LIC Housing Finance

LIC Housing Finance has been able to efficiently manage all kinds of risks during testing times and has strong fundamentals. Long-term investors can accumulate the stock at its current level

WE HAD recommended LIC Housing Finance as a stock idea on June 23, ’08. The stock has lost nearly 22% since then. We feel this is due to the overall bearish phase in the market, wherein even the Nifty has lost close to 30% during the same period. Hence, LIC Housing Finance’s stock has outperformed the broader market. We think the company is the one of the best-managed non-banking finance companies (NBFCs) in the country and long term investors can accumulate the stock at its current level.

BUSINESS:

LIC Housing Finance provides housing loans mainly to individuals. It is the second-largest housing finance company in the country after Housing Development Finance Corp (HDFC). Its balance sheet size has nearly trebled in the five years from FY03-08. During this period, it has been one of the fastest growing NBFCs. This is due to the strong economic growth seen in India and the rising level of disposable incomes, which has fuelled the demand for housing loans. Also, since last year, LIC Housing Finance has stepped up its promotional activities, which has improved its share in housing loans from 5% to 7%. This is commendable as much larger players like HDFC and commercial banks, which have a significant presence in housing loans, dominate this market. Since the beginning of the current financial year, the financial sector has been facing the brunt of rising interest rates and slow disbursements. LIC Housing Finance has been able to weather the storm, which is visible from its growth in interest income. The company’s interest income grew by more than 30% year-on-year for the six months ended September ’08. In fact, even its disbursements were up 30% during this period, which is in line with its performance last year.

NBFCs typically face delinquency risks, which surface during times of a slowdown, when borrowers are not able to make the interest payments (EMIs) on their loans. LIC Housing Finance’s net non-performing assets (NPAs) stood at less than 1% of its net advances as of end-September ’08, compared to 1.65% a year ago. This shows that the company’s quality of loan book has improved tremendously in the past one year and it has been efficient in managing delinquency risks.

The company is also efficient in managing liquidity risks. This is evident as the proportion of assets maturing in one year is similar to the proportion of liabilities maturing within one year. This aspect is extremely vital as NBFCs which have financed long-term assets through short-term sources of finance face tremendous pressure in a scenario of tightening liquidity. Hence, it is clear that LIC Housing Finance has been able to efficiently manage all kinds of risks during testing times.

VALUATIONS:

The stock is trading at a price-to-earnings (P/E) multiple of 3.9 times. Hence, the stock appears to be cheap considering its high earnings growth, as its net profit in the past 12 months has grown by more than 40%. Though it is a known fact that in the case of finance companies, the stock trades at a lesser multiple than earnings growth, we feel this is overdone in the case of LIC Housing Finance, as the P/E multiple is just a fraction of its earnings growth.

We think the market has already factored in a worst-case scenario for all NBFCs, including LIC Housing Finance. The company’s current low valuations appear to be attractive for long-term investors, as LIC Housing Finance’s stock price has fallen as much as that of other NBFCs, even though its fundamentals are much better than theirs.

GMR infrastructure

GMR infrastructure is well geared for substantial growth over the long term fuelled by its power and airport businesses

THERE are a few construction and infrastructure companies, which have been able to generate positive cash flows from operations. This is because of heavily leveraged balance sheets, higher working capital requirements or developmental stage of their projects. This has exposed them to greater risk in the current economic downturn. However, if the company has a clutch of mature and operational projects, resultant steady cash flows is a comfort factor for future funding requirements. GMR Infrastructure, at present, is placed in such a comfortable zone.

BUSINESS:

GMR Infrastructure is engaged in the business of power, airports and highways, which contributed 49.11%, 41.91% and 3.49% in the nine months ended December 2008 . The company is also into commercial real estate development and special economic zone close to 4050 acres. However, the progress is slow due to downturn in the market.

GROWTH DRIVERS:

In the power business, growth is expected to come from FY12 and beyond due to an additional 5,000 MW capacity at eight different locations in India. Further, its existing business is likely to benefit from lower naphtha prices and higher gas availability from the KG basin. The biggest growth driver is going to be its airport business. Hyderabad airport is already operational. The company’s efforts to add new airlines, increase the user development fee and other aero charges will increase revenue. Full development of the Delhi airport will give a boost to the airports business in the long term. The company is targeting to complete all its remaining road projects by March 2009.

CONCERNS:

The company’s airport business is dependent on the growth of the overall traffic growth at the airports. While domestic traffic is unlikely to pick up dramatically, substantially and immediately, the growth in the international passenger traffic is expected to remain steady. International passenger traffic, which formed only 25% and 33% in the total passenger traffic, grew by 8.3% and 9.7% at Delhi and Hyderabad airports, respectively, in the nine months of FY09.

GMR’s consolidated debt-to-equity ratio of 1.3 in FY08 is expected to increase. With the consolidation of Intergen, this will go up substantially. The company is also exposed to refinancing risk of the bridge loan. In a fiscal deficit scenario, where interest rates are expected to remain higher, the company is expected to continue to witness the burden of interest charges, which means subdued profitability.

POSITIVE DEVELOPMENTS:

The government has allowed company to charge the Airport Development Fee (ADF) from departing passengers at the Delhi Airport. The permission to charge ADF of Rs 200 per domestic passenger and Rs 1,300 per international passenger for three years from March 1, 2009 is likely to ease the company’s funding requirement to complete the Delhi Airport project on time before the Common Wealth Games in September 2010. Secondly, GMR Holdings, which holds 73.28% in the company as on December 2008 quarter, has bought 2.7 million of the company (termed as creeping acquisition) in 2009 till date and has increased its shareholding to 74.2% as on February 20, 2009.

FINANCIALS:

In December 2008 quarter, consolidated net revenues jumped 79.28% to Rs 959.15 crore, thanks to significant jump in revenues from power (47.7% rise in revenues) and airports (189.4%). Operating profit witnessed an even higher growth of 91.99% to Rs 287.8 crore. However, net profit declined 36.3% to Rs 64.07 crore after accounting for minority interest, notional forex losses while interest and depreciation costs more than doubled.

OUTLOOK:

March 2009 quarter is expected to be better due to improving passenger traffic following reduction of airfares, recently commissioned Ambala-Chandigarh BOT project and resumption of operations at Vemagiri power plant, which were affected due to lack of gas. However, net profit would remain under pressure due to higher fixed costs. The stock trades at around 2.3 times its price to book value for FY10. Though this is on higher side, the company’s real growth will start from FY11 and beyond, as its power and airport projects, which are at various stages of completion, start contributing . Hence, longterm investors should accumulate the stock.

BUILDING BLOCKS

• GMR has two domestic airports at Hyderabad, Delhi and one international airport—Istanbul (Turkey) under its fold
• It is also into power sector with 11 projects out of which three in—Chennai, Karnataka and Andhra Pradesh—are operational with a total capacity of around 800 MW
• Highways segment consists of 6 build-operate-transfer (BOT) projects totalling to 422 kilometres, out of which, four projects, including three annuity-based and one toll based, are operational
• While growth in the revenues will be robust over the next few years, higher fixed costs could constrain rise in net profit
• GMR acquired 50% stake in Netherlands-based Intergen with the power generation capacity of 7658 MW in June ’08. This marks GMR’s entry into the UK, the Netherlands, Mexico, Philippines and Australia. However, debt levels are likely to rise substantially on consolidation due to a bridge loan of $954 million
  

Koutons Retail

Delhi based Koutons Retail has shown tremendous growth post it’s listing in 2007. The company operates in the fashion wear apparel segment category. However it has now expanded its product merchandise to become a complete ‘family shop’.

BUSINESS:

Incorporated in 1994, Koutons is an integrated apparel manufacturing & retail company. It is in the business of designing, manufacturing & retailing apparel under the “Koutons” & “Charlie Outlaw” brands.

They have a network of 1420 exclusive brand outlets across India. The company has positioned the “Koutons” brand in the middle to high fashion segment ranging from formal to party wear. The company had reinvented & re-launched their old premier brand “Charlie” as “Charlie Outlaw”. It forayed into women wear with Les Femme and kids segment with its Koutons Junior brand. As of September 2008, Les Femme contributed 6% of the revenue, & Koutons Junior contributed 5% of the revenue and the Men’s segment contributed 89% of the revenue.

The company increased number of stores from 1,175 in FY08 to a little over 1300 stores as of now. It is looking to expand the store count to 1,800 in FY09. This will entail expansion of space from 1.20 million square feet as on September ’08 to 1.5 million square feet in FY09. It targets to open 100 exclusive stores of each in FY09. The company has already forayed into footwear. It would also introduce men’s accessories like innerwear, women’s accessories like handbags and kids’ accessories. This will help in maximizing the overall sales per square foot for its stores. Its acquisition of Upper Class range of womens’ wear marks its entry into the premium segment. Its presence in the West Asia will also help Koutons make an entry into this region. The average sale per sq ft for Koutons is about Rs 12,000 and for Charlie it is Rs 8,000.

FINANCIALS:

The sales have grown at a CAGR of 69.4% from Rs 96.3 crore in FY05 to Rs. 793.5 crore in FY08. Net profit during the period grew at a CAGR of 142 % from Rs 1.9 crore to Rs 67 crore. It’s operating margins have been hovering between 15-20%. But with the slowdown in the economy in the recent quarters, operating profits have shrunk by about 200-300 basis points. Despite this, the company has some of the best net profit margins ranging between 5-7%. New product launches as well as new line of business have helped to maintain the overall growth of the company. KRIL has been rolling out stores aggressively since the last two years and is looking at a pan India presence.

GROWTH DRIVERS:

The company has been doubling in size compared to about 40-50% YoY growth reported by other retailers. However it cannot be directly compared to other players because its format and business model does not permit so. The company will be able to maintain its high profit margins as it’s offering is attractively priced.

