Stock views on State Bank of India, Heritage Foods, Glaxo SmithKline Pharma

HDFC Securities  on Glaxo SmithKline - Target Rs 1738

HDFC Securities is bullish on Glaxo SmithKline Pharma and has maintained buy rating on the stock with a target of Rs 1738.

"Glaxo SmithKline Pharma (GSK) reported excellent results for Q4CY09. Net sales grew by 20%YoY from Rs 3.75 billion to Rs 4.50 billion against industry growth of around 16% during the quarter. The company's EBIDTA margin improved by 230bps from 29.7% to 32.0% mainly due to the reduction in material cost. Material cost declined by 380bps from 39.2% to 35.4% of net sales due to the change in product mix. Personnel cost increased by 130bps from 11.3% to 12.6% of net sales due to addition of 200 MRs during the year. Other expenses increased by 30bps from 19.7% to 20.0% of net sales due to thrust on marketing. GSK's other income declined by 35% from Rs 301 million to Rs 195 million. Net profit before EO items grew by 20%YoY from Rs 892 million to Rs 1,067 million due to strong sales growth and margin improvement."

"At the CMP of Rs1579, the stock trades at 26.7x CY09 EPS of Rs 59.1 and 20.9x CY10E EPS of Rs 75.5. We maintain BUY rating on the scrip with a target price of Rs 1,738 (23x CY10 earnings), an upside of 10% over the next 12 months."

Firstcall Research on Heritage Foods - Target Rs 231

Firstcall Research has recommended a buy rating on Heritage Foods, with price target of Rs 231, in its report.

"At the current market price of Rs 201, Heritage Foods (India) is trading at 22.26 x FY10E and 18.2 x FY11E respectively. Price to Book Value of the stock is expected to be at 2.54 x and 2.23 x respectively for FY10E and FY11E. Earning per share (EPS) of the company for the earnings for FY10E and FY11E is seen at Rs 9.03 and Rs 11.04 respectively. Net Sales of the company is expected to grow at a CAGR of 19% over 2008 to 2011E. On the basis of EV/EBITDA, the stock trades at 4.53x for FY10E and 4.02x for FY11E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 231 for Medium to Long term investment," says Firstcall Research report.

Firstcall Research on SBI - Target Rs 2120

 

Firstcall Research has come out with a research report on State Bank of India (SBI). The research firm has recommended buying in this scrip with a target price of Rs 2120 for medium to long term investment, in its report.

The report says, "At the market price of Rs 1893.60, the stock trades at 9.62x and 8.83x for the earnings of FY10E and FY11E respectively. Price to Book Value of the stock is expected to be at 1.41x and 1.21x respectively for FY10E and FY11E. Earning per share (EPS) of the bank for the earnings of FY10E and FY11E is seen at Rs 196.85 and Rs 214.54 respectively for equity share of Rs 10 each."

"Net Income of the bank is expected to grow at a CAGR of 17% over FY08 to FY11E. SBI plans to add another 1,000 branches this year with a view to increase its presence in new centres, which will take the total number of branches to 13,000. State Bank of India, which enjoys the largest overseas presence among local lenders, will be opening 23 more branches abroad by March 2010. We recommend buy in this particular scrip with a target price of Rs 2120 for medium to long term investment," according to Firstcall Research.