Stock Views on BHEL, Hindustan Unilever, Pfizer

Emkay on Hindustan Unilever, target of Rs 305

Emkay Global Financial Services has maintained its buy rating on Hindustan Unilever with target price of Rs 305 in its research report.

"HUL implemented price cut of 4%-20% on select brands and product categories. The price cuts are implemented either directly (20% price cut on Wheel Active Blue) or indirectly through weight changes (4.2% weight increase in Lifebuoy and 6.7% - 8.3% weight increase in Wheel Green). Considering above mentioned price cuts on select brands, total blended price reductions is approximately 1.2%. This translates into net cost saving of Rs 5,301 million compared to Rs 7,637 million earlier and additional EBITDA margin of 2.9% versus 4.1% earlier."

"Recent price reductions ratify our call that consumer staple companies will retain some savings to improve margin profile and intensify advertisement activities and utilize the balance for price reductions to benefit consumers. The recent price reduction on select brands is in-line with expectation. Despite adjusting the above price actions, HUL can implement incremental price reductions of 3.1% without impacting FY10E earnings estimates and intensify advertisement activities. Our earnings forecasts for CY09E remain unchanged at Rs 11.7/Share. We maintain our BUY rating with target price of Rs 305," says Emkay Global Financial Services' report.

IIFL on BHEL, target of Rs 2585

IIFL has recommended a buy rating on Bharat Heavy Electricals with a target price of Rs 2,585 in its research report.

"Higher-than-expected 34% YoY growth in 4Q gross revenues was reassuring after the execution slip in 3Q. However, our fears of a muted guidance for FY10 revenues came true. The 16.3% YoY growth in gross revenues implied by MoU target of Rs 320 billion under ‘Excellent’ rating is below our estimate as well as consensus. The muted guidance reflects constraints on accelerated execution, as was evident during our recent visit to a project site. We cut our FY10 and FY11 earnings estimates by 5% on lower revenue estimates. Order coverage ratio of 4.6x provides unmatched earnings visibility in the Indian capital-goods universe, but valuations, at PE of 18.7x on FY10ii and 15.5x on FY11ii, leave little room for slippages."

"Bharat Heavy Electricals’s 4Q gross revenue growth of 34% YoY helped the company beat the FY09 MoU targets by 1.8%. However, EBITDA margin likely contracted by 300bps in 4Q, against our estimate of 240bps contraction. BUY", target price of Rs 1,585," says IIFL's research report.

Hem Securities on Pfizer, target of Rs 935

Hem Securities has initiated a buy rating on Pfizer with a target of Rs 935 in its research report.

"The company has posted the compounded annual growth rate of 48.42% in bottom line in last four years and is expected to maintain its growth in coming years. The company was well placed to benefit from the growth of Indian Pharmaceutical market, that is expected to grow at 11-12%. It is expected to be valued at USD 20 billion by 2015. The stock at the current market price of Rs 597 will trade 12.27 times to its earnings of Rs 48.67 (TTM) and 1.90 times to its book value of Rs 314.52 and is expected to provide huge upside potential in long-term. We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 935 in the long -term investment horizon with an appreciation of 56.62%," says Hem Securities' report.