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Summary
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SHAREKHAN SPECIAL
Impact of
floods
The monsoon has been
advancing at an accelerated pace. So much so that many states
are in the grip of floods. States like Maharashtra, Andhra
Pradesh (AP), Gujarat and Madhya Pradesh have witnessed heavy
rains accompanied by devastating floods. But apart from
disturbing the routine human life, the floods have also
impacted India Inc in some way or the other. For example,
heavy rains in Gujarat and parts of Maharashtra have affected
the manufacturing activities of the companies located in these
regions.
The floods have also impacted some of the
companies under our coverage. We have presented below the
companies that are likely to be impacted by the
floods.
The good
news has been priced in
We have been
saying that the better-than-expected earnings of the
corporates and a pause by the Federal Reserve (Fed) in hiking
interest rates would be the key drivers of the Sensex in the
short term (see our market outlook reports dated June 3, 2006
and August 2, 2006).
While both the factors have played out in
favour of the markets, we believe that the same have already
been priced in the valuations. The earnings of the corporates
and the economic growth numbers (tax collections, IIP etc)
remain buoyant and high cash levels of over Rs12,000 crore
with the domestic mutual funds should also support the market.
However, we do not see too much upside from here.
Our 12-month target of the Sensex at 12,000
would give a return of only 6% from here on and this indicates
that the market is now close to being fully valued. |
STOCK UPDATE
Bharat Heavy
Electricals
Cluster: Apple
Green
Recommendation: Buy
Price target:
Rs2,650
Current market price: Rs2,180
Another order in the bag
India's largest power equipment company,
Bharat Heavy Electricals Ltd (BHEL) has bagged an order worth
Rs1,224 crore from Uttar Pradesh Rajya Vidyut Utpadan Nigam
Ltd for the setting up of a thermal power plant in the state.
The order entails the setting up of a 500-megawatt (MW) power
plant, with two units of 250MW each (units 5 and 6) at
Parichha TPS Extension, Uttar Pradesh. The project would be
commissioned by 2009-10. Under the secured order BHEL would
manufacture, supply, test and commission the main plant
package along with its associated auxiliaries and civil
works. |
