leyland are expected to disappoint the most amongst the OEMs because the earnings got affected by specific issues related to these companies. Greaves Cotton would disappoint the most amongst the ancillaries. Q2FY2013, a wash-out quarter; a better outlook for H2FY2013 Given that the festive season is shifting largely to Q3FY2013 and Q4FY2013 being the strongest quarter of year in terms of demand, earnings are expected to bottom out in Q2FY2013. Apart from the festive buoyancy, the forthcoming period is expected to see the benefits of the recently lowered interest rates. In a structural upturn, companies that hold on to their market share or are expected to gain back the lost ground would gain the most. M&M and Maruti would outperform amongst the OEMs. We would avoid Hero MotoCorp as the rupee's appreciation alone cannot warrant outperformance of the stock.   Q2FY2013 Pharma earnings preview   Strong growth momentum to continue   Key points  Robust aggregate revenue growth of 32% supported by the international business: We expect our pharmaceutical (pharma) universe to report a 32% year-on-year (Y-o-Y) growth in revenues in Q2FY2013 on an aggregated basis, mainly led by a 39% Y-o-Y growth in the international business (aided by key launches in the US and depreciation of the rupee). On the other hand, the domestic formulations business is expected to grow moderately by 12.5% year on year (YoY), mainly due to the high base effect in case of Sun Pharma (flat growth YoY). However, companies like Lupin (22.5% YoY), Glenmark Pharma (19% YoY) and Cadila Healthcare (16.5% YoY) will be outperforming the domestic formulation market during the quarter.  Margin boosted by the better product mix and currency benefits: We expect the operating profit margin (OPM) to expand by 377 basis points YoY to 27.1% for our universe during the quarter. Except Ipca Laboratories (Ipca) and Opto Circuits, most of the players would see an expansion in the OPMs mainly due to the better product mix and currency benefits. However, players like Piramal Healthcare and Dishman Pharma are not strictly comparable on a Y-o-Y basis, due to business restructuring affecting the base business in Q2FY2012 for both these companies. However, even excluding these companies, OPM should expand by 145 basis points YoY to 24.7%. The OPM of Ipca would be affected due to the high base effect (reversal of certain portion of the employee's expenses helping stronger margins) while that of Opto Circuits would be affected due to the higher raw material costs and other expenditure.  Adjusted PAT to grow by 21% YoY: We expect our pharma universe to report 21% rise in the net profit excluding marked to market (MTM) foreign exchange losses or gains. The growth would be mainly led by Cadila Healthcare (up 46.9% YoY) and Ipca (up 39.5% YoY) followed by Piramal Healthcare (up37.6% YoY), Sun Pharma (35.1% YoY) and Torrent Pharma (up 32.9% YoY). Glenmark Pharma is likely to witness a decline of 41% YoY, mainly due to the deferred tax credit recorded in Q2FY2012, thus making a high base. Dishman Pharma is likely to see a turnaround in the profits during the quarter. Click here to read report: Investor's Eye   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

Fw: Sharekhan Fundamental Research

 

 

