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Unformatted text preview: ons are likely to lim it the downs ide.
T ata Ste e l
Over the pas t three quarters , Tata Steel has reported a better-thanexpec ted operational
perform anc e, es pec ially from its European operations . W e m aintain our pos itive s tanc e on
Tata Steel as its earnings growth is likely to be driven by higher s ales volum e on the bac k of
2.9 m illion tonnes expans ion in Jam s hedpur and im provem ent in profitability of European
operations . CAPIT AL GOODS
"W e s ee big c hanges in the c apital ex penditure c y c le in the nex t
12-18 m onths "
Deepak Ladha, Ex ec utiv e Direc tor, Ladderup Corporate Adv is ory
It has been es tim ated that India's c apital goods m arket c an grow
from $71.7 billion in 2011-12 to $153.3 billion by 2016-17, a
businesstoday.intoday.in/stor ypr int/201839 10/18 1/2/14 M ar ket exper ts on what to expect fr om var ious sector s in 2014 : Business Today c om pounded annual growth rate of 16%. Als o, c apital goods ,
infras truc ture and power c om panies are likely to benefit from
polic ies that the new governm ent (after the 2014 general elec tions )
purs ues to inc reas e ec onom ic growth. Als o, the s ec tor will gain
from the s pec ial ec onom ic z ones the governm ent has s anc tioned
for the indus try.
India's s hare of global c apital goods exports is low (0.1-0.6%).
There is a huge potential for growth here. Infras truc ture and c apital
goods indic es as well as s elec t s toc ks have rallied s harply of late, partly on expec tations that
the NDA will be able to form a governm ent at the Centre next year. On this bas is , we s ee big
reform s and c hanges in the c apital expenditure c yc le over the next 12-18 m onths . Kirloskar Oil & Engine s
T arge t price : Rs 225
The s toc k m ay get a boos t from expec ted ec onom ic revival, higher governm ent s pending,
s trong balanc e s heet, good c as h flow and high return on equity. Als o, the new pollution
c ontrol norm s , to be im plem ented s oon, will lead to a 10-15% inc reas e in pric es of engines
and 5-7% in pric es of gens ets .
Praj Industrie s
T arge t price : Rs 60
Praj ac c ounts for 10% of the world's ethanol produc tion. The c as hric h c om pany will benefit
from the m andatory ethanol blending in petrol likely to be im plem ented s oon. For this , it is
planning to s et up India's firs t plant to m ake new generation ethanol direc tly from agro-was te,
a s hift from the traditional m olas s es -bas ed extrac tion. Exports , too, are expec ted to ris e as
businesstoday.intoday.in/stor ypr int/201839 11/18 1/2/14 M ar ket exper ts on what to expect fr om var ious sector s in 2014 : Business Today m ore and m ore c ountries opt for fuel blending.
Larse n & T oubro
T arge t price : Rs 1,400
W hile high interes t rates and weak ec onom y are likely to have an im pac t, L&T c ontinues to
m eet order inflow targets . It is expec ting to rais e Rs 4,200 c rore from s take s ale in L&T IDPL,
a s ubs idiary. This will provide L&T the m uc h-needed c as h flow given that it has equity
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- Spring '14