LKP Shares on Kennametal, Godrej Consumer, Dhampur Sugar Mills

LKP Shares on Kennametal - Target Rs 225

LKP Shares has recommended a buy rating on Kennametal India (KIL) with a target of Rs 225, in its research report. " Kennametal India Ltd (KIL) being the largest player in the listed space derives 80% of its annual revenues from the Hard Metal and Products space and 20% from Machine Tools. The business continues to be India Centric with exports accounting for only 5% of its revenues.First half of the current fiscal witnessed a 4% drop in revenues at Rs 1795 mn and PBT dropping 16% to Rs 310 million (Rs 370 mn) led by margin compression in the hard metal division."


"Despite the projected de-growth in earnings this fiscal and the fact that KIL would likely report an EPS of Rs 20 during FY'09, given the resilience of the company arising out of the support of its parent and competitive strengths relative to its peers within the industry we believe that KIL trading at 7xFY'09E earnings can be accumulated with a one-year price target of Rs 225. BUY" says LKP Shares' research report.


LKP Shares on Godrej Consumer - Target Rs 165

LKP Shares has recommend a buy rating on Godrej Consumer Products with a price target of Rs 165, in its research report. "Godrej Consumer Products Ltd had enjoyed double digit volume growth in a benign cost environment during the period FY' 05-FY' 07 and post its overseas brand acquisitions and the subsequent integration issues and impact of leverage on consolidation it witnessed a deviation from the linear trend in earnings growth due to rising input costs in its soaps business."


"We believe that the company could explore international acquisitions in the hair care segment going forward. Q3 witnessed robust volume growth of 19% in soaps when industry growth was 5% and as price increases are ruled out for some time we do see volume growth in soaps converging towards value growth which was 20% for GCPL in the first nine months of the current fiscal. We recommend a BUY on the stock with a one-year price target of Rs 165," says LKP Shares' research report


LKP Shares on Dhampur Sugar Mills - Target Rs 45

LKP Shares is bullish on Dhampur Sugar Mills and has recommended a buy rating on the stock with a target of Rs 45, in its research report. “We recommend a BUY on Dhampur Sugar Mills Ltd - DSM based on improved prospects for the sugar business on account of buoyancy in sugar prices arising due to low production in India, increased traction from the co-generation business and savings in interests costs due to swapping of high cost loans (total debt of Rs 6 billion) with low cost loans from the sugar development fund.”

“With a stock of 1.35 lac tons at the end of Q1-FY'09 we expect DSM to crush up to a maximum of 2.8 million tons this fiscal by operating for 115 days. DSM sells refined sugar under the brand - Dhampure. Q1-FY'09 witnessed sugar realizations of Rs17.9 per kg as compared to Rs14.3 per kg in the same period last fiscal and after accounting for the notional foreign exchange loss of Rs 50mn, DSM posted a net profit of Rs137mn for the quarter and expanded power capacities now at 145mw with an exportable surplus of 80mw contributed to the earnings during the quarter. We expect DSM to post a net profit of Rs 300mn this fiscal and Rs 550 million next fiscal after accounting for foreign exchange losses and the stock trading at 3xFY'10E earnings can be accumulated by investors with a one-year price target of Rs 45. We recommend a BUY,” says LKP Shares' research report.