Stock Views on DLF, Idea Cellular, Glaxo Smithkline Pharma

Goldman Sachs on DLF

Goldman Sachs has maintained its ‘sell’ rating on DLF while reiterating its cautious outlook on the real estate sector. According to the investment bank, New Delhi-based realty major’s third-quarter results have confirmed a significant slowdown in property sales and construction activity in India. “We push back our medium-term develop-ment pipeline projections and lower our property price assumptions,” Goldman Sachs said in a report. The investment bank has lowered its earnings per share (EPS) estimates for FY2009-FY2011 by 29-62% and cut its 12-month target price to Rs 124 from Rs 203.

CLSA on IDEA CELLULAR

CLSA has maintained its ‘outperformer’ rating on Idea, with price a target of Rs 53, as it feels the company’s stronger balance sheet would support valuations. “Idea’s balance sheet has improved significantly with Telekom Malaysia’s Rs 73 billion cash injection (a 15% preferential placement) and another Rs 21 billion from its stake sale in ABTL (Aditya Birla Telecom), with 3QFY09 net debt/equity of 0.18 times (against 1.8x in 1QFY09),” the investment bank said in a report. “The company’s aggressive expansion strategy and inferior margins for its Spice Communications business have compressed margins, but the big improvement in its balance sheet and strong valuation benchmarks from recent deals for start-ups, will support the stock,” the report added.

India Infoline on GLAXO SMITHKLINE

India Infoline has assigned an ‘add’ rating to Glaxo Smithkline Pharma, citing stable growth, zero debt and strong cash balance as the key positives. According to the brokerage, the company has more than $300 million cash on its books. “We believe that new product launches under patent protection will help Glaxo maintain its growth rates in the foreseeable future. Glaxo has a lean asset base, with most of manufacturing being outsourced,” the brokerage said in a note to its clients. “Hence, the company also stands to gain from falling prices of intermediates and APIs. This, we believe, will help the company maintain its EBITDA margin at CY08 levels, even in the event of a slow-down in the domestic market,” the note added.