Their franchisee model relieves them of the burgeoning rental costs, which are eating into retail margins. But the aggressive expansion has resulted in blockage of funds in inventory. This has forced the company to go for working capital funding. Larger volumes would bring in economies of scale thus further reducing cost.

The company has been making a conscious effort of not rapidly opening new stores but rather expanding the existing stores.

Foray into women wear and kids wear will drive company’s growth in future. Kids segment requires quick replenishment as the child outgrows its outfits within six months—thus providing huge sales potential. The company also plans to foray into West Asia and China.

OUR TAKE:

For the company that believes in providing fashion and quality at affordable prices, going ahead with rapid store roll out could be a big challenge. Nonetheless, we believe economies of large scale could help the company in stabilizing its operating costs and sustaining the current slowdown.

VISHAL RETAIL

Vishal Retail Ltd started in the year 1986 as discount retailer in Kolkata and is focused on tier II and III cities in the country. About 80% of the company’s stores are located in these cities. The company raised Rs 110 crore through its public issue in June’07.

BUSINESS:

Vishal Retail (VRL) is a value retailer with focus on apparels. Besides apparels it has a presence in a wide range of household merchandise and other consumer goods like footwear, toys, home furnishings to mobile phones, watches, toiletries, and grocery items.VRL’s outlets sell over 70,000 products, which meet all household requirements. The company has focused on the lower middleincome group as its customers and the strategy has served its well so far. To increase its penetration the company has also experimented with small formats and it also plans to re-size around 25 of its stores. They have also opened restaurants within their stores to gain a higher share of customer’s wallet. As of now the company has 181 retail stores across 107 cities covering a total area of 2.98 million sq feet. VRL has an edge over peers with its focused business model operating largely through hypermart format. Thus it helps to being in economies of scale for sourcing raw materials and pass on the benefits to consumers. The company’s focus continues to remain on Tier II and Tier III.

It also has an apparel-manufacturing unit in Gurgaon and Dehradun. The company has 29 warehouses located in 8 key cities in India covering over 1.05 lakh sq ft area. The company manufactures about 9% of its requirement for apparels in its existing facility. Currently the company is consolidating its existing store count and has kept its expansion plans on hold.

FINANCIALS:

The sales have grown at a CAGR of 62% from Rs 147 crore in FY05 to Rs 1013 crore in FY08. Net profit also has grown at a CAGR of 91.7% from Rs 3.1 crore to Rs 40.6 crore during the period. Though the company did witness a slowdown in sales in the Sept’08 quarter, the revenue mix saw a shift towards non-apparels. The company has made a conscious effort of shifting towards non-apparels and staples.

Apparel share declined to 57% in second quarter compared to 62% in first quarter. In comparison, revenues from FMCG and other non- apparel goods rose to 24.1% (19.7%) and 18.2% (16.7%) respectively. This has a positive impact on the margins. The company is gradually increasing share of its private label in every category. This will further boost margins. However, the company has not been insulated from the slowdown in the overall consumption spend. Moreover delay in delivery of stores has resulted in very high inventory. This has resulted in the need for working capital funding, which has resulted in higher interest outflows. This has become a major concern for them.

GROWTH DRIVERS:

The company expects to continue its 40-50% sales growth in the coming future. The company earns around 5-7% of its operating profit from its private label products. Going forward, the company is looking at further increasing share of this high margin segment to drive growth and maintain EBITDA margins at around 12%. The overall share of private label is expected to increase from the current 18% in FY08 to 25% by end of March 2011.

The company has adopted the franchisee model for future store expansion. This would help to curb its operating costs as well.

OUR TAKE:

Besides the delay in store completion and increasing financing costs, the company will have to cope with declining sales growth in the coming times. The stock has been beaten down badly in this market crash and its rising debt levels are a concern, yet its business model makes it a good portfolio stock.

Stock Views on HDFC, Bajaj Auto, Tata Steel

BNP Paribas on HDFC

BROKING house BNP Paribas Securities has reiterated its ‘buy’ rating on mortgage lender HDFC, but slashed price target to Rs 1,600 from Rs 2,250. “We expect HDFC to continue to enjoy a premium over its banking sector peers with its sticky customer base, better asset quality, a sector leading opex ratio and stable spreads,” the outfit said in a note to clients. “The company guided towards loan growth in the range of 18-20% for FY10. We are factoring for a loan growth of 16% for FY10 and we believe this growth will be more back end loaded in FY10,” the note added.

MERRILL Lynch on Bajaj Auto

MERRILL Lynch has retained its‘neutral’ rating on Bajaj Auto, but raised price target by 11% as it expects the stock’s valuation multiples to expand on improved earnings visibility. “Following positive customer response to XCD 135 cc motorcycle, we have greater confidence for four upcoming launches by September. We raise domestic two-wheeler sales estimates to 1.36 million units in FY10 (5% growth, earlier 5% decline), and retain 5% growth on higher base in FY11,” the Merrill note to clients said.

JP Morgan on Tata Steel

JP Morgan has retained its ‘neutral’ rating on Tata Steel, citing bleak outlook on the sector. “With European steel environment remaining challenging, end demand visibility low, term debt at $10 billion and FY10 (estimated) adjusted net debt equity at 2.3 times, we remain ‘neutral’ on the stock. Working capital release at Corus and the company’s intention to pre pay $450 million at Corus from asset sales at Teesside are key positives and while adjusted FY10E price/book at 0.9 times provides support, we would wait for some improvement in end demand in Europe before stepping in,” the JP Morgan note said.

Buyback & how it’s done

THE TERM literally refers to a company’s move to repurchase its own shares. By doing so, the company reduces the number of its shares available in the open market.

This will lead to the rise of earnings per share (EPS) and the return on assets of the company, indicators on the balance sheet of an improvement in the performance of the company. As an investor, it will mean an increase in his/her stake in the company. A stock buyback is also sometimes referred to as share purchase and it is generally considered to signal a potential increase in share price.

How is it done?

A company can buy back shares either using tender offer or in an open market buyback. Under the first method, the company issues a tender offer with details regarding the number of shares that the company plans to repurchase and indicates their price range.

An investor keen on accepting the offer needs to fill the form mentioning the number of shares that he/she wants to tender and the price desired and send it back to the company. In most cases, the price in a tender offer buyback is higher than the price in the open market.

According to Sebi guidelines, if the company has decided to accept your shares, then it needs to intimate you in 15 days after the closure of the offer. The other route available for company is where they slowly buy back their shares from the open market.

Where can you find out?

Details regarding buybacks are available from the stock exchange as it is mandatory for the companies to intimate them of such resolutions. Details of a buyback offer are also available on the Sebi website.

Why are companies currently going for a buyback?

There are multiple reasons. Sometimes, companies generally indulge in a buyback when they feel that their share price in the market has fallen drastically.

At other times, it may simply be a way of using excess cash. However, there are also cases when this may be an attempt at preventing a takeover of the company.

Sector View on Indian Steel Industry

KRChoksey Shares & Securities on TATA STEEL

The company’s EBITDA has increased by 43.68% Y-o-Y from Rs 2,733.4 cr to Rs 3,075.9 cr. While PAT has increased to 50.13% from Rs 1,488.4 cr to Rs 1787.8 cr. Other income has also increased by 152.72% which has led to increase in the profit margins. We recommend a buy on the stock despite the growth concerns purely on the basis of attractive valuations.

KRChoksey Shares & Securities on SAIL

SAIL’s net sales increased 34% Y-o-Y to Rs 12,238.59 crore in Q2FY09 as against Rs 916 3.49 crore during Q2Y08. EBITDAof the company registered a growth of 17% Y-o-Y to Rs 3,433.92 crore & PAT rose by 18% Y-o-Y to Rs 2,009.6 crore. The second half of FY09 is expected to present significant challenges in the metals sector, though the long term fundamentals of the company remains strong.

Geojit Financial Services on JSW STEEL

The company is among the largest Indian steel companies. It has now tied up with UK based Severfield Rowen to float an equal stake joint venture company for manufacturing construction steel. The net profit of the company has grown 44.72% from the June quarter to this September quarter. The P/E of the stock is 3.43 and the EPS (TTM) is at 70.89.

Geojit Financial Services on WELSPUN GUJARAT STAHL

Welspun Gujarat Stahl Rohren is the flagship company of Welspun Group. It is all set to be positioned as the world’s largest pipe company with an increase in capacity from 1 million ton pa to 1.75 million ton by March 2009. The debt-equity ratio at 1.21 shows that most of the assets are financed and it must set aside more money to pay the cost of borrowed money.

Emkay Global Financial Services on HEG

HEG will become number one manufacturer of graphite electrodes in India after its expansion from 60000 tpa to 80000 tpa by Q4FY09. We expect topline and PAT to have CAGR of 37% and 25% respectively for next two years. It is trading at 5.9x FY09E FDEPS of Rs21.2 and at 2.6x FY10E FDEPS of Rs48.8.

Emkay Global Financial Services on GODAWARI POWER AND ISPAT

Godawari Power’s iron ore pelletisation will commence in 2HFY10 while the iron ore mining will start from Q4FY09 which will translate into tremendous savings. PAT is expected to grow at CAGR of 47% GPIL trading at 1.6x FY09E FDEPS of Rs40.2 and at 0.8x FY10E FDEPS of Rs76.6, while on EV/EBITDA basis it is trading at 2.4x FY09E EV/EBITDA and at 1.2x FY10E EV/EBITDA.

Sector View on FMCG

Motilal Oswal Securities on ITC
THE 18% growth inQ3 PBIT has been encouraging. Growing demand and high entry barriers for other players will ensure steady double-digit profit growth. Poor performance from hotels business is already priced in. Market share of 2.5% in the toilet soaps & rising consumer acceptability in skin care is positive for the company.

