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Summary
of Contents
STOCK UPDATE
Solectron Centum Electronics
Cluster: Emerging
Star
Recommendation: Hold
Price target: Rs250
Current
market price: Rs174
Poised to grow
Solectron Centum
Electronics has established itself in the EMS space and has
aggressive plans to scale up the operations over the next couple of
years. The growth in the component business is also likely to revive
in the current fiscal. Though the margins would continue to remain
under pressure, the profits in the absolute terms would grow at a
healthy rate due to the expected aggressive growth in its
revenues.
At the current price the stock trades at 19.6x
FY2007 and 17.3x FY2008 estimated earnings. We maintain our Hold
recommendation on the stock with a revised price target of Rs250.
The decision to upgrade the rating will depend on distinct signs of
the revival of growth in the component business (like the
commencement of the Rs35-crore high-margin government order and an
increase in the demand for components from C-MAC).
SECTOR
UPDATE
Life
insurance
Creating
value
According to the latest report released by the
Insurance Regulatory and Development Authority, the first year
premium collection of the life insurance companies grew by a
whopping 177% year on year (yoy) from Rs6,524 crore to Rs18,096
crore for the period April-July 2006.
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