KRChoksey views on Sterlite Industries, Dishman Pharma, Mahindra Lifespaces, SAIL

Sterlite Industries - Target Rs 455
KRChoksey Research has recommended a buy rating on Sterlite Industries, with price target of Rs 455, in its report dated October 24, 2008. "At the CMP of Rs 208,65, Sterlite is trading at 3x based on TTM EPS of Rs 67.5. We expect Sterlite to continue to be impacted by lower EBITDA margins due to fall in base metal prices. However, the highly integrated business models in all the commodities and huge cash balances (Standalone cash level : Rs 7800 crore). Hindustan zinc is completely debt free company with Rs 9395 crore cash which translates to Rs 220 per share. We recommend a BUY on the Stock with a target price of Rs 455 which is an upside potential of 118% from the CMP," says KRChoksey's research report.

Dishman Pharma - Target Rs 247.60

KRChoksey Research has recommended a buy rating on Dishman Pharmaceuticals, with price target of Rs 247.60, in its report dated October 29, 2008. "In Q2FY09, the company’s sales have increased by 39.2% on a y-o-y basis to Rs 255.6 crore. The EBITDA for the quarter has increased by 41.8% to Rs 52.4 crore compared to Rs 37.7 crore, whereas the margins have increased marginally by 40bps to 20.9% as against 20.5% a year earlier. The net profit of the company declined by 90.1% y-o-y to Rs 2.8 crore against Rs 27.7 crore, due to MTM losses of Rs 30.01 crore in the quarter under review. At the CMP of Rs 139.6 the stock is trading at 8.9x, TTM EPS of Rs 15.7 and 6.5x FY09E EPS of Rs 21.6. We assign BUY rating to the stock with a target price of Rs 247.6, implying an upside potential of 50%. At the target price, the stock would be valued at 11.5 x FY09E EPS of Rs 21.6," says KRChoksey's research report.

Mahindra Lifespaces - Target Rs 394
KRChoksey Research has recommended a buy rating on Mahindra Lifespaces, with price target of Rs 394, in its report dated November 1, 2008. "At the CMP of Rs 187, Mahindra Lifespaces is trading at 8.3x FY09E EPS. The Company trading at a P/BV of 0.85 and has a comfortable balance sheet compared to its peers. It has a Net Debt/Equity ratio of 0.3x and also has a healthy Interest Coverage ratio 30.9. The company is trading below its book value per share of Rs 209. Both of Mahindra key SEZ are operational and the processing areas sold (100%in Chennai and 25-30%in Jaipur) which gives visibity to company earning and captive demand for the residential component in the segment. Looking at the strong growth prospects of all its verticals, we recommend a BUY with a target price of Rs 394, an upside potential of 111%. At the target price the stock would be valued at 17.5x FY09E EPS of Rs 22.52," says KRChoksey's research report.

SAIL - Target Rs 110

October 22, 2008. "Net sales increased 34% Y-o-Y to Rs 12,238.59 crore in Q2FY09 but volume growth declined by 16.1%. All its businesses - Heavy structurals, Pipes, TMT rounds, Plates, Tin plates showed healthy growth. Though the company exhibited 17% Y-o-Y growth in operating profit, its operating profit margins declined by 395 bps to 28.06% compared to 32.01% in Q2FY08. Margins declined mainly because of increase in raw material prices and employee cost which has gone up on account of salary revision due to implementation of 6th Pay commission. Net profit of the company increased 18% Y-o-Y to Rs 2,009.6 crore. Net profit margin dipped by 213 bps Y-o-Y from 18.55% to 16.42%."

"The company is currently trading at a forward P/E of 7x at our base case valuation which assumes average EBITDA margins of 24% and average realization of Rs 33,000/ton. We recommend a hold on the stock with a target price of Rs 110 which is an upside potential of 9%," says KRChoksey's research report.