Target Price:Rs244.00
CM Price:Rs186.00
Recommendation
The bank has registered a compounded growth rate of around 60 per
cent since it interception. We expect the bank to continue to grow at a high rate.
We are very positive on the long term business prospects of the company and financial performance. At Current Market Price of INR 165.05 the stock is trading at a PE of 16.15x. With expected EPS for FY10 and FY11 of INR 17.73 and INR 19.32 respectively, the stock is trading at a PE of 9.7x and 8.9x respectively.
Target Price:-Rs 127
CM Price:-Rs104.10
Investment thesis
Favourable enviornment for standalone operations
Hindalco’s low cost domestic operation is highly leveraged to aluminium prices. Aluminium prices have jumped sharply from its lows (~45%) triggered by strong recovery in China underpinned by tied up inventory at LME. Leadership in downstream products and monopoly in specialty alumina helps it fetch additional premium over its domestic peers. Domestic operations are well funded and equity contribution for ongoing greenfield projects will be met through internal accruals.We expect a 23% CAGR in its domestic operations over 2010-2102e.
Novelis drag is behind as pain is priced in