Motilal Oswal Securities on Nestle

NESTLE India is best placed to ride on the expected growth in processed food market due to the strong technology of the parent company. Dominant market share and strong brands will prevent margin erosion of the company. Going ahead, high penetration and innovative prod-uct launches would further fuel its growth.

Antique Stock Broking on Britannia Industries

AFTER witnessing consistent drop for four years, Bri-tannia’s market share has stabilised over the last two years, both in value and volume terms. Going ahead, Britannia’s sales would be driven by Good Day, growing at 25-30% in the premium category and Tiger brand, growing at 18-20% in the value-for-money category.

Motilal Oswal Securities on Marico

CONSOLIDATED net sales of Marico recorded a 23% YoY growth, largely led by 15% price increases and 7% volume growth. Brands in pure coconut oil category — Parachute & Nihar — have reported a volume growth of 9% and 15%, respectively. GLobal business grew 44% YoY. Decline in copra and safflower oil prices benefited the co.

Invest Shoppe on Ruchi Soya

RUCHI Soya enjoys the leadership position in the domestic edible oil market. Its processing capacity (the largest in India), experienced mgmt, increasing share of sales from branded products and consistent profit growth despite volatile commodity prices are some of the positives. It is expected to benefit once oil prices start rising.

Invest Shoppe on McLeod Russel

THE tea price boom helped McLeod Russel to post 61.48% growth in net profit in the last quarter. It attributes the improved performance to strong domestic demand. It plans to acquire Vietnam-based Phu Ben Tea for $2 million. McLeod, the world’s largest bulk tea player, will continue to gain from increased preference to tea world over.

Sector View on Indian Hotel Industry

ICICI Securities on EAST INDIA HOTELS (EIH)
EIH recorded 7.8% growth in its revenues, which is in line with our expected revenue of Rs 241.5 crore for Q2FY09, led by better performance of its Mumbai (Trident and Oberoi) and Delhi properties. Combined together, these two properties account for nearly 71% of its owned room base. We expect EIH’s revenues to continue to grow in FY09E and FY10E once its BKC project starts operation by Q3FY09 end.

Indiabulls Securities on INDIAN HOTELS

IHCL has hotels across various segments and geographies. However, there is a growing trend towards mid- and lower-priced hotels, which are comparatively less susceptible to the fall in the occupancy rate and the ARRs. It has planned aggressive capacity expansions for its Ginger Hotels chain, and has launched the Gateway brand, which is positioned between Ginger and ICHL’s luxury chain.

PINC Research on TAJGVK HOTELS & RESORTS

While we like TajGVK Hotels and Resorts’ business model on account of its diverse product portfolio and ability to leverage its offerings to maximise revenues, we believe that the ongoing turmoil in the global economy will lead to a clampdown in discretionary spending, by both corporates and individuals. This has the potential to impact revenues and profits.

ICICI Securities on HOTEL LEELA

Hotel Leela currently operates 1,115 rooms. The company has plans to add a further 1,486 rooms over the next four years. This expansion involves a project cost of around Rs 2,000cr. However, due to the current global financial market turmoil, liquidity crunch and expected sluggish demand for premium rooms, its project execution may get delayed in cities like Pune, Hyderabad and Chennai.

KRChoksey Shares and Securities on KAMAT HOTELS

It is one of the major mid-sized players in the Indian hotel industry. It is charting an expansion plan in the western regions of the country. It is expected to increase its owned and managed room base from 755 in FY08 to around 2,500 in FY10E. With an expected EPS of Rs 27 in FY10E, the stock is available at a P/E of 1.55 and a P/B of less than 0.4.

KRChoksey Shares and Securities on VICEROY HOTELS

The stock shows promise due to its advanced project pipeline. The room base is expected to triple by FY10. It has franchisee agreement with Marriot International. The company is expanding its geographical reach. It is also successfully tapping the huge opportunity in the F&B space though its restaurant business. Viceroy Hotels currently trades at 4x FY10E Rs 6.45 EPS. It looks attractive at a P/B of 0.48.

Sector View on Indian pharmaceutical industry

Kotak Securities on PIRAMAL HEALTHCARE

Piramal Healthcare is increasing its focus on profitability in the customs manufacturing business. The company had strengthened its critical care business in 1QFY09 by buying PlasmaSelect’s polygeline-based blood plasma products for Euro7.7mn. We expect domestic branded formulation business to grow at 20% in FY09 and 15% in FY10 driven by sales from new acquired brands and increasing geographic reach.

Kotak Securities on LUPIN

Lupin is witnessing strong sales growth led by Kyowa acquisition and strong growth in branded and generic formulations across geographies. We expect Kyowa to contribute Rs3.9bn to consolidated revenue in FY09. Lupin has strengthened its CRAMS capabilities with the acquisition of Novodigm which is largely engaged in the manufacturing of advanced intermediates for APIs under CRAMS model.

Asit C Mehta Investment Intermediates on DISHMAN PHARMACEUTICALS

Dishman’s focus in contract manufacturing for high margin patented drugs and Active Pharmaceutical Ingredients (API) for products under patent/R&D distinguishes its business model from its peers (concentrating on manufacturing old generics) in the segment. The company’s acquisition of Carbogen Amcis has strengthened its capabilities and presence in contract research.

ICICI Securities on FORTIS HEALTHCARE

Fortis Healthcare came out with the positive Q2 FY09 results with net profit of Rs 10.06 crore led by better revenue growth, better cost management and exceptional income. With the huge expected demand in the tertiary care segment, along with the changes in demography, we expect Fortis to benefit in the long-term from its metro-focused multi-speciality facilities with expertise in cardiac care.

Prabhudas Lilladher on ANKUR DRUGS & PHARMA

Ankur Drugs is one of the largest contract manufacturers of pharma formulations. Major clients include: Ranbaxy Labs, Cipla, Novartis, and Lyka. It is also manufacturing six products for Novartis, Switzerland. The company has plans to introduce patented products of Labtec, Germany. The stock is attractively valued at 2.3x FY09E EPS of Rs41.3.

Angel Broking on ELDER PHARMACEUTICALS

It is one of the fastest growing companies in the Indian pharmaceutical industry. Elder’s operating profit registered CAGR of 37.4% during FY2005-08 on the back of strong revenue CAGR of 25% and expansion of operating margins by 480bp during the mentioned period. Domestic sales grew at a CAGR of 24.0% from Rs276cr to Rs528cr while exports clocked CAGR of 49.1% from Rs7cr to Rs23cr over FY2005-08.

Stock Views on TCS, United Spirits, Bharti Airtel

IDFC-SSKI Securities on TCS

Broking house IDFC-SSKI Securities has rated TCS as an ‘outperformer’ with a price target of Rs 630. “TCS is expected to be a key beneficiary of the accelerating trend in offshoring as clients lever-age low-cost geographies to contain IT services spend. TCS has, in the last few years, increasingly derisked its business model by expanding into newer geographies (Continental Europe, China and Latin America) as well as through long-term contracts,” the IDFC-SSKI note to clients said. “TCS derives approximately 30% of its revenues from non-US and non-UK geographies. We expect 8% revenue (US dollar) compounded annual growth and 4% EPS CAGR for TCS over FY09-11,” the note added.

Citigroup Global Markets on United Spirits

Citigroup Global Markets has reaffirmed its ‘sell’ rating on United Spirits, with a price target of Rs 454. “The recent sharp deterioration in profitability and the sequential volatility in operating profits have highlighted that USL’s business is far more cyclical than earlier envisaged. Around 90% of the promoter stake being pledged remains an overhang and a significant concern,” the Citi note to clients said. “Stake sale in USL would be a positive, though the timing and the pricing remain uncertain,” it added.

HSBC Securities on Bharti Airtel

HSBC Securities (India) has retained its ‘overweight’rating on Bharti Airtel with a price target of Rs 786. “The current market favours companies with strong balance sheets, low leverage, large scale, and high RoE (return on equity). What’s more, after the Satyam issue, companies with records of strong corporate governance command a premium,” the HSBC note to clients said. “Bharti is in a stronger financial position than its peers,” the note added.

Stock Views on Tata Chemicals, HPCL, GODREJ Consumer Products

GOLDMAN SACHS on TATA CHEMICALS

GOLDMAN Sachs downgrades Tata Chemicals to ‘neutral’ from ‘buy’ with a 12-month P/BV-based target price of Rs 140, implying downside potential of 12% from here. With a weakening global economy and consequent correction in agri commodity prices, Goldman Sachs now expects downside risk to Tata Chemicals earnings from its soda ash and fertiliser businesses. It forecasts soda ash prices to decline by 20-25% globally in FY10E, primarily due to:

(1) soda ash producers not having the necessary pricing power to retain the benefit of low energy prices;

(2) softening demand due to a slowdown in the global economy; and

(3) a surge in Chinese soda ash capacity of about 4 million tonnes over the next two years, which may have a material impact on Asia’s soda ash margins.

The 12-month target price of Rs 140 is based on a trough P/BV multiple of 0.8x. Key risks to the target price include:

(1) renewal of soda ash prices at prices higher than estimates;

(2) further depreciation of the rupee against the dollar; and

(3) a rebound in international urea prices.

MERRILL LYNCH on GODREJ CONSUMER PRODUCTS

GODREJ Consumer Products’ (GCPL) margins are expected to be the best ever in FY10E, driven by a sharp fall in palm oil prices and product price increases effective September ’08. Recent excise duty cuts should further reduce input costs. The management’s focus is on driving category sales growth, rather than market share gains. The latter may not be easy to achieve, given that GCPL is the market leader. The share of international sales may go up from the current 25% in the long term. No impact of the economic slowdown has been witnessed on the FMCG sector so far, and sales growth has picked up in the past two months. Merrill Lynch believes GCPL can benefit from a tightening consumer wallet as its product portfolio is skewed towards economy brands. At 13x FY10E P/E, GCPL is trading at a discount to its FMCG peer group and the historic average. Merrill Lynch expects the discount to narrow as earnings momentum picks up.