Sharekhan ValueGuide [October 08, 2012]  Sharekhan www.sharekhan.com

Summary of Contents  EQUITY FUNDAMENTALS THE STOCK IDEAS REPORT CARD FROM SHAREKHAN'S DESK Booster dose from policy makers  Policy makers from across the globe were expected to take critical decisions in September 2012 that were to provide direction to the equity markets globally, and sure enough they did. As European Central Bank, US Federal Reserve and the Chinese government announced stimulus measures one after another in a coordinated effort to support the sagging global economy, the market gained strength and moved closer to the higher end of its multi-month trading range (the Nifty level of 4600-5600). The booster dose for the Indian equity market, however, came from our own government, which shaking off months of policy inertia announced a series of policy measures in a surprise move last month. SPECIAL REPORT High on cocktail of policy measures   The equity markets are celebrating the recent flurry of policy measures. Another round of liquidity infusion by the central bankers in Europe and the USA is soothing investor nerves and unleashing a "risk-on" rally globally. In India also, the government has finally shaken off the policy inertia and announced some critical policy steps to curtail the bloating subsidy bill and attract foreign inflows in the retail and aviation sectors. The developments have come as an unexpected pleasant surprise and the domestic market has accordingly reacted with a sharp appreciation of close to 7-8% in the past one week. Nifty-within kissing distance of the higher end of range and the highs made earlier this year: Contrary to general pessimism and the bearish consensus view, we had always been convinced that the benchmark index (Nifty) would remain within its multi-month trading range (4600-5600) with an upward bias. Driven by the recent events, the Nifty has surged ahead touching the higher end of the range and tested the recent highs (at least on an intra-day basis). In the absolute near term, the equity market could give up some of the recent gains on account of profit booking and the growing political uncertainties domestically. However, we believe that the bias remains positive and the probability of the benchmark indices breaking out of their range has increased substantially now. The caveat is the that the government should follow up the recent moves with more policy actions and take corrective steps to support the key sectors such as power and small and medium enterprises as well as the other troubled sectors. Thus, the idea should be to buy on corrective pull-backs.  Risk/concerns: The stock market rally could lose steam if the crude oil prices remain at uncomfortable alleviated levels on the back of QE3-inducted speculative interest in commodities. Domestically, the ability of the government to move forward with reforms despite the discontent among allies and the growing pressure from the opposition on the government over the corruption charges would influence investor sentiments. SHAREKHAN TOP PICKS Sharekhan top picks  STOCK IDEAS CMC: Leveraging on its pedigree Persistent Systems: Persistently innovating Relaxo Footwears: Catch this Flite SWITCH IDEA Construction: Closure of switch call from ITNL to IRB with 18.5% returns STOCK UPDATES Apollo Tyres: Price target revised to Rs105 Bank of India: Margins likely to improve but asset quality worries remain Bharat Heavy Electricals: Maintain Hold with price target of Rs260 Cadila Healthcare: Price target revised to Rs1,064 Deepak Fertilisers & Petrochemicals Corporation: Annual report review Eros International Media: Annual report review GAIL India: Annual report review  Godrej Consumer Products: Annual report review; price target revised to Rs726 Grasim Industries: Price target revised to Rs3,405 Housing Development Finance Corporation: Growing steadily despite competition  India Cements: Downgraded to Hold; price target revised to Rs95 Infosys: Wait is over, Infosys' first major acquisition  Larsen & Toubro: Annual report review; price target revised to Rs1,627  Marico: Price target revised to Rs201 Mcleod Russel India: Downgraded to Hold; price target revised to Rs356 Punj Lloyd: Management meet highlights Tata Consultancy Services: Downgraded to Hold Torrent Pharmaceuticals: Growth revives SHAREKHAN SPECIAL Q2FY2013 Banking earnings preview Q2FY2013 IT earnings preview SECTOR UPDATES Automobiles: Forex gains for auto sector, impact on FY2013 earnings  Pharmaceuticals: New drug pricing policy-less severe than anticipated VIEWPOINT Aurobindo Pharma: Concerns abating  EQUITY TECHNICALS  Sensex: Higher tops, higher bottoms  EQUITY DERIVATIVES  Derivative view: Riding on reforms  COMMODITY FUNDAMENTALS  Macro-economy Crude oil: Tumbles on SPR release fears, rising US inventories Precious metals: Boosted by QE3 speculations Base metals: Possibility of a correction in short term Major economic events in October 2012   COMMODITY TECHNICALS  Gold: Above Golden ratio Silver: Aiming higher Crude oil: A vertical fall Copper: Near key resistance Lead: Pull-back matured Nickel: Sub-division  CURRENCY FUNDAMENTALS  Currency market: Reforms unleashed, liquidity tap flowing  INR-USD CMP: Rs52.56 (spot) INR-GBP CMP: Rs84.92 (spot) INR-EUR CMP: Rs67.85 (spot) INR-JPY CMP: Rs67.35 (spot)   CURRENCY TECHNICALS  USD-INR: Expecting recovery GBP-INR: Approaching channel support EUR-INR: Scope for a bounce JPY-INR: Potential for a pause  PMS DESK Sharekhan PMS funds: Fund manager's view and product performance ProPrime-Top Equity ProPrime-Diversified Equity ProTech-Diversified ProTech-Nifty Thrifty ProTech-Trailing Stops  ADVISORY DESK  Monthly performance of Advisory products MID Trades Derivative Ideas  MUTUAL FUNDS DESK  MF PICKS Sharekhan's top mutual fund picks (equity)  Sharekhan's top SIP fund picks  EARNINGS GUIDE Click here to read report: Sharekhan ValueGuide     Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

