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SMART INVESTMENT BY SMART PROFIT

BUY RURAL ELECTRIFICATION CORPORATION LIMITED (REC)
CMP: 156; Target: 250
REC a listed Public Sector Enterprise Government of India with a
net worth of Rs. 12,789 Crore as on 31.03.11. Its main objective is to
finance and promote rural electrification projects all over the
country.
RECL 1QFY12 PAT grew 12.6% YoY to INR 662 crore against INR 587 crore,
previous quarter ended June 2010, in line with our estimate. Loan
book grew 24% YoY and 5% QoQ to INR858b.
For 2011-12, we expect REC's loan growth to stabilise around 25%, led
by slowing disbursements and higher competition. Its disbursements are
estimated to grow by 20%, with some cushion from undisbursed loans of
over Rs 100,000 crore.
We have a 'BUY' rating on the stock at CMP of Rs 156 with target price
of Rs 250 for 6 month due to REC's robust long-term business outlook
valuation and within a year Rs 350. We also expect REC to post 18%
earnings CAGR over FY11-13, with NII growth of 17%. And average return
on equity (RoE) of 21 per cent over 2011-12.

BUY AREVA T&D (522275)
CMP: 226; Target: 400
India Ltd, the Indian subsidiary of AREVA France SA, engages in the
design and manufacture of equipment, systems, and services for
transmission and distribution of electricity in India.
The Total income of the company has rose to 12.88% by Rs 998.86 crore
for the quarter ended March 31, 2011 as against Rs 885.90 crore for
the quarter ended March 31, 2010 and to along with a net profit of Rs
26.20 crore.
Order intake increased by 9% to Rs 2215 crore.
Eight new factories were built at three locations: Vadodora in
Gujarat, and Hosur and Padappai in Chennai in Tamilnadu.
Building on the strong operating performance with relatively low
interest and depreciation cost as proportion to sales and lower tax
incidence. Historically, the stock has traded at an average P/E of
29x. We expect the stock perform dominant in earning at CMP Rs 226
with a target price of Rs 400.

BUY TATA TELESERVICES (532371)
CMP: 16; Target: 30
Tata Teleservices Limited spearheads the Tata Group's presence in the
telecom sector. The Tata Group includes over 90 companies, over
395,000 employees worldwide and more than 3.5 million shareholders.
It launched mobile operations in January 2005 under the brand name
Tata Indicom and today enjoys a pan-India presence through existing
operations in all of India's 22 telecom Circles.
Tata Teleservices Limited also has a significant presence in the GSM
space, through its joint venture with NTT DOCOMO of Japan, and offers
differentiated products and services under the Tata DOCOMO brand name.
Today, Tata Teleservices Ltd, along with Tata Teleservices
(Maharashtra) Ltd, serves over 85 million customers in more than
450,000 towns and villages across the country.
Net sales for the company rose to Rs 584.98 crore during April-June
quarter 2011, as against Rs 552.21 crore during the previous quarter
ended June 2010.

Going forward we expect the company to maintain quarterly addition of
0.5 million subscriber in FY12, which signifies an addition of 20
million subscribers in a year.
We expect the upgrade to 3G to boost average revenue per user, premium
services may take time to pick up in a price sensitive market such as
India. Increase usage of broadband service on photon device driving
key metrics upwards. The overall performance of the company looks
encouraging. At CMP of Rs 16 we have a BUY rating on the stock with
the target price of Rs 30.

BUY POWER GRID CORPORATION OF INDIA (532898)
CMP: 96; Target: 150
Power Grid Corporation of India, the Central Transmission Utility
(CTU) of the country under the Ministry of Power.
Central Transmission Utility - Navaratna PSU - Asset of Rs. 50352 Crs
as on March 31, 2011. World's Leading Power Transmission Utility -
82,354 Ckt.Km line-135 Substations . Technology Leader in EHVAC & HVDC
Transmission.
Carries 51% of Generated Power Across Country.
• 93,050 MVA Transformation Capacity
• 22400 MW (Approx) Interregional Capacity
Telecom NLD with 20733 Km Optical Fibre Network & Internet Service
Provider
Capital expenditure for FY12 is expected to be around Rs 16700 crore.
For the 12th plan, company's capital expenditure is expected to around
Rs 100,000-120,000 crore in which about 52,000 km of transmission
lines, 70 sub-stations and transmission capacity of 1,36,000 MVA are
to be added. The management has guided for capitalization of Rs 10,000
crore in FY12. Higher capitalization should aid top line growth.
Company has more than 50% of the market share of the transmission
sector and this is expected to increase.
Net profit of the company for the quarter ended June 2011, grew
marginally to Rs 705 crore against Rs 703 crore during the previous
quarter ended June 2010. Whereas Total income rose over 11% at Rs
2,044.14 crore as against Rs. 1,837.16 crore during the previous
quarter ended June 2010. Net sales rose 10.17% to Rs. 2202.49 crore in
the quarter ended June 2011 as against Rs 1999.12 crore during the
previous quarter ended June 2010.
The company said that Rs. 150 crore in Q1 June 2011, in addition to
Rs. 1600 crore utilized till 31 March 2011, have been used in part
financing of capital expenditure on the projects specified for
utilization and the balance amount has been invested as per the
investment policy of the company.
Due to Power Grid's robust long-term business outlook, valuations and
on a strong fundamental basis, we have a 'BUY' rating on the stock at
CMP of Rs 96 with target price of Rs.150.

BUY HOTEL LEELA (500193)
CMP: 36; Target: 60
India's fifth-biggest luxury hotel chain founded in 1957. Leela Group
is engaged in the business of ready-made garments and luxury hotels
and resorts.
Hotel Leela venture, plans to raise funds through divest as much as
14.95% stake through a fresh issue of shares to unnamed investor(s)
and besides monetize its property by selling non-core assets in
Kerala. It expects to generate about Rs 500 crore . Its intention to
raise about Rs. 950 crore over next two years via sale of property and
development of real state, which would be used for reducing its debt.
Sales of the company for the year ended March 2011 grew marginally to
Rs 526 crore against Rs 430 crore during the previous year ended March
2010.
The company also executed a joint venture with Prestige Estate
Projects to develop premium apartments on part of its land bank in
Bangalore. It expects to generate about Rs. 150 crore over 4 years
through this development.
India is one of the fastest growing tourist markets in the world
inherently rooted concept of hospitality in form of "Ätithi Devo
Bhava". At present, your Company operates six hotels at the locations
viz. Mumbai, Bangalore, Goa, Kovalam, Udaipur and Gurgaon comprising
1523 guest rooms and 90 serviced apartments.
Hotel Leela is expected to commence to aided by addition of 260 rooms
in Delhi and 332 rooms in Chennai properties.
With an ever increasing demand in tourism business synergizing with
growth plans of Leela, we recommend a BUY at current level of Rs 36
with target of Rs 60.

DISCLAIMER:- Smart Profit has taken due care and caution in
compilation of data for its reports. The market view and investment
tips expressed on Smart Profit are in no way a guarantee either
express or implied. However, Smart Profit does not guarantee the
accuracy, adequacy or completeness of any information and is not
responsible for any errors or omissions or for the results obtained
from the use of such information. CEO, Directors and staff may have a
position in the recommended stock.

Contact Details

DIPAK MANGELA
(Research Analyst)
Email: dipak.mangela@smartprofit.in
Tel : 9820260291
MANSINGH RAI
(Senior Executive)
Email: mansingh.rai@smartprofit.in
Tel : 9320907684
SHAILESH GOWDA
(Senior Executive)
Email: shailesh.gowda@smartprofit.in
Tel : 9967394114

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