HSBC on HPCL

HSBC has cut the target price on HPCL to Rs 271 and downgraded its ratings to ‘neutral’ from ‘overweight’. HPCL incurred a loss of Rs 4,100 crore in H1 FY09, and the recent fuel price cut has limited its ability to recoup a portion of this loss. With the possibility of a second fiscal stimulus package, there is also the risk of further price cuts. While the government has initiated discussions for reforms in auto fuel pricing, HSBC remains cautious on its implementation as this can result in higher diesel prices. Based on oil price assumption of $90/bbl for FY09 and $71/bbl for FY10, HSBC estimates sector under-recoveries of Rs 138,000 crore and Rs 55,000 crore, respectively, and 50% compensation in the form of oil bonds and 33% in the form of discounts from upstream players. Based on a combination of P/E and P/BV approaches, HSBC has cut its target price after accounting for the recent derating of the market and HPCL’s refining peers. Any reform in the subsidy mechanism allowing HPCL to bear lower levels of under-recoveries will be a key catalyst for the stock.

Stock Views on Tata Power, Union Bank of India, Reliance Capital

NOMURA on TATA POWER

NOMURA initiates coverage on Tata Power with a ‘buy’ rating and a 12-month target price of Rs 854, representing 17% potential upside from the current level. Nomura believes a strong project pipeline, adequate fuel security, global expansion plans and high earnings visibility are key positives for the stock. Tata Power’s capacity will rise to 13,611 mw by FY14, representing a CAGR of 33% over FY08-14E — significantly higher than the targeted 10% CAGR under India’s 11th Five-Year Plan. Nomura expects its EPS to rise from Rs 47.5 in FY08, at a CAGR of 28%, to Rs 209.4 by FY14E, due to stable cash flows from businesses in Mumbai, North Delhi Power, Mundra UMPP and Indonesian coal mines. The target price translates into a 14.2x FY09E EPS of Rs 60 and 12.9x FY10E EPS of Rs 66.4 — a significant discount to NTPC’s 20.9x FY09E P/E and 18.8x FY10E P/E.

MOTILAL OSWAL on UNION BANK OF INDIA

MOTILAL Oswal maintains ‘buy’ rating on Union Bank of India. The bank is confident of achieving its FY09 targets of stable margins (2.85% vs 2.8% in H1 FY09), loan growth of over 22%, deposit growth of 23%, and slippage ratio of <1.25%.>

(1) technology and process transformation;

(2) fast growing retail deposits, branch network and customer base; and

(3) achieving profitable business growth.

Motilal has upgraded FY09 estimates by 9% to factor in the bond gains and has downgraded the FY10 estimates by 3% to factor in higher NPA charges. Motilal expects the bank to report an EPS of Rs 33 in FY09 and Rs 35 in FY10. The stock trades at 4.7x FY09E EPS and 1.1x FY09E book value. RoA and RoE will remain strong at 1.1%+ and 23%+, respectively, over the next two years.

CITIGROUP on RELIANCE CAPITAL

CITIGROUP has a ‘sell’ recommendation on Reliance Capital with a target price of Rs 500. Reliance Capital has corrected sharply since September ’08, and is now close to its bare bones valuation. But Citigroup believes its businesses will continue to face challenges due to:

a) uncertainty in the capital market;

b) tight funding environment; and

c) slower economic and savings growth.

It values the life insurance business at Rs 294; AMC at Rs 124; consumer finance at Rs 42; non-life insurance at Rs 21 and broking at Rs 22, at 10x one-year forward EPS. Also, it does not attribute any value to unrealised portfolio gains due to sharp correction in the capital market. Key pressure points are:

a) earnings linked to the equity market;

b) non-banking platform;

c) growth in life insurance and consumer finance can slow meaningfully; and

d) vulnerability of consumer finance asset quality.

An easing of any/some of these concerns can lead to a change in the view on the stock.

Stock Views on Tata Motors, Infosys Technologies, Balrampur Chini Mills, Aban Offshore

INDIABULLS on TATA MOTORS

INDIABULLS has downgraded Tata Motors from hold to ‘sell’ after the company reported a decline in sales volume over the past few quarters. The broking house expects this trend to continue in the coming quarters, “given the slowdown in the economy, the cautious lending environment and a significant decline in consumer spending.” Indiabulls feels that the biggest challenge for Tata Motors currently is to turn around its Jaguar Land Rover (JLR) business, for which it raised a bridge loan of $3 billion. “Given the tight liquidity scenario and bleak capital markets, Tata Motors is likely to roll over its bridge loan, thereby adding to the company’s finance cost,” says the report. Further, JLR’s sales volume is trending downwards, and given the current economic conditions in the US and Europe, we do not expect volumes to recover in the near term, it adds.

Prabhudas Lilladher on INFOSYS TECH

Prabhudas Lilladher has a ‘reduce’ rating on Infosys Technologies as it feels that the outlook for the company and the software industry is quite weak in the near-term. “While we expect Infosys to perform better than most other players in the industry, we rate the stock ‘reduce’ with a target of Rs 1,246,” says the report. With a difficult FY10E and full-tax FY11E, the two-year earnings CAGR (FY09-11) for the company is unlikely to be over 10-15%, it adds. According to the broking house, the company’s pricing power in fresh contracts would remain under pressure as “pricing behaviour by competition has turned aggressive in new contracts.” While Infosys has seen some weakness in the BFSI domain in the recent past, the outfit expects this weakness to “spread to retail and possibly the manufacturing domains as well.” Of the various service lines, Enterprise Solutions may be worst affected over the next few quarters, according to the management, it adds. The broking house is also expecting another reduction in US dollar guidance by Infosys.

PINC Research on BALRAMPUR CHINI

PINC has downgraded its rating on Balrampur Chini Mills to ‘sell’ as it feels that lower cane crushing would impact the company’s profitability. “Although we remain confident about Balrampur Chini Mills’ business model & efficiency levels and are positive about the turnaround in the sector, we believe that lower cane crushing in FY09 would impact its return ratios (assuming cane price of Rs 140/quintal),” says the report. The outfit expects the company’s revenues for FY09 to rise by 12% to Rs 1,650 crore, aided by higher sugar revenues. “Revenues from sugar sales should grow 12% to Rs 1270 crore as a result of inventory liquidation and higher sugar prices. OPM should dip by 90bps to 21.3% in FY09 on the back of higher cane costs at Rs 140/quintal,” it says. The report, however, does add that if cane prices are maintained at last year’s SAP of Rs 125/quintal, the target price works out to Rs 38 based on FY09E profits of Rs 160 crore.

Ambit Capital on ABAN OFFSHORE

Ambit Capital has maintained a ‘buy’ on Aban Offshore with a revised target price of Rs 1,603 (earlier Rs 1,566), implying an upside of 143% from the current levels. The upward revision comes after the company announced contract renewal of its jack-up ‘Deep-Driller-IV’ (DD-IV) in continuation of expiry of its current contract in December 2008. According to the report, the renewal is for a period of six months and is part of the two six-month options built into the agreement

Stock Views on Bombay Rayon Fashion, United Breweries

Merrill Lynch on Bombay Rayon Fashion

Merrill Lynch has maintained `Buy’ rating on Bombay Rayon Fashion. However, it has reduced the price targer to Rs 225 from Rs 270 to reflect both earnings cut and higher risks. It cut FY10E EPS by 5% and FY11E by 14%, primarily to factor in lower sales of its brand Guru, as management has stalled its growth plans, following the global slowdown. The stock has corrected sharply in the last few months and valuations look attractive at 3x FY10E PE. It expects EPS growth of 32% in FY10 helped by new capacities coming onstream by March 2009. These capacities would enjoy several fiscal benefits making them globally cost competitive, which should help BRFL gain market share. Management had aggressive plans for expansion of the Guru operations which have now been put in the back burner. After the sharp cut in Guru’s estimates, it now accounts for less than 5% of BRFL’s consolidated EBIDTA versus 9% earlier. We estimate BRFL’s gearing to peak at 2.1x in FY09 and fall to 1.4x by FY11. After a 70% price correction in the last six months, the stock is trading at only 3x FY10E PE. The current stock price more than factors in the macro risks and the correction is clearly overdone.

Indiabulls Securities on United Breweries

Indiabulls Securities maintains `Sell’ rating on United Breweries (UBL) with a target price of Rs. 70. UBL’s net sales in Q309 grew substantially by 24% yo-y to Rs. 370 crore. The EBITDA margin advanced 200 bps y-o-y to 9.4% in the quarter, from 7.4% for the same period in FY08, on the back of a 243 bps y-o-y fall in advertisement and sales promotion costs (as a percentage of sales). Indiabulls sees significant downside in the stock due to high financial leverage and limited expected improvement in margin performance. Moreover, Indiabulls’ valuation gives a fair value of Rs 70, suggesting a ~10% downside from the current market price. UBL has a highly leveraged capital structure with a debt-to-EBITDA ratio of around 4x, largely attributed to its expansion activities and acquisitions in the recent times. The company has raised Rs. 425 crore through a rights issue; however, this money is to largely meet the CAPEX requirements for FY09 and FY10. Subsequently, UBL’s financial leverage is to remain at least 3x for FY09E. As a result, it will continue to bear a substantial interest burden, which will drag its net margins. We expect the EBITDA margin to improve by ~80 bps in FY10 to 11.3% as raw material prices have fallen recently. Moreover, the company should benefit from economies of scale and better realisations on the back of a strong brand equity.