Fw: Investor's Eye: Special - Q2FY2013 FMCG earnings preview, Q2FY2013 Banking earnings preview, Q2FY2013 Cement earnings preview

 

 

Investor's Eye [October 05, 2012]  Sharekhan www.sharekhan.com

Summary of Contents SHAREKHAN SPECIAL Q2FY2013 FMCG earnings preview   Growth momentum to sustain  Key points  Steady top-line growth anticipated: Despite an uncertain macro environment and below-normal rainfall during most part of the monsoon season, we anticipate a decent top line growth for most of the companies in the fast moving consumer goods (FMCG) space. Our interaction with the managements of the FMCG companies under our coverage indicates that the consumer demand for value-for-money daily consumption items remained steady during the quarter. However, we believe that the premium and discretionary segments (including paints) would see some moderation in sales volume. Prices of key raw materials on a declining trend: The prices of the key inputs showed a declining trend during the quarter. The prices of palm oil, copra and linear alkyl benzene (LAB) declined by 10.4%, 31.4% and 1.4% year on year (YoY) respectively during the quarter. The prices of these inputs were lower on a sequential basis as well. On the other hand, the prices of some of other input likes kardi oil, caustic soda (flakes) and raw tea have firmed up in the recent times (as can be seen in table below).  Margin improvement visible for all: The decline in the prices of some of the key inputs, increase in the sales realisation, improvement in the revenue mix and cost saving initiatives should help the FMCG companies to post a decent improvement in their operating profit margin (OPM) in Q2FY2013. The likely exception is Mcleod Russel India Ltd (MRIL), whose margins are expected to remain lower on a year-on-year (Y-o-Y) basis because of lower tea crop (affected by abnormal rains in the August-September 2012 period).  Mid-caps likely to outperform large-caps: We expect Sharekhan's FMCG universe to post a decent top line growth of 14.5% YoY to Rs19,012 crore and a bottom line growth of 18.0% YoY to Rs3,310.9 crore. The mid-caps such as Godrej Consumer Products Ltd (GCPL) and Marico are expected to post a strong bottom line growth of 38.0% and 21.3% YoY respectively on the back of a strong revenue growth and an improvement in the margins during the quarter. GCPL's strong growth would be driven by organic and inorganic initiatives both. ITC and Hindustan Unilever Ltd (HUL) are expected to report a decent bottom line growth of 18% and 19% YoY respectively for the quarter. HUL would achieve a volume growth of around 9% in the domestic consumer business while ITC is expected to report another quarter of muted sales volume in the cigarette business for the quarter.  Sector outlook: The FMCG companies did not see any pressure on their sales volume on account of the below-normal rainfall and uncertain macro environment in Q2FY2013. The revival in the monsoon in August helped make up for the deficient rainfall earlier and the monsoon deficit at the start of October 2012 stood at 8% (vs 19% at the start of August 2012). The late rainfall is positive for the kharif crops such as rice and sugar while it will also help to retain the moisture in the soil, thereby helping the rabi crops. This will rebuild the consumer confidence (especially in rural India) in the coming quarters which along with the festive season starting from the end of October 2012 will help the FMCG companies to achieve a strong performance in Q3FY2013.  Valuation: In view of the stretched valuations of the FMCG companies, we maintain our selective stance on the sector. We continue to prefer ITC in the large-cap space and GCPL in the mid-cap space.    Q2FY2013 Banking earnings preview  Macro concerns to cast a shadow on earnings performance   Key points  Earnings to grow 19% YoY but remain flattish QoQ: The earnings of Sharekhan's banking universe are expected to grow at 19% year on year (YoY; down 0.2% sequentially) in Q2FY2013. The private banks are likely to grow at 24% YoY whereas the public sector banks (PSBs) are expected to see a growth of 16.5% YoY. However, excluding Bank of India (BoI) and Union Bank of India (due to a low base of Q2FY2012) the earnings are expected to grow at 16% YoY. The slower growth in the net interest income (NII) and the increased provisioning will continue to affect the earnings growth. Operating performance to weaken: Due to stagnation in the credit growth and pressure on the margins the operating performance of banks is likely to weaken. We expect the NII of our coverage universe to see a growth of 13.5% YoY compared with the 17.6% year-on-year (Y-o-Y) growth in Q1FY2013 and the 22% growth in Q4FY2012. The pre-provisioning profits are expected to show a growth of 16.2% as against the 19% growth seen in Q1FY2013.  