Karvy Stock Broking views on Axis Bank, Nitin Fire Protection, Ipca Laboratories

Karvy Stock Broking on Axis Bank - Target of Rs 629

Karvy Stock Broking has maintained its buy rating on Axis Bank with a target price of Rs 629 in its research report.

"We have revised our Axis Bank earning estimates after a visit to the bank's senior management; we expect that the bank's credit growth would moderate to 31.5% (Y/Y) to Rs 1,146 billion from our earlier credit book estimate of Rs 1,226 billion in FY10. Net interest margin is estimated to shrink by 30 bps to 2.57% in FY10.The bank's core fee income growth momentum is expected to come down to 28% (Y/Y) in FY10 from 70% in FY08 and 50% in 9MFY09. The bank's management did not provide with any guidance or estimates on non-performing assets front; we expect 152% (Y/Y) rise in gross NPA in FY10 to Rs 21.5 billion and increased credit cost to 1.3% in FY10 from 0.71% in FY08 and 1.1% 9MFY09."

"We increase our earning estimates for FY09 by 5.0% to Rs 17.7 billion and reduce for FY10 by 9.6% to Rs 15.5 billion and reduce our target price by 29% to Rs 629 per share.We estimate the bank to record RoAE of 18.8% and 14.4% in FY09 and FY10 respectively. We re-iterate our BUY rating on the stock with a target price of Rs 629 at 2.2x adjusted book value FY10," says Karvy Stock Broking's research report.


Karvy Stock Broking on Nitin Fire Protection

Karvy Stock Broking has changed its recommendation on Nitin Fire Protection Industries from buy to outperformer with a price target of Rs 160 in its research report.


"In the fire protection and security business, the demand has been negatively impacted due to slowdown in construction activity - both commercial and residential. Of the various contracts awarded to the company, Nitin Fire has not been able to execute few of them because of the client's decision to slowdown or hold that particular project. Accordingly that would lead to difficult 4QFY09 for the company."

"We expect the company's earnings to grow by 32% during FY10E primarily on back of better capacity utilization of the company's Vizag plant. However due to slowdown in the construction activity and corporate capex plans; we expect the company's fire protection and industrial cylinder segment would be hampered in FY10E. On back of lowering of our EPS estimates and lowering of PE multiple to reflect the current market valuation, we are reducing our price target by 33% to Rs 160 and change our recommendation from BUY to Outperformer," says Karvy Stock Broking's research report.


Karvy on Ipca Laboratories - Target of Rs 500

Karvy Stock Broking has maintained its buy rating on Ipca Laboratories with a price target of Rs 500 in its research report.


"The company's domestic formulations business which accounts for 40% of FY 2008 revenues should grow by 10% in FY 2009. The low growth has been on account of the tender business of Rs 600 million in FY2008 which is marginal in the current year. The overall branded revenues are Rs 1800 million as against Rs 1200 million in the previous year. The export API revenues should do around Rs 2500 million as against Rs 1940 million in the previous year. We maintain BUY on the stock with a price target of Rs 500 based on 7.1x FY 2010E," says Karvy Stock Broking's research report.