Stock Views on oriental bank of commerce, Colgate-Palmolive, ABB

Morgan Stanley on oriental bank of commerce

OBC is now trading at a huge discount to other state-owned enterprise (SOE) banks. OBC has corrected sharply in the last few days. The stock is now trading at 0.4x book. The stock is mispriced compared with other SOE banks, which are trading close to 0.9x book, on an average. Morgan Stanley remains negative on OBC’s fundamentals, but that’s for all the SOE banks. The valuation gap is huge and some of this is likely to get bridged. OBC is now a most preferred stock among SOE banks. Earnings will be under pressure. Morgan Stanley is expecting the revenues to fall by 31% in F2010. This will be driven by a continued weakness in NIMs (net interest margins) and a sharp pick-up in credit costs. But, even on those earnings, the stock is trading at 4x. Morgan Stanley agrees things can be much worse in terms of asset quality, but OBC will not be the only one to be affected. Other banks (which are trading at significant premiums) will also be affected in equal measure. Hence, this is the stock to buy in the SOE universe. There is no change in the negative view on Indian banks. Morgan Stanley expects core earnings for Indian banks to remain weak in F2010 driven by increased credit costs and weak revenues. Plus, Indian banks still remain among the most expensive banks in the region.

HSBC on Colgate-Palmolive

HSBC maintains `Overweight’ rating on Colgate-Palmolive with a price target of Rs 470. The company’s sales growth volume for the first three quarters of this year has averaged 12%, with Q3 spiking up to 14%. However, the average over the last three years has been 9%. There are three factors responsible for this high growth rate:

(1) market share gains - Colgate has moved up from 47.8% in FY06 to nearly 50% currently (crossed 50% for the first time in several years for the month of January 2009)

(2) Price stability - Colgate has not taken any price increases in the year till date

(3) price point rationalisation - price of Cibaca 20g pack was reduced from Rs 6 to Rs 5, which has greatly boosted volumes.

Although Colgate is in staples category and is relatively immune to recession, it is possible that there may be a slight impact on the sales and volume growth may return to the three-year average in high single digits, from the current 12%+ which is probably above trend. The probability of a price increase, however, seems low given the softening commodity cost scenario.

Motilal Oswal on ABB

Motilal Oswal has reiterated `Neutral’ rating on ABB with a target price of Rs 382, which implies a downside of 4% from current levels. ABB India reported in-line performance for 4QCY08, with revenues up 18% y-o-y to Rs 2,170 crore, EBITDA up 3% y-o-y to Rs 270 crore, and net profit up 6.8% y-o-y to Rs 190 crore. While 4QCY08/CY08 results are largely in line with the estimates, order intake witnessed sharper than anticipated decline (- 37% y-o-y, -33% q-o-q), as projects got deferred. Order backlog as of December 2008 stands at Rs 6,160 crore (up 22.6% y-o-y), and book to bill ratio is at 0.9x CY08 revenues. EBITDA margin declined 100 bps to 11.2% in CY08, in line with our estimates. EBIT margins for power systems declined 190 bps to 8.6% in CY08 from 10.5% in CY07, largely due to business restructuring (reduced focus on APDRP and RGGVY) and possibly higher costs in certain projects. Business headwinds on the industrial side (47% of CY08 EBIT) are getting stronger, particularly in the project segment, given delays in terms of financial closure. Metals and cement (~30% of industrial order book) are witnessing demand slowdown. Also, segments like hydrocarbons, paper/pulp and real estate constitute a sizeable part of the order book, where order intake would be impacted. Motilal Oswal is downgrading its earnings estimates by 9.8% for CY09 and by 11.6% for CY10 to factor in the business headwinds. The stock trades at 15.7x CY09E and 16x CY10E earnings.

Stock Views on Infrastructure Development Finance Corp, Exide Industries

MERRILL LYNCH on EXIDE INDUSTRIES

Merrill Lynch maintains `Buy’ rating on Exide Industries, however, it has cut the target price to Rs 62 on a weak Q3. Exide Industries reported 30% below estimated PAT in 3QFY09 largely due to Rs 20 crore FX loss and in small part due to weaker sales. Merrill Lynch has cut EPS on slower demand, however, it maintains `Buy’ as

(1) FY10E EPS to grow 22% on falling cost and

(2) FY10E PE of 9.9x is close to trough valuation.

Exide Industries, the largest lead acid battery manufacturer of India, reported a net profit of Rs 56.1 crore, a growth of only 1.8% y-o-y in 3QFY09. This was the slowest growth in the last 15 quarters and is driven by

(1) volume growth of only 11% and

(2) foreign exchange loss of Rs 20 crore that reduced profit by 23%. Volume growth weakened considerably from the recent trend of over 15% growth due to slowdown in automobile demand. With FX loss accrued due to unhedged payables of over Rs 450 crore, Merrill Lynch still expects strong EPS growth of 220% in FY10E driven by

(1) lower cost of lead along with rupee appreciation could help expand EBITDA margin by 200 bps and

(2) demand growth of over 12% driven by market share gain in the relative secular segment of the automotive after market.

Thus far, FX loss on account of sharp depreciation of the rupee has been negating the impact of decline in lead cost.

GOLDMAN SACHS on IDFC

Goldman Sachs maintains a `Sell’ rating on Infrastructure Development Finance Corp (IDFC), despite a significant fall in price as lack of growth drivers over the medium term. Infrastructure lending should likely remain constrained by the need to maintain high capitalisation ratios; and capital market-driven revenues should likely remain depressed. A subdued contribution from capital market-related revenues will erode ROA from 3.1% in 2007 to 2.8% in 2008E and 2.4% in 2009E and 2010E, in our view. The constraint for IDFC in growing its balance sheet without additional equity capital infusion due to higher capitalisation requirement is well-known to the market. However, expectations, as implied by consensus estimates, remain high and could be driven by many factors including expectations of lower capitalisation requirement or a possible change in the structure of the company (although we note that the company has not stated any intention of a potential change in structure/form) over the medium term, in our view. Expectations of lower capitalisation requirements are unlikely to fructify until macroeconomic conditions improve.

Stock Views on Infosys, Punj Lloyd, Suzlon Energy

CLSA on INFOSYS

Infosys reported its lowest y-o-y revenue and volume growth in the decade, but its highest margin in six years. The stock has outperformed the markets 16% YTD as the Satyam debacle has shifted investor preference to India’s corporate governance stars, where Infosys enjoys iconic status. With currency providing all of the margin upside in Q3, and like to like pricing down 1.8% q-to-q in December ‘08, volume recovery will come after margin headwinds, the latter beginning in the March ‘09 quarter itself, as per Infosys’ guidance. Six-year high EBITDA margins of 35% were backed by double digit INR/USD depreciation, which negated headwinds from lower utilisation and cross currency effects. CLSA expects pricing to weaken further ahead as more negotiations reach a decisive stage. Every 1% of pricing cuts 70 bps from EBITDA. With cost metrics touching all-time lows in overhead line items, it is debatable if Infosys has any more juice to squeeze out of its operations. CLSA’s call that margins are more and sooner at risk, compared to the recovery hope in volumes, drives the earnings 6% below consensus for FY10. This limits absolute upsides for the stock, and from here to the full year guidance in April.

BNP Paribas on PUNJ LLYOD

The company has disclosed new orders of approximately Rs 1,880 crore in 3QFY09, down 56% y-o-y. Additionally, international orders declined 57% y-o-y. BNP estimates a decline of 22.4% y-o-y for new orders in FY10. There is also further evidence of a global slowdown in the petrochemical industry. Their FY09E and FY10E EPS estimates have declined by 9% and 41%, respectively, due to lower order inflow assumptions. SABIC has terminated its contract with Punj Lloyd (Punj) and is seeking liquidation of the performance bond and advance payment bond for a total of GBP28.5m. Punj may incur additional cash charges of GBP28.5m (Rs 210 crore) if SABIC succeeds in its claims. BNP has not included this claim in the estimates; however, now it includes the provision for a Rs 300-crore loss (before tax) that should have been included in the FY08 results. This loss reduces the FY09E EPS estimate by 55%.

JP Morgan on SUZLON ENERGY

JP Morgan remains `Neutral’ on Suzlon Energy with a March 10 price target of Rs 80. Suzlon’s recent initiatives provide breathing space to tide over the funds crunch:

1) sale of 10% stake in Hansen Transmission - estimated cash inflow of Rs 520 crore;
2) securing a six-month payment window from Martifer for acquiring the latter’s 22.4% stake in REpower; and
3) the sale of a 17.1% stake in SE Forge to IDFC, bringing in Rs 400 crore.

With these measures, Suzlon will end FY09 with net consolidated DER (debt equity ratio) of 0.83x and net debt to EBITDA of 4.3x. In FY10E, Suzlon would end with consolidated DER of 0.81x and net debt to EBITDA of 4.3x. Suzlon has loan repayment of Rs 1,100 crore for the remainder of FY09, Rs 1,000 crore in FY10 and another Rs 1,000 crore in FY11. As operating cash flows may be insufficient for these repayments, Suzlon may have to borrow afresh. October ‘08 OB, at 2,505 MW, is not sufficient to meet FY10 volume estimate of 2,950 MW. Additional orders are necessary to meet FY10 estimates. There have been considerable delays in securing orders due to weak sentiment for renewable energy investments, coupled with a possible quality perception of Suzlon’s products. The key risk is further earnings cuts if strong order flows, necessary to lend credence to FY10 and FY11 earnings estimates, do not materialise. The FY10 estimates have seen a marginal upward revision of 2.6% due to the translation of REpower earnings at a higher Rs/ of Rs 64, compared to Rs 56 used previously.

Stock Views on Dr Reddys Laboratories, Micro Technologies, HDFC Bank

Karvy Stock Broking on Dr Reddys Lab - Target Rs 925

Karvy Stock Broking has maintained its buy rating on Dr Reddys Laboratories with a target of Rs 925 in its report.