Asset quality under stress: Given the rising stress in the mid corporate and small and medium enterprises (SME) segments the asset quality pressures are likely to continue in Q2FY2013 as well, though the rate of slippages and restructuring could decline. The provisioning is expected to remain high and we expect a 4% Y-o-Y (14% QoQ) increase in the provisions for the banks under our coverage. Outlook: The banking stocks have rallied on the hope of the easing of interest rates, resumption of investment cycle based on the reforms initiated by the government and attractive valuations. Going ahead, the earnings will remain under pressure due to the slowing credit growth and asset quality pressures. We continue to prefer private banks like Axis Bank, ICICI Bank and Federal Bank. Among the state-owned banks we prefer larger banks like Punjab National Bank (PNB) and Bank of Baroda (BoB).   Q2FY2013 Cement earnings preview   Low base to drive earnings growth  Key points  Low base effect to drive earnings growth of the cement companies in Q2FY2013: The cement companies are set to display strong earnings growth during Q2FY2013, mainly on account of the low base effect of Q2FY2012. Though the cement prices did soften sequentially in the seasonally weak monsoon season, the blended realisations for the companies under our coverage are expected to be higher by 6-20% as compared to the same period last year (Q2FY2012). Hence, the cumulative earnings of Sharekhan's cement universe are expected to increase by 64.9% on year-on-year (Y-o-Y) basis. The companies like Shree Cement, UltraTech Cement, Grasim Industries and Orient Paper & Industries are expected to post higher earnings growth whereas companies like India Cements and Madras Cements are expected to post a decline in their earnings.  Volume offtake affected due to the seasonal slowdown in Q2FY2013: Due to the monsoon season, the execution of the infrastructure projects and other construction activity has witnessed a slowdown. Therefore, the cement offtake has been affected during Q2FY2013. The PAN India cement players like ACC and Ambuja Cements have registered a decline in its dispatches for the Q2FY2013 due to the monsoon season and the overall weakness in the demand environment. Overall, we accept that the volume growth is unlikely to support the revenue growth of the cement players in Q2FY2013. For the year FY2013, we expect the all-India cement demand to increase at around 7-8% as compared with 6% registered in FY2012. Cement realisation for Q2FY2013 reduced on a Q-o-Q basis in some regions but remains higher on a Y-o-Y basis: The cement prices in August-September 2012 have decreased by an average of Rs5-10/bag in the southern and eastern regions due to the seasonal weakness and the poor demand environment. However, the Western, Northern and Central regions have witnessed a relatively better demand environment. Thus, the average cement realisation remains largely flat compared with Q1FY2013 level. We estimate the average cement realisation in Q2FY2013 to be lower by around Rs100-150/tonne on a QoQ (quarter on quarter) for the companies operating in the southern and eastern regions. However, on a Y-o-Y basis, the cement realisation remains at a higher level. The cumulative revenues of the companies under our coverage are expected to increase by over 14.8% on a Y-o-Y basis. Further, as per our channel check, the cement prices have gone up by Rs5-6/bag after increase in the diesel price by Rs5/litre. For the year FY2013, the average realisation will be higher as compared with FY2012.  Higher realisation on a Y-o-Y basis results in margin expansion: With the support of growth in the cement realisation, the revenues of the companies under our coverage are likely to increase in the range of 5-50%. Further, the negative impact on the margins due to increase in the freight charges (because of increase in lead distance) is expected to be offset by the higher cement realisation. Therefore, most of the cement companies are expected to register expansion in the margin. The cumulative operating profit margin (OPM) of the companies under our coverage is expected to improve by 222 basis points on a Y-o-Y basis. Click here to read report: Investor's Eye   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

