Stock views on Bharat Heavy Electricals, Aban Offshore, Lupin

Sharekhan on BHEL - Target of Rs 2546

Sharekhan has maintained its buy rating on Bharat Heavy Electricals, BHEL with a price target of Rs 2,546 in its research report.

"BHEL’s strong revenue visibility (with an order book of 4.8x FY2008 revenues) coupled with its strong balance sheet makes it our preferred pick in the sector. We expect the company to report a turnover growth of 31.6% year on year (yoy) and profits to grow at 8.3% yoy. For the full year, the company would be making a provision of Rs 1,313 crore for increment in wages, as recommended by the Sixth Pay Commission. For Q4FY2009, the provision would be to the tune of Rs 475 crore. We expect the total order inflows for FY2009 to rise by 39%, while the backlog should settle at a 19% growth on a year-on-year (y-o-y) basis."

"BHEL currently has a strong Rs 1,13,500 crore worth of orders on hand, imparting revenue visibility for the next three to four years, which makes BHEL our preferred pick in the sector. At the current market price, the stock trades at 16.9x FY2010E earnings and at a premium to the Sensex owing to its resilient business model and strong balance sheet. We reiterate our Buy on the stock with a price target of Rs 2,546," says Sharekhan's research report.

Hem Securities on Aban Offshore - Target of Rs 784

Hem Securities has recommended a buy rating on Aban Offshore with a price target of Rs 784 in its research report.

"Aban Offshore Ltd., has two business segments: Offshore Oil Drilling and Production services, and Wind Power generation. The company posted excellent financial figures for the quarter ended December 2008. The net sales for the company gone up by 54.88% to Rs 2618.68 million for the Q3FY09 as against the net sales of Rs 1690.74 million for the Q3FY08. The net profit for the company rose to Rs 558.72 million for the Q3FY09 in comparison to net profit of Rs 477.67 million for the Q3FY08 with the growth rate of 16.97%. The net profit margin stood at 21.34% for Q3FY09 in comparison to 28.25% for Q3FY08."

"Besides, the current market valuation also makes an attractive case for fresh investments in the stock. Aban Offshore has contracts of about Rs. 14000 crore, which clearly shows the strength of the company. We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 484 in the medium -term investment horizon with an appreciation of 15%," says Hem Securities' research report.

Sharekhan on Lupin - Target of Rs 840

Sharekhan has maintained its buy rating on Lupin with a price target of Rs 840 in its research report.

"Lupin has acquired a majority stake in Multicare Pharmaceuticals Philippines, Inc (MC) in the Philippines. MC reported revenues of Php 272 million peso (USD 5.6 million) and was profitable for the year ending December 2008. This strategic partnership will allow Lupin to strengthen MC’s product portfolio in the Philippines through its own brands and provide cross-selling opportunities through some of its latest acquisitions in the other markets."

"With the sustained growth momentum in the domestic market, strong visibility of the earnings from the US business owing to sizeable product opportunities and the ramp-up of the business in Europe, Japan, Australia and the other markets, we expect Lupin to deliver a strong performance over the next few years. We expect MC to be accretive to Lupin’s earnings from the first year itself, though the contribution would be very marginal. Keeping in mind the strong business fundamentals and the growth potential of the company, we maintain our Buy recommendation on Lupin with a price target of Rs 840" says Sharekhan's research report.