"Dr Reddys revenues for the quarter are expected to be higher by 31% to Rs 19657 million. Revenues will continue to be powered by authorised generic Imitrex. The rest of the formulations space would show lacklustre growth while PSAI business would show double digit de-growth. Gross margins will be lower than preceding quarter on account of strengthening of the rupee. Operating margins for the quarter would be higher at 13.8 % as against 10.9 % in the corresponding quarter of the previous year. The company has set a target of USD 3 bn revenue turnover and a ROCE of 25 % by FY 13. The revenue growth would be organic growth in global generics segment driven primarily by US and aided also by Europe, Russia and India. We maintain 'BUY' rating on the stock with a price target of Rs 925 based on 16x FY 2011E, “ says Karvy Stock Broking's research report

SKP Securities on Micro Tech - Target Rs 206

SKP Securities has recommended a buy rating on Micro Technologies with a target price of Rs 206 in its report.

"Micro Technologies (India) Ltd is a leading global developer, manufacturer and marketer of IT based security solutions for its clients across the globe. Product lines include the much-needed security devices, life style and support systems and web-based software. It has developed more than 200+ generic software products in security & life support systems. We believe, MTIL is the strongest player among Indian electronic/ software based security industry, led by its first mover advantage in security products/ solutions and absence of core competitor in the industry. At current market price of Rs 109/-, the stock is trading at a P/E of 1.06x of FY 11E earnings of Rs 102.82. We hereby initiate coverage on MTIL Ltd. and recommend buy rating with a target price of Rs 206/- (89% upside) in 18 months," says SKP Securities' report.

Sharekhan on HDFC Bank - Target Rs 1654

Sharekhan has maintained its hold rating on Axis Bank with a target price of Rs 834 in its report.

"In Q1FY2010, Axis Bank clocked a net profit of Rs 562 crore, up by a whopping 70.2% year on year (yoy), well ahead of our as well as street estimates. The surge in the net profit was mainly driven by strong treasury gains coupled with higher than-expected top line growth during the quarter. The net interest income (NII) grew by 29% yoy and came in at Rs 1,045.6 crore. The operating expenses grew by 30.8% yoy and 11.9% quarter on quarter (qoq) to Rs 827.8 crore on account of a sharp 44.8% y-o-y and 20.1% quarter-on-quarter (q-o-q) increase in staff expenses. At the current market price of Rs 756, the stock trades at 9.6x FY2011E EPS, 4.8x FY2011E PPP and 2.3x FY2011E adjusted BV. In view of limited upside in the stock price from the current levels, we maintain our Hold recommendation and price target of Rs 834, " says Sharekhan's report.

Stock Views on IDBI Bank, Power Grid Corporation, Sintex Industries

Angel Broking on Sintex Industries - Target Rs 248

Angel Broking has maintained its buy rating on Sintex Industries with a target price of Rs 248 in its research report.

"Sintex Industries’ (Sintex) consolidated Net Sales de-grew by 9.1% to Rs 662.4 crore (Rs 728.6 crore) in 1QFY2010. Sintex’s 1QFY2010 consolidated Operating profits stood at Rs 87.4 crore. The OPM for the quarter stood at 13.2%, increasing by 50bp on a yoy basis.Going ahead, we expect the company’s business to be primarily driven by its building construction division. We like Sintex on account of its high revenue visibility in the monolithic and prefab business, where it has an order book position of around Rs 1,600 crore,

with another Rs 190 crore of fresh orders from Rural housing in the pipeline. Despite the slowdown in the auto industry, the company’s custom molding segment is expected to deliver a strong performance in the future, due to robust demand from the electrical segment."

Hem Securities on Power Grid - Target Rs 144

Hem Securities has recommended a buy rating on Power Grid Corporation, with price target of Rs 144, in its report.

"The stock at the current market price of Rs 111.05 will trade 27.65 times to its earnings of Rs 4.02 and 3.20 times to its book value of Rs 34.74 and is expected to provide huge upside potential in medium to long – term. We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 144 in the medium term investment horizon (5- 6 months) with an appreciation of about 30%," says Hem Securities' report.

Sharekhan on IDBI Bank - Target Rs 169

"In Q1FY2010, IDBI Bank recorded an impressive growth in its core operating profit (up 275% year on year [yoy]) on the back of marked improvement in various operating parameters (viz. year-on-year [y-o-y] improvement in margins, lower cost to income, strong core fee income growth, healthy advances growth). However, the same could not trickle down to the bottom line on account of multi-fold increase in provisioning expenses (bulk of which relates to Dabhol Power Plant) during the quarter. Consequently, the net profit growth was contained at 7.6% yoy (well below our expectation)."

"At the current market price of Rs 100, IDBI Bank trades at 5.4x FY2011E earnings per share, 2.6x 2011E pre-provisioning profit and 1.0x FY2011E price-adjusted book value. We maintain our Buy recommendation on the stock and shall return soon with a detailed analysis of the bank's Q1FY2010 performance after discussion with the management on the same, target price Rs 169, “ says Sharekhan's research report.

Stock Views on Glodyne Technoserve, Bank of Maharashtra, Jubilant Organosys

Reliance Money on Glodyne Techno - Target Rs 575

Reliance Money has maintained its buy rating on Glodyne Technoserve, with price target of Rs 575, in its report.

"We view this acquisition as a positive development for Glodyne Technoserve, however we are still awaiting for the finer details of the deals and integration process. We maintain our earlier estimates for FY10E and FY11E for the company and will rework on our estimates after our meeting with the Glodyne’s management. At the current market price Rs 466, Glodyne is trading 5x FY10E and 4x FY11E. We maintain 'BUY', with a target price Rs 575," says Reliance Money's report.

Sushil Finance on Bank of Maharashtra - Target Rs 46

Sushil Finance has recommended a buy rating on Bank of Maharashtra, with price target of Rs 46, in its report.

"Bank of Maharashtra (BOM) has high CASA share of 35.7% will help the bank in maintaining its low funding cost (5.9% in FY09). Strong business growth, high CASA ( 36%), decent asset quality, sustainable ROE of about 16%, strong network base, comfortable CAR of 12% with finance ministry promising to infuse the required capital in BOM, scope for growing advances due to low Credit deposit ratio and decent dividend yield of +5% are the other key positives for the bank. Stock is trading at a valuation of 0.7x FY11E ABV and 3.3x FY11E Earnings. Buy with price target of Rs 46," says Sushil Finance's report.

Reliance Money on Jubilant Organosys - Target Rs 203

Reliance Money has maintained its buy rating on Jubilant Organosys with a revised target price of Rs 203 in ite report.

"Jubilant Organosys reported a muted growth of 8% in its consolidated revenues to Rs 9013 million in Q1FY10, as the Industrial and Performance Products (IPP –that contributes about 30% of total revenue) Revenues saw 8% decline on account of lower realization and product rationalization. Despite global slowdown and inventory issues, Jubilant has been delivering steady growth in its CRAMS operation and we expect similar trend going ahead. Further increasing R&D pacts provide us long term visibility for the company. Also, the margin expansion seems to be continuous process for Jubilant. Looking at the steady revenue growth with better profitability and reducing balance sheet risk for Jubilant, we maintain our 'BUY' rating with the revised target price of Rs 203 (7x FY11EPS), " says Reliance Money's report.

Angel Broking Views on Exide Industries, Patel Engineering, Bajaj Auto

Angel Broking on Patel Engg - Target Rs 545

Angel Broking has recommended a buy rating on Patel Engineering, with price target of Rs 545, in its report.

"We have valued Patel Engineering on SOTP methodology. We have assigned its Core Construction business a PE of 12x FY2011E EPS of Rs 36.8. Its Real Estate arm has been valued at a huge discount, using the NAV method, at Rs 103/share. In the recent past, the stock had witnessed a sharp appreciation, in line with its construction peers. We believe that, at the current levels, PE is available at reasonable valuations. At CMP, the stock is trading at 11.6x its FY2011E EPS of Rs 36.8, on a consolidated basis without considering its real estate venture. We recommend a Buy on the stock, with a Target Price of Rs 545," says Angel Broking's report.

Angel Broking on Bajaj Auto - Target of Rs 1230

"For Q1FY2010, Bajaj Auto (BAL) clocked Net Sales of Rs 2,339 cr (Rs 2,311 cr), up 1.2% yoy, which was in line with our expectation. Total volumes for the quarter declined 11.7% yoy while average realisations per vehicle improved substantially by almost 10.7% yoy primarily due to the change in product mix and better performance by the 125cc-plus Segment. During 1QFY2010, BAL witnessed a substantial 793bp yoy jump in EBITDA Margins to 19.5% (11.6%). Before Extraordinary items, Net Profit stood at Rs 317.5 cr (up 81.3% yoy) and exceeded our expectations. On a qoq basis too, Margins improved by almost 834bp. We maintain an Accumulate on the stock with a revised Target Price of Rs 1,230 (Rs 1,016 earlier), " says Angel Broking's report.

Angel Broking on Exide Industries - Target of Rs 81

"Exide Industries, India’s largest Auto Battery manufacturer, for 1QFY2010 clocked 0.3% yoy decline in Net Sales to Rs 903.5 cr (Rs 906.5), which was better than our estimate of Rs 797 cr on the back of better qoq growth in Total Volumes during 1QFY2010. During 1QFY2009, Exide witnessed a 665bp yoy increase in EBITDA Margins owing to a 1,002bp yoy fall in Raw Material costs, which accounted for around 58.2% of Sales (68.2% in 1QFY2009). The company reported 48.9% yoy increase in Net Profit to Rs 122.4 cr during the quarter. Interest cost fell 96.3% yoy to Rs 0.4 cr including Exchange gains of Rs 1.03 cr. We upgrade our EPS estimate for the company to Rs 5.5 (Rs4.2 earlier) and Rs 6.0 (Rs 5.2 earlier) for FY2010E and FY2011E, respectively. We maintain an Accumulate rating on the stock, with a revised Target Price of Rs 81 (Rs74)," says Angel Broking's report.