Fw: Stock Idea: Persistent Systems (Persistently innovating)

 

 

Stock Idea [September 28, 2012]  Sharekhan www.sharekhan.com

Summary of Contents   STOCK IDEA Persistent Systems Cluster: Emerging Star Recommendation: Buy Price target: Rs552 Current market price: Rs414 Persistently innovating Key points Well placed in the under-penetrated OPD space: Persistent Systems Ltd (PSL) is a niche player in the highly under-penetrated outsourced product development (OPD) market. According to industry reports, the OPD market was worth close to $8 billion in 2009 and is expected to grow at 19.1% CAGR over 2009-13. The addressable worldwide R&D/product engineering services market was worth approximately $35.4 billion in 2009 and is expected to reach $65.7 billion by 2013, growing at a CAGR of 16.7%. PSL has helped its customers develop over 3,000 products over the last five years. With strong domain expertise and years of experience in the OPD business, PSL is well placed to garner the incremental spending taking place in the global R&D space.  Investing for the future growth augurs well for deeper client mining: Over the last four years, PSL has consistently invested in the areas of innovative technologies (cloud computing, analytics, collaboration and mobility) to penetrate deeper into clients' wallet and the expertise that it has built in these areas over the years has started reflecting in its numbers. In the last two years, these four areas have contributed close to 40% of the total revenues and their combined contribution is poised to increase in the coming years with the increasing size of the funnel of orders in these segments. On the other hand, the proactive efforts to invest in the newer technologies would help the company to offer a better value proposition to its clients, get a bigger share of their R&D spending and diversify its offerings further. PSL is amongst the few Indian IT companies with considerable expertise in the area of innovative technologies with niche offerings in the OPD space.  Higher IP-led revenues = Margin improvement: With expertise in the OPD business and confidence of its clients, PSL continues to invest in acquiring and building intellectual property (IP) to gain a foothold in the non-linear side of the business. Its IP-led revenues have grown from $1 million in FY2007 (1.5% of total FY2007 revenues) to $18.3 million in FY2012 (8.8% of total FY2012 revenues). Currently, the company owns around 14 IPs and is continuously investing in building IP both on its own (close to 5% of its manpower deployed on IP creation) and through collaborations with leading universities, research laboratories and clients. PSL is also actively looking at the inorganic route (it has already made three acquisitions in the IP space) to acquire the right IPs to enhance its growth prospects. Going forward, the management is aiming to earn 20% of its revenues from the non-linear space in the next three to four years. This, we believe, will differentiate the company from the rest and help improve its margin in the coming years.  Undemanding valuation, buy: PSL has proven expertise in the OPD space, a strong presence in the newer technologies, strength to improve its IP base and the best-in-the-class margin profile which set it apart from the other mid-cap IT companies. Its earnings are expected to grow at a CAGR of 23% over FY2012-14. At the current market price of Rs414, the stock trades at 9.3x and 7.7x FY2013 and FY2014 earnings estimates respectively. In view of the niche offerings, the best-in-the-class margin profile and strong cash kitty (Rs85 per share), the current valuation seems to be undemanding. We initiate coverage on PSL with a Buy rating and a 12-month price target of Rs552 based on our target PER of 10x FY2014E earnings.  Click here to read report: Stock Idea < /font>   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.