Stock Views on Piramal Healthcare, Gujarat Industries Power

Angel on Piramal Healthcare - Target of Rs 340

Angel Broking has maintained its buy rating on Piramal Healthcare with a target price of Rs 340 in its research report.

"Piramal Healthcare (PHL) has announced that it would be discontinuing its Pharma Solution operations at the low-Margin Huddersfield facility in UK. We believe given the near-term hiccups in the CRAMS space it is a prudent decision taken by the company to control costs. However, Revenue from the existing contracts at Huddersfield that would be shifted to the other facilities would take some time to kick in as the validation and stability studies are still proceeding."

"Over the long term, we expect the Pharma Solution business to drive the company's growth on the back of robust product pipeline with twenty-seven Innovators' products at Phase III (as of 1HFY2009), of which two are at advanced stages with a likely launch by FY2011. However for FY2010E, we have factored in a de-growth of 7% for the Pharma solution business and have not taken any EBITDA Margin expansion resulting into an upside risk if the company improves its EBITDA margin on account of restructuring. We maintain a 'Buy' on the stock, with a target price of Rs 340," says Angel's research report.

Bonanza on Gujarat Industries Power - Target of Rs 54

Bonanza has recommended a buy rating on Gujarat Industries Power Co. with a price target of Rs 54 in its research report.

"Gujarat Industries Power Co., GIPCL is a small Gujarat Govt.PSU with capacity of 557 MW presently, to be expanded to 807 MW by Q2 FY10. There is long term visibility in Power sector in India. Country is likely to remain power deficit for next few years. Company is likely to show fall in bottom line in FY09, compared to FY08, however, once the new capacity starts in next 4months, a sharp jump in results can be seen in FY10."

"Currently, it is trading at very attractive Market cap/Sales ratio of 0.6 times. The company is expanding its capacity by 50% in next 4 months, which gives good potential for future performance. Presently, it is at an attractive dividend yield of 6%. "Buy", price target of Rs 54," says Bonanza's research report.

Emkay Global on Piramal Healthcare - Target of Rs 261

Emkay Global Financial Services has recommended a buy rating on Piramal Healthcare with a target price of Rs 261 in its research report.

"In a bid to improve operating performance of its Pharma Solution (CMG) business, Piramal Healthcare is re-aligning its CMG assets by closing down its Huddersfield facility. Company will take one time hit of Sterling pound 10.1mn in FY09 itself. Company will be shifting these contracts to Digwal (India) and Morpeth (UK) facilities. Management has indicated that this restructuring will enable them to improve the operating margins of its Pharma Solution business by 6 to 8 ppt from FY10E itself.

"We view the restructuring of its Pharma Solution business as long term positive for the company. We have revised our revenue and earning estimates downward because of these restructuring. We have downward our revenue estimates by 11% and 11% and earnings estimates by 9% and 8% for FY10E and FY11E respectively. On the back of downward revision in earnings, our target price has been revised downward by 13% to Rs 261, Buy," says Emkay Global Financial Services' research report.