Tuesday, December 2, 2008


We initiate coverage on Mahanagar Telephone Nigam (MTNL), a
government-owned telecom operator, with a REDUCE rating and TP of
INR55 based on a cash per share of INR39 and a core business
valuation of INR16 at 2.5x FY09 EBITDA. Historically MTNL traded close
to its book value but the valuation is now converging towards its cash
per share as its ROE has declined to 3.3%, well below its cost of capital,
and one-fourth of its book value is amount recoverable from Department
of Telecom, which is unconfirmed and outstanding for several years.

To read full report MTNL(BNP PARIBAS)


Housing Development Finance Company (HDFC) is among the better diversified
plays on financial services in India given its leadership in the under-penetrated
mortgage market and strong growth in other financial services (life insurance,
asset management and banking via HDFC Bank). We believe that HDFC’s flexible
funding franchise, efficient operating performance and consistent earnings
momentum in a tough operating environment will be key stock catalysts. Potential
divestment in subsidiaries could be a long-term trigger. At the current market
price, the stock trades at FY10E P/BV of 2.3x (unadjusted) and 1.4x after adjusting
for investments in subsidiaries and associates. We initiate coverage on HDFC
with BUY and sum-of-the-parts (SOTP) price target of Rs1,940/share.

To read full report HDFC(ICICI Direct)