3 reasons why Gujarat Pipavav is a buy today

•Kotak Securities initiated coverage on Gujarat Pipavav Port with an accumulate rating on the stock with a target price of Rs 64 against its current price of Rs 58, reflecting a growth of 10 percent**.** The company’s board has approved a Rs 1,097 crore expansion plan to be financed through a mix of debt, equity and internal accruals.

Strong infrastructure and parentage, good location and hinterland connectivity are some of the reasons cited by Kotak. Overall, the company’s margins are likely to rise to 25 percent for 2013 from 14 percent in 2011. Here are the reasons why Kotak has picked GPPL has stock pick:

1. With congestion at JNPT and proximity to NCR,the company is strongly placed to attract container volumes going forward, said Kotak.

[caption id=“attachment_333997” align=“alignleft” width=“380” caption=“Gujarat Pipavav aid an extraordinary general meeting of shareholders will be held on July 2 to “approve issue of equity shares for an aggregate amount of Rs 3,500 million”]  [/caption]

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2. Strong infrastructure is already in place to support medium term growth.

3. GPPL is strategically located at the entry point of the Gulf of Khambat, and is the largest port in the Saurashtra region of Gujarat. This gives Pipavav good access to the fast-growing hinterland.

Even Citigroup has upgrades Gujarat Pipavav Port to Buy and increased target price to Rs 73 as the port is in the ramp-up phase, and structural gains due to new vessel calls should mitigate effect of a cyclical downturn.

•ICICI Securities changed its view on Housing Development and Infrastructure (HDIL) to buy from reduce. It has a target price of Rs 88 per share against its current price of Rs 66. Apart from the company’s March quarter numbers exceeding the research firm’s expectations, itss focus to improve cash flow generation through FSI / asset sales augurs well for the company. “With cash flow remaining strong, we could see an uptick in project launches, sales and execution for the year ended March 2013”,ICICI said in its latest report.

•Kotak Securities has an accumulate rating on Simplex Infrastructure with a target price of Rs 226 against its current price of Rs 219 per share, reflecting a growth of 3 percent. While the company’s net profit declined a steep 22 percent due to a sharp increase in interest outgo, Kotak is bullish on the stock as its growth is expected to jump in revenues as well as order inflows. The current order book of the company stands at Rs 15,224 crore diversified across various sectors. However one should look at declines to buy the stock as its near term performance would be affected by higher interest cost.

•Ambit is bullish on Tata Motors as Jaguar Land Rover sales is the main driver for earnings and valuation of the stock (around 70 percent). The brokerage estimates JLR volume of 361,000 units for FY 2013. Moreover, with strong demand in China for JLR (China accounted for nearly 25% of total JLR volumes in April 2013 compared to 19% in 4QFY12) especially Range Rover Evoque, Ambit remains confident that JLR will meet the FY13 volume estimates. However, the target price is still under review. The stock was last trading at Rs232 per share.

he company is the first private sector port concessionaire which is responsible for introducing the concept of private sector investment in landlord port model in India.