Stock views on Sun Pharma, Ipca Labs, ITC

Motilal Oswal on ITC - Target of Rs 200

Motilal Oswal has recommended a buy rating on ITC, with price target of Rs 200, in its report.

"ITC’s stock price has reacted negatively to sharp increase in duties in the past. The stock declined by 6.1% in 2005 (10% excise increase after a gap of three years) and 17% in 2007 (imposition of 12.5% VAT and 5% increase in excise). We currently factor in 7.5% increase in excise and 4% volume growth: We are currently factoring in 4% increase in cigarette volume and 7.5% increase in excise duty. Double-digit excise duty increase will be viewed negatively by the markets, in our opinion. Expanding margins by increasing prices will not be an easy option in FY10 as cigarette prices have increased by over 25% in the last two years. Maintain Buy with target price of Rs 200," Motilal Oswal's report.

Angel Broking on Ipca Labs - Target of Rs 684

Angel Broking has maintained its buy rating on Ipca Laboratories with a target price of Rs 684 in its May 29, 2009 research report.

“Ipca, a vertically integrated company with a geographically diversified business model, has grown at a steady pace in the past posting a CAGR of 17.3% in net sales during FY2005-08 primarily driven by its Domestic Formulation Segment. Going forward, we expect the next leg of growth for the company to come from its Export Segment as it leverages its API capabilities to create a sturdy business in the Regulated and Emerging Formulations market.”
“For FY2010, management expects top-line to grow 18-20% with OPM remaining steady at 20-21% levels. On the back of the same, we have upgraded our FY2010 net sales estimates resulting in an 8% upward revision of our net profit FY2010 numbers. We have also introduced our FY2011 numbers, wherein we expect the company to post 14.1% and 23.9% rise in net sales and Profit, respectively. Overall, we expect Ipca’s net sales and Adjusted net profit to post a CAGR of 16.9% and 29.4% respectively, over FY2009-11. At Rs 547, the stock is trading at 8.0x FY2010E and 6.4x FY2011E Earnings. We believe that the stock is trading at attractive valuations compared to its historical trading band. Hence, we maintain a buy on the stock with a target price of Rs 684," says Angel's research report.

KRChoksey on Sun Pharma - Target of Rs 1352

KRChoksey has recommended a hold rating on Sun Pharmaceutical Industries with a target price of Rs 1352 in its KRChoksey's research report.

"Sun Pharma Q4FY09 performance was hit by lower sales from Caraco and the economic downturn, which resulted in a slowdown in the domestic business. Currently, the status of the Detroit facility is unchanged; however the management has indicated that if the need arises, the company could evaluate product transfer options to India from Caraco on a case-to-case basis. For FY2010, Caraco has not provided any guidance, given the uncertainty surrounding its Detroit facility and the lower exclusivity revenues."

"Going forward, we expect the slower growth in the business to continue for the next two to three quarters, due to the economic downturn and lack of new product launches from the Caraco facility that is under USFDA scrutiny. However, the company’s track record of delivering consistent and robust growth makes it the best Indian player in the generic space. With a strong balance sheet with over Rs 3,500 crore in cash, Sun Pharma is well positioned to exploit newer growth avenues. Thus we remain positive on the stock.'Hold', price target of Rs 1352," says KRChoksey's research report.