Stock Views on Glenmark Pharma, Sasken Communication, Larsen & Toubro

KRChoksey on Glenmark Pharma - Target Rs 252

KRChoksey has maintained its buy rating on Glenmark Pharma with a price target of Rs 252.2 in its report.

"The topline of the company has shown a decline of 10% y-o-y to Rs 491.1 crore whereas on q-o-q basis the company reported a decline of 11%. The fall in sales was due to absence of licensing income during the quarter as compared to Rs 61.0 crore in the corresponding pervious period. Excluding licensing income, the base business declined by 4%. Dip in the base business is due to factors like fewer ANDA approval, destocking in the regions like Latin America & Russia, currency impact in Latin America & Russia and price erosion of Glyptal. Going forward, we expect the revenues to improve on back of improved performance from Glenmark generics, specialty formulation and Indian formulation business."

"We maintain our optimistic view on the company supported by the consolidation from the acquisitions (like Actavis), revenue contribution from the new launches and increasing number of approvals from USFDA which would strengthen the earnings visibility of the company, Buy, target of Rs 252.2," says KRChoksey's report.

Angel Broking on Sasken Communication - Target Rs 127

Angel Broking has recommended a buy rating on Sasken Communication, with price target of Rs 127, in its report.

"Going ahead, we expect Sasken to record 8.5% and 22.6% CAGRs in its Top-line and Bottom-line, respectively, over FY2009-11E (excluding one-time items). Sasken continues to struggle to cope with the difficult business environment, and its key segment, Network Equipment Manufacturers, remains in consolidation mode. The medium-term outlook remains hazy for Sasken even as a recovery is anticipated in 2HFY2010. While the business prospects in the medium-term are a little subdued, we believe current valuations at just 3.3x FY2011E EPS adequately factor this in. We upgrade the stock to Buy from Neutral with a Target Price of Rs 127, implying a P/E of 4x FY2011E EPS," says Angel Broking's report.

Indiabulls Securities on Larsen & Toubro - Target Rs 1621

Indiabulls Securities has recommended a hold rating on Larsen and Toubro, with price target of Rs 1621, in its report.

"Larsen & Toubro is currently trading at a forward (FY10) P/E of 28.8x. Our fair value estimate of Rs 1,621, based on the Sum-of-the-Parts (SOTP) methodology, factors in all the major positives and thus, provides limited upside potential from the current market price. Thus, we change our rating to Hold," says Indiabulls Securities' report.

Stock Views on Bharat Petroleum Corporation, Bharti Airtel, India Cements

Indiabulls Securities on BPCL - Target Rs 526

Indiabulls Securities Research has recommended a buy rating on Bharat Petroleum Corporation (BPCL), with price target of Rs 526, in its report.

"With crude oil prices hovering at around $ 70 per barrel levels, we expect the under-recoveries for PDS kerosene and domestic LPG to escalate further. However, the recent price hike in petrol and diesel prices should provide some respite to the Company. At its current market price (CMP), the stock trades at a forward P/E of 8.6x and 8.3x for FY10E and FY11E, respectively. We have revised our estimates to consider the recent developments in the sector. Based on our valuation, we have arrived at a target fair value of Rs 526, which provides an upside potential of 15.9% from the CMP. Thus, we upgrade our rating for the stock to Buy," says Indiabulls Securities' research report.

IIFL on Bharti Airtel - Target Rs 866

IIFL has maintained its buy rating on Bharti Airtel with a target of Rs 866 in its report.
"In our view, the Bharti–MTN deal is driven more by strategic considerations than by synergies. In a world where giants such as Apple and Google are invading the telco space, size will be key. Nevertheless, an analysis of savings / synergy opportunities in the proposed Bharti–MTN deal suggests that Bharti can have a gain of almost USD 3 billion. Our key assumptions are based on measures attributable to Bharti’s involvement, over and above MTN’s own cost reduction measures. These include estimates of opex and capex savings in MTN and capex savings in Bharti. We consider opex savings in Bharti attributable to this deal unlikely. The proposed deal (as the terms stand now) is not significantly earnings dilutive for Bharti even without considering synergies. Hence, we are in no hurry to reduce our TP (Rs 866); we retain 'BUY', " says IIFL's research report.

Sharekhan on India Cements - Target Rs 160

Sharekhan has maintained its hold rating on India Cements with a price target of Rs 160 in its report.

"India Cements has announced its Q4FY2009 results. For the quarter, the adjusted net profit came in at Rs 104.2 crore as against our estimate of Rs 107.8 crore. The adjusted net profit declined by 22.5% year on year (yoy). The net sales increased by 3.6% yoy to Rs 888.5 crore. The figure includes revenues from Indian Premier League (IPL), wind power and shipping businesses. The cement dispatches for the quarter fell by 5.3% yoy at 2.32 million metric tonne (MMT). The dispatches dipped mainly on account of unscheduled breakdown at Vishnupuram, Chilamkur and Yerraguntla facilities along with planned stoppage at one of the kilns at Vishnupuram facility. We maintain Hold recommendation on stock as the stock could underperform in the near term due to seasonal weakness in monsoon. We are rolling over our valuation on FY2011 and have arrived at a price target of Rs 160 (valued at EV/tonne of $72 on FY2011 capacity), " says Sharekhan's research report.

Stock Views on Lupin, Godawari Power & Ispat, Crompton Greaves

Emkay Global on Lupin- Target Rs 980

Emkay Global Financial Services has maintained its buy rating on Lupin, with price target of Rs 980, in its report dated.

"Since this is a sub-judice matter, it is difficult to take a call which way the judgment goes? However, by the spirit of the matter taken up by the EU authorities and chronology of events leading to out of court settlement raises an iota of doubt about the intention of settlement between innovator (Servier) and Lupin. At the moment, we can not estimate the exact loss; therefore impact on financials can not be assessed. In worst case scenario, this event will lead to one time charges, which could be as high as Rs 3.7 billion (10% of FY09 revenue). Hence, we continue to maintain our Buy rating with a target of Rs 980," says Emkay Global Financial Services' research report.

Karvy Stock Broking on Godawari Power & Ispat - Target Rs 128

Karvy Stock Broking has recommended a buy rating on Godawari Power & Ispat, with price target of Rs 128, in its report.

"The stock is trading at 0.6x its FY09 & 0.55x its FY10 BV. We revise FY10 earning estimates by 6% on account of change in MAT rate. However, we retain our valuation of 0.8x FY10 BV and target price of Rs 128/share. However, due to recent correction in stock price, we revise our rating from out performer to 'BUY'," says Karvy Stock Broking's report.

Sharekhan on Crompton Greaves - Target Rs 308

Sharekhan has recommended a buy rating on Crompton Greaves, with price target of Rs 308, in its report.

"We like Crompton Greaves for its consistent performance at the operating level. Moreover, its ability to improve its working capital management in a tough environment (most other companies have indicated a stretched working capital cycle) is quite impressive. We reiterate our bullish stance on the company and maintain our Buy recommendation on the stock. At the current market price the stock is discounting its FY2010 and FY2011 earnings estimates by 16.3x and 14.8x respectively, target of Rs 308," says Sharekhan's research report.

Stock Views on Aditya Birla Nuvo, ITC, Divis Laboratories

Indiabulls Sec on Aditya Birla Nuvo - Target Rs 1035

Indiabulls Securities Research has maintained its buy rating on Aditya Birla Nuvo with a target price of Rs 1035.

"Aditya Birla Nuvo (ABNL) reported results, which are above our expectations. The Company's consolidated net sales registered a growth of 15.3% yoy in FY09. Most of the Company’s segments have displayed an improvement in Q4’09. Accordingly, we have upwardly revised our estimates, and it has resulted in an increase in our fair value estimate. Further, we continue to believe that the Company's growing Life Insurance and Telecom businesses along with the improving performances of its other businesses will provide long-term value to the shareholders. Thus, we reiterate our 'Buy' rating on the stock. We have valued the Company by using the sum-of-the-parts methodology; our fair-value estimate of Rs 1,035 suggests a potential upside of 17% from the current market price. Hence, we reiterate our 'Buy' rating," says Indiabulls Securities' research report.

Motilal Oswal on ITC - Target Rs 237

Motilal Oswal has maintained its buy rating on ITC with a target price of Rs 237 in its research report.

"The stock has appreciated by about 12% in the last couple of trading sessions – perhaps the highest rise in reaction to budget pronouncements in recent times. We remain positive on ITC’s long-term prospects. We have upgraded our FY10E EPS to Rs 10.2 (Rs 9.9 earlier) and FY11E EPS to Rs 11 .6 (Rs11.3 earlier), factoring in no excise increase and removal of fringe-benefit tax (FBT). Maintain Buy with FY11E SOTP value of Rs 237," says Motilal Oswal's research report.

Sushil Finance on Divis Lab - Target Rs 1490

Sushil Finance has recommended a buy rating on Divis Laboratories with a target price of Rs 1490 in its report.

"In spite of the economic slowdown, DLL has managed to maintain its above average industry margins in FY09. DLL does expect some pressure on its Custom Chemical Synthesis Business (CSS) business but is banking on API sales of Levirecetam, lopamidol & nabumetone which will offset the slowdown in other businesses. Seeing the growth prospects & above industry average margins the stock deserves to trade at higher multiple. At the CMP, the stock trades at 13.3x its FY11E earnings. It has recommended buy rating on the stocks, target of Rs 1490," says Sushil Finance's research report.

