Reliance Money views on Chennai Petroleum, Elder Pharma, Biocon

Chennai Petroleum - Target Rs 175

Reliance Money has upgraded its rating on Chennai Petroleum Corporation from hold to buy with a target price of Rs 175 in its October 23, 2008 research report. "As expected, Chennai Petroleum has posted disappointing Q2 FY09 results, thanks to lower Gross Refining Margins, huge inventory losses, and one month maintenance shut down during the last quarter. Although the outlook on refining margins is not great, still at current levels, stock is extremely cheap."

"The company also has a strong track record of declaring dividends, and the average dividend yield for the past 15 years is at around 6%, giving a good support to stock price on the downside. Keeping in view the fact that CPCL is the cheapest refinery stock available coupled with attractive dividend track record, we upgrade the stock from HOLD to BUY with a target price of Rs 175 based on 3x FY10 EV/EBITDA multiple," says Reliance Money's research report.

Elder Pharma - Target Rs 338

Reliance Money has maintained its buy rating on Elder Pharmaceuticals with a revised target price of Rs 338 in its October 23, 2008 research report. "With the lower than expected performance in H1FY09 and sharp correction in the valuations across the sector, we revise down the valuation for Elder. We have changed the valuation model from DCF basede earlier to PE multiple based. Hence, we value Elder Pharma at Rs 338 (i.e 6x its FY10 EPS) from earlier DCF based target of Rs 509 per share."

"Though we have revised down our target price to Rs 338 mainly to capture overall market valuations, we maintain our positive stance on the future earnings backed by increased shifting of manufacturing to excise free zones and consistent brand building efforts of the company. Hence, we maintain our BUY recommendation on Elder with the revised target price of Rs 338," says Reliance Money's research report.

Biocon - Target Rs 167

Reliance Money has maintained its buy rating on Biocon with a revised target price of Rs 167 in its October 24, 2008 research report. "Biocon reported 58% growth in its consolidated revenues to Rs 4422.9 million in Q2FY09, coupled with OPM of 16.6% (a sharp fall from 28.8%) and resulted in a flat PBT at Rs 557.1 million. Though we have revised down our target price to Rs 167 mainly to capture overall market valuations, we maintain our positive stance on the future earnings backed by strong pipeline of biosimilars and progress in its discovery pipeline. Hence, we maintain our buy recommendation on Biocon with the revised target price of Rs 167," says Reliance Money's research report.