Nava Bharat Ventures
Recommendation: Buy
Reco Price: 164
Target Price: 268
Current Market price: 183
Upside (%): 46.4
Broking firm: Religare Securities

The company’s strategy of shifting its focus to the high margin power sector from the earlier ferro alloys sector augurs well.

Power segment, having a margin of 50 per cent, contributed 95 per cent of EBIT in FY07. Also the company has taken significant steps in enhancing the share of power segment by ramping up capacities.

Also the company holds significant land interests like the 51 per cent stake in 250-acre SEZ project and 68 acres in Secundarabad.

At the recommended price, the stock trades at a price to earnings multiple of 7.7 times and 5.9 times for FY08 and FY09 estimated earnings respectively without taking into consideration the 1050MW power plant and value of holdings.


Sanghvi Movers
Recommendation: Buy
Reco price: 768
CMP: 804
Broking firm: Anand Rathi

Sanghvi Movers is a market leader in crane hiring business in India with a market share of 52 per cent and fourth largest crane hiring company in Asia.

The company currently has a fleet of 253 Hydraulic and Crawler type of cranes of which around half i.e. 124 cranes have a capacity of more than 100 tons. The company is likely to benefit from the robust investment activity in the country as roughly 0.5-0.7 per cent of the project costs consists of crane hiring charges.

Moreover the company is expanding its fleet by acquiring around 28 brand new cranes with lifting capacity between 250 tons and 750 tons over the next two years with an investment of Rs 290 crore.

The stock trades at a price to earnings multiple of 10.4 times and 8.3 times its estimated earnings for FY08 and FY09 respectively.


Tourism Finance Corporation
Recommendation: Buy
Reco price: 17
Target Price: 30
CMP: 21.65
Upside (%): 38.6
Broking firm: Sharekhan

TFCI is expected to benefit in terms of higher loan growth due to positive outlook for the tourism sector.

The company has significantly improved its poor financials as its net NPAs, which were 11 per cent in FY2004 has come down significantly to 2.6 per cent in FY2006 and are expected to fall further in FY2007, thanks to higher recoveries and lower incremental NPAs.

TFCI is also reported to be in talks with major private hotel chains, real estate funds and private equity players to raise private equity to finance large hotel projects.

The stock trades at 0.5 times its estimated price to book value for FY08E and FY09E respectively, which is reasonable given that the company has never made losses.


ITC
Recommendation: Buy
Reco price: 154
Target Price: 176
CMP: 154
Upside (%): 14.3
Broking firm: IDBI Capital

ITC, the largest cigarette company has diversified into multiple businesses over the years. It holds a dominant position in hotels, paper and paperboards and agri-trading business.

It has been successful in rapidly increasing its market share in packaged foods, retailing, and other FMCG products.The company has plans to invest Rs 15000 crore to scale up its existing operations.

Moreover, the company’s huge cash flow of Rs 2,500 crore and a strong balance sheet position can help it combat short term pressures.

Over the last three years, its revenue has exhibited CAGR of 24 per cent driven by non cigarette business, which has grown at over 40 per cent. The stock trades at a price to earnings multiple of 19.8 times and 18.1 times for FY08E and FY09E estimated earnings.


Power Finance Corporation
Recommendation: Buy
Reco price: 144
CMP: 147.9
Broking firm: IDBI Capital

The outlook for Power Finance Corporation (PFC) remains strong due its leadership position in power financing, superior domain knowledge, and lean cost structure.

It is also expected to be the biggest beneficiary of $155 billion investments lined up in the power sector over FY07-12E. Edelweiss expects its loan book and earnings to grow by 24 per cent and 30 per cent CAGR respectively over FY07-09E.

After correcting by 200 bps since FY04, its interest spreads are likely to be steady at 1.9 per cent by FY09 as the pressure of higher funding cost in rising interest rate scenario will be partially offset by its asset liability structure and re-pricing benefits.

Return on equity is also expected to expand to 15 per cent by FY09 due to higher scope for leverage and tax exemptions.

The company’s other income is also expected to get a boost due to the proposed ultra mega power projects (UMPP) advisory services and loan syndication contracts. The stock trades at 1.5x FY09E book (adjusted for tax benefits) and 10.6x FY09E earnings.