Stock Views on Punjab National Bank, Patel Engineering, Dr Reddys Laboratories

Prabhudas Lilladher on PNB - Target of Rs 682

Prabhudas Lilladher has upgraded its rating to accumulate on Punjab National Bank, PNB with a price target of Rs 682 in its report dated .

“Punjab National Bank’s (PNB's) Q4FY09 PAT grew by 59.2% YoY at Rs 8.66 billion. This was higher than our estimate of Rs 7.1 billion and also the market estimates, largely led by lower provisions and high treasury gains. We have discontinued giving a significant discount (Rs 40 per share for its commercial real estate exposure of Rs 60 billion). Equity capital is currently again available to real estate companies as capital markets have improved. Hence, we feel debt exposure to real estate companies should not attract any significant discounts."

"At the CMP, the stock is trading at 1.4x FY10 P/BV, 1.5X FY10E P/ABV and 6.5xFY10E P/E in-line, with its peer group banks. However, it has one of the best RoEs (>20%) and RoAs (1.2%) in the sector, the risk of continuation of current Chairman at the helm of affairs is the only pertinent non-fundamental risk that we can envisage at the current juncture. We upgrade the stock to an ‘Accumulate’ rating, with a revised price target of Rs 682," says Prabhudas Lilladher's report.

Karvy Stock Broking on Patel Engineering - Target of Rs 395

Karvy Stock Broking has maintained its buy rating on Patel Engineering with a price target of Rs 395, in its report.

"During the quarter ending March 09, we expect the company would report the net sales growth of 11.5% to Rs 8.1 billion in Q4FY09 from Rs 7.26 billion in Q4FY08. We expect EBIDTA would go up by 19.5% to Rs 1.25 billion and EBIDTA margin would improve by 100bps to 15.5% on account of higher contribution from high margin order book. We expect RPAT would go up by 36.3% to Rs 726 million."

"During the quarter, the company has bagged an order worth of Rs 7.99 billion from the Narmada Valley Development Authority for Bargi Diversion Project in joint venture with SEW Construction Ltd. The company's stake in the project would be around 60% which will translate the order inflow of Rs 5 billion. At the current market price of Rs 309, the company is trading at PER multiple of 10.2x and EV/EBIDTA multiple of 5.8x on FY10E earnings. Looking at the easing liquidity situation and expected robust order inflow post stable government; we maintain our 'BUY' rating with revised price target of Rs 395." says Karvy Stock Broking's report.

Angel Broking on Dr Reddys Laboratories - Target of Rs 765

Angel Broking has recommended a buy rating on Dr Reddys Laboratories with a target price of Rs 765 in its research report.

"For 4QFY2009, under Indian GAAP, Dr Reddy’s Laboratories (DRL) reported Net Sales of Rs 1,928.2 crore posting a growth of 52.2% yoy and ahead of our estimate of Rs 1,692.9 crore. For 4QFY2009, DRL’s Operating Margins (OPM) expanded by 974bp to 24.2% on the back of higher contribution from Sumatriptan and lower growth in SG&A expenses. For FY2009, the company reported OPM of 17.5%, up by 200bp."

"On the bourses, the stock has moved up 61.0% to Rs 636 in the last three months on the back of positive announcements pertaining to favourable judgment on Omeprazole OTC, ANDA filing of Fondaparinux and strong show on Sumatriptan in the US. For FY2011, we estimate Net Sales to post 10.5% yoy growth to Rs 7,848 crore with EBITDA Margins of 18.5% resulting in EPS of Rs 53.8 for the year. Discounting FY2011E Earnings, we have arrived at a Target Price of Rs 765 wherein Rs 741 is attributable to DRL’s base business (at 18x FY2011 EPS of Rs 41.2) and NPV of Rs 24 for its potential FTF. We recommend a Buy on the stock on the back of improving visibility in DRL’s product pipeline," says Angel Broking's research report.