Stock Views on Tamil Newsprint, Bajaj Hindusthan, Piramal Healthcare

Angel Broking on Piramal Healthcare - Target of Rs 340

Angel Broking has maintained its buy rating on Piramal Healthcare with a target price of Rs 340 in its research report. "Piramal Healthcare and Minrad International Inc., a provider of generic inhalation anaesthetic, jointly announced that they have signed a definitive merger agreement for Piramal to acquire Minrad. Under the terms of the agreement, Minrad will merge with a newly incorporated wholly-owned subsidiary of Piramal. If the merger is completed, stockholders of Minrad will receive USD 0.12 per share in cash. In connection with the merger agreement, Piramal has also agreed to acquire Minrad’s 8% Senior Secured Convertible Notes from the note holders."

"Total consideration for the merger and acquisition of the notes, in cash plus the assumption of debt, will be approximately USD 40 million. The transaction is conditioned upon approval by Minrad’s stockholders and other customary closing conditions. It is not subject to any financing contingency and is expected to close in the first quarter of 2009. The company expects it to be marginally EPS accretive from FY2010 onwards. We believe this acquisition would help the company to scale up its Inhaled anaesthetic product portfolio and build a global presence in critical care segment. We maintain a Buy on the stock with a target price of Rs 340," says Angel's research report.


Karvy Stock Broking on Bajaj Hindusthan- Target of Rs 85


Karvy Stock Broking has maintained its buy rating on Bajaj Hindusthan with a target price of Rs 85 in its research report. "For Q4FY08 (standalone), Bajaj Hindustan Ltd (BHL) reported marginal revenue increase of 7.1% YoY (QoQ increase of 1%) to Rs 4.63 billion, 9.9% lower than our estimates of Rs 5.1 billion. We have revised our cane cost from Rs 132 to Rs 140 per quintal for FY09 and assumed cane cost Rs 145 per quintal in FY10."

"We have revised our sugar realization estimates from Rs 16.9 per kg to Rs 19.5 per kg in FY09 and assumed Rs 20.5 per kg in FY10. We have changed FCCB (Rs 5.3 billion) accounting from equity to debt considering significant deference between CMP and conversion price of Rs 465 per share. We have changed our valuation from EV/ Ton of Rs 0.31 to 0.8xBV (book value) due to high leverage (2.8X) and low earnings over next two years makes. We maintain BUY with target price of Rs 85 (previous Rs 140)," says Karvy's research report.


Karvy Stock Broking on Tamil Newsprint - Target of Rs 96


Karvy Stock Broking has recommended a buy rating on Tamil Nadu Newsprint and Papers with a target of Rs 96 in its research report. "The topline and bottom line of TNPL are expected to grow at CAGR of 15.6% and 14% to Rs 14,494 million and Rs 1,663 million in FY11E respectively over FY08. Moving ahead, we expect the capacity expansion in pulp & paper production and favorable industry dynamics will keep the growth momentum of the company. In addition to that, TNPL is better placed than its global as well as domestic peers in terms of gross profit margin and return ratios. We estimate ROCE for FY09, FY10 and FY11 will improve from 14% in FY08 to 15.2%, 16.7% and 18% respectively. The ROE for FY09, FY10 and FY11 is estimated about 17.4%, 18% and 18.5% respectively."

"The stock is currently trading at P/E of 4x on FY09E EPS of Rs 17.2, 3.4x on FY10E EPS of Rs 20.4 and 3x on FY11E EPS of Rs 24. Hence, we believe TNPL deserves better valuation on account of attractive dividend yield and improving fundamentals going ahead. Hence, we recommend a BUY on the stock with a target price of Rs 96 based on 4x on FY11E earnings with one year investment perspective," says Karvy Stock Broking's research report.