Stock Views on Procter and Gamble, Havells India, MERCK

India Infoline on PROCTER & GAMBLE - Target RS 901

India Infoline has recommended a ‘buy’ rating on Procter & Gamble with a one-year price target of Rs 901 after factoring in the 25% yearon-year growth in the net sales of the company and 42.50% rise in net profit. “Procter & Gamble registered 24.8% YoY growth in reve-nues at Rs 1.9 billion, led by strong growth in the health and hygiene segments,” says the report adding that the “feminine hygiene segment recorded its highest ever turnover of Rs 970 million; a growth of 29.5% YoY.” The report also notes that “margins remain under pres-sure due to sharp rise in raw material cost and adspend. However, the report adds that the sharp decline in overhead costs restricts further margin erosion. The broking house also feels that due to low penetration level and low per capita consumption, healthcare and feminine hygiene categories have a tremendous potential to grow. According to the report, the company has set up two new healthcare plants in Baddi with an investment of Rs 600 million to meet increasing demand for its products. With the additional contribution from the new plants, the broking outfit expects the overall profitability to improve going forward.

PINC Research on HAVELLS INDIA - Target RS 230

PINC has maintained its ‘buy’ rating on Havells India after the com-pany reported a consolidated net loss of Rs 250 million for the second quarter of the current financial year. The broking house feels that the company’s consolidated Q2FY09 results were ‘below expectations owing to losses in Sylvania.”. According to the report, Sylvania re-ported a 1% decline in net sales in euro terms, however, a 19% rupee depreciation helped net sales grow by 18% to Rs 8.5 billion. The decline in euro sales was a result of a 6% decline in European markets, it adds. PINC, however, notes that on a standalone basis, net sales rose by 17.5% to Rs 5.8 billion led by cables & wires segment (18% YoY), switchgears (18% YoY) and electrical durables (36% YoY).

LKP Shares on MERCK - Target Rs 400

LKP Shares has recommended a ‘buy’rating on Merck on account of factors like the company is trading at book value and has a dividend yield of more than 7%. The broking house has set a oneyear price target of Rs 400 for the MNC drug major. According to the outfit, bulk actives like Vitamin E, Oxynex and Guaiazulene account for 20% of the company’s revenues. “With the company increasing capacities of Oxynex by seven times, the next fiscal should see significant export volumes,” it adds.