Stock Views on IDBI Bank, Marico, JP Associates

Sunidhi Securities on IDBI Bank - Target Rs 115

Sunidhi Securities & Finance has recommended a buy rating on IDBI Bank, with price target of Rs 115, in its report.

"IDBI Bank has adopted a strategy of developing a larger client base in the mid-corporate, SME and retail sectors while nurturing the deep relationships that already exist in the large corporate sector. IDBI Bank has high quality assets, comfortable capital adequacy, robust other income and strong growth in advances in the current challenging scenario. At the CMP of Rs 87, the share is trading at a P/BV of 0.74 (FY10), P/E of 8.2x on FY09E and 6.1x on FY10E. We recommend 'BUY' with a target of Rs 115 in the medium term," says Sunidhi Securities & Finance's research report.

Sharekhan on Marico - Target Rs 85

Sharekhan has recommended a hold rating on Marico with a target price of Rs 85 in its report.

"We remain bullish about Marico’s prospects. We maintain our earnings estimates but increase our price target for the stock to Rs 85, as we roll the target over based on our 19x FY2011E estimates. However considering marginal upside from current market price we put a 'Hold' recommendation on the stock," says Sharekhan's research report.

Motilal Oswal on JP Associates - Target Rs 227

Motilal Oswal has maintained its buy rating on Jaiprakash Associates with a price target of Rs 227 in its report.

"We expect Jaiprakash Associates to report net profit of Rs 11.8 billion in FY10E (up 38% YoY) and Rs 11.5 billion in FY11E (down 2% YoY). Based on SOTP methodology, we arrive at price target of Rs 227 per share. Stock trades at PER of 24.6x FY10E and 25.1x FY11E. Maintain Buy," says Motilal Oswal report.

Stock Views on Nava Bharat Ventures, Jubilant Organosys, Infosys

FinQuest Sec on Nava Bharat Ventures - Target Rs 396

FinQuest Securities has recommended a buy rating on Nava Bharat Ventures, with price target of Rs 396, in its report.

"We expect realignment of business strategy to be value accretive and will lead to re-rating of the stock. We expect NBVL to be treated as Power generation utility as power will contribute 60% to topline in FY12E and the company will attain 1125 MW of power capacity by FY14E. We don't expect any expansion in Ferro alloys and sugar. Our SOTP valuation gives a target of INR 396. The company is currently trading at 4.4x and 3.0x its FY11E PE and EV/EBITDA respectively. We rate the stock as 'BUY'," says FinQuest Securities' report.

Karvy Stock Broking on Jubilant Organosys - Target Rs 210

Karvy Stock Broking has maintained its buy rating on Jubilant Organosys, with a price target of Rs 210, in its report.

"Jubilant Organosys has set a goal to grow its revenue and profit by 1.5x and 2x respectively in the next three years which will be on back of greater asset efficiency. The company has set a target of 30 % ROE for FY 2013E. We downgrade our EPS for FY 2010E by 16.3 % to Rs 18 and by 3 % to Rs 26 for FY 2011E on account of lower other income, higher interest cost, amortisation on account of foreign currency translation reserve and higher tax. We decrease our price target by 2.3 % to Rs 210 based on 8x FY 2011E. The overhang on stock does remain on account of the FCCB repayment of USD 270 mn by CY 2011. We maintain our 'BUY' rating on the stock, with price target of Rs 210," says Karvy Stock Broking's research report.

Reliance Money on Infosys - Target Rs 1985

Reliance Money has recommended a hold rating on Infosys Technologies, with price target of Rs 1985, in its report.

"In the last three odd months, most of the IT stocks had a sharp run up owing to smart rally in the domestic market, however there is not much improvement at the micro levels, nevertheless there is a marked improvement in the risk appetite and optimism towards a early 2010 recovery in the sector. We believe, Infosys with its robust business model coupled with strong margin management is well placed to take early advantage of the curve. In terms of stock price, we expect a near term correction after a sharp 28% run in the stock price in last three months. We recommend 'HOLD' on Infosys with a price target of Rs 1985, at our target price stock would be valued at 20x FY10E and 17x FY11E," says Reliance Money's report.

Stock Views on Orchid Chemicals, Nestle India, Axis Bank

Angel Broking on Orchid Chemicals - Target Rs 110

Angel Broking is bullish on Orchid Chemicals and has recommended a buy rating on the stock with a target of Rs 110 in its report.

"Orchid has been an underperformer on the bourses on account of delays in receiving approvals for its high-Margin products, which resulted in higher Debt burden. However, now having received approval for Tazo+Pip in the EU and likely approval for the product in the US in 2QFY2010, we believe the product pay-off has begun for the company. Nonetheless, we have pruned our FY2011E Earnings estimates by 13.3% post increase in the MAT rate in the recent Union Budget from 10% to 15% as the company does not claim the MAT credit."

"On the valuation front, the stock is trading at 5.3x FY2011E Adjusted Earnings and 1.3x FY2011E EV/Sales, which we believe discounts the high debt on the company's Balance Sheet and delays in receiving approvals for its key products. Hence, we recommend a Buy on the stock at 7x FY2011E Adjusted Earnings with a revised Target Price of Rs 110 (Rs 136). At our Target Price the implied EV/EBITDA stands at 5.7x and EV/Sales at 1.4x FY2011E, which is much below its historical average of last 4 years of 12.1x and 2.6x, respectively," says Angel Broking's research report.

Hem Securities on Nestle India - Target Rs 2500

Hem Securities has recommended a buy rating on Nestle India with a target of Rs 2500 in its report

"Nestle India has reported excellent results for Q1FY09. The net sales surged from Rs 10932.60 million in the same quarter last year to Rs 12707.80 million this quarter depicting an increase of 16.24%. This also resulted in an increase in the operating profit to Rs 3041.00 million showing a growth of 25.97% from Q1FY08. The net profit of the company increased by 23.20% to Rs 1973.00 million. We are positive on company’s long term prospects. The company has earned the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'. Based on the positive financial performance reported by the company, we recommend 'BUY' on the stock with a medium term price target of Rs 2500, “ says Hem Securities' report.

Prabhudas Lilladher on Axis Bank - Target Rs 880

Prabhudas Lilladher has maintained its accumulate rating on Axis Bank with a target price of Rs 880 in its report.

"Asset quality risks from corporate loan restructuring are a sector wide risk. Hence, we need to be selective and invest in those banks which will be able to absorb these shocks and still deliver reasonable earnings growth. We remain confident that Axis Bank is capable of delivering a 25-30% CAGR in earnings over FY09-11E. At the CMP of Rs 756, the stock is quoting at 9x FY11E EPS, 1.8x FY10E BV and 1.9x FY11E ABV. We continue to favour Axis bank from a medium-to-long term perspective. Maintain our Accumulate rating with a revised price target of Rs 880 (rolling over to FY11E)," says Prabhudas Lilladher's research report.

Stock Views on Axis Bank, Pantaloon Retail, Divis Laboratories

Angel Broking on Axis Bank - Target Rs 1024

Angel Broking has maintained its buy rating on Axis Bank with a target of Rs 1024 in its report.

"At the CMP, the stock is trading at 10.2x FY2011E EPS of Rs 73.9 and 2.0x FY2011E Adjusted Book Value (ABV) of Rs 379.1. Overall, given the reasonable mid-cycle valuations, we believe a medium-term investment perspective needs to be adopted to take advantage of the imminent upturn in GDP growth. From this perspective, we retain our preference for Private Banks such as Axis Bank, in light of their stronger core competitiveness. We believe the Bank deserves premium valuations on account of its attractive CASA franchise, multiple sources of sustainable fee income, strong growth outlook and A-list management. We maintain a Buy on the stock, with a Target Price of Rs 1,024, implying an upside of 35% from current levels," says Angel Broking's research report.

Angel Broking on Pantaloon Retail - Target Rs 301

Angel Broking has recommended a buy rating on Pantaloon Retail with a target of Rs 301 in its report.

"We believe that that future growth of the organised Retailing Sector in India would be led by Value Retailing, cascading effects of which would be witnessed in the Lifestyle and Home Retailing Segments as well albeit with a lag effect. PRIL continues to be our Top-pick in the Indian Retail Sector on account of being the largest Retail player in India and having presence across most product categories and price points. We are positive on PRIL as it has been able to sustain decent growth on a Standalone YTD basis despite the apathetic economic scenario."

"At Rs 270, the stock is trading at 17.3x FY2011E Earnings and 3x FY2011E P/BV. We have valued PRIL Standalone at Rs240. We have valued PRIL's stake in FCH, HSRIL and Future Bazaar at Rs31, Rs12 and Rs18, respectively. We recommend a Buy on PRIL with a target price of Rs 301," says Angel Broking's research report.

Karvy Stock Broking on Divis Laboratories - Target Rs 1260

Karvy Stock Broking has maintained its buy rating on Divis Laboratories with a target of Rs 1260 in its report.

"Revenues for the quarter have gone up by 9.4% to Rs 2.9 billion for the quarter. This is in line with lower traction in revenues on account of slow down in growth in CRAMS business. We believe the second half would be better than the first half. Operating margins of the company would be 42 % compared to 41.5 % in the corresponding quarter of the previous year. Profits for the quarter would be up by 7 % to Rs 1010 million. Divi's Labs will be a major beneficiary of the pharmaceutical outsourcing and will see greater traction in H2 FY 2010 and FY 2011. The company had provided lower tax on account of SEZ in FY 2008 and FY 2009 to the tune of Rs 400 million. This has been on account of the amendment being valid from FY 2010 as against retrospective effect. The company will now have to provide the same in the current year. We downgrade our multiple from 15.5x to 14x on account of higher tax outgo and impact on cash flows on account of MAT. We reduce our price target by 10 % to Rs 1260 based on 14x FY 2011E. We however maintain our 'BUY' rating on the stock, “ says Karvy Stock Broking's report.