Stock views on HCL Technologies, Lanco Infratech, Glenmark Pharma

Credit Suisse on Glenmark Pharma

Credit Suisse has retained its ‘outperform’ rating on Glenmark Pharma, saying widespread investors’ unhappiness over a last moment guidance change, weak cash flows and R&D provide an opportunity to buy the stock. “The sharp drop in P/E suggests complete disbelief in estimates: the market may be implying Rs 10 FY10 (estimated) EPS, down 33% year-onyear. This ignores continued healthy growth in India and the US (together 60% of sales and 70% of Ebitda), and potential cuts in selling, general and administrative (SG&A) expenses as inefficiencies in ‘other’ markets are addressed,” the Credit Suisse note to clients said.

ICICI Securities on Lanco Infratech

ICICI Securities has retained its ‘buy’ rating on Lanco Infratech, citing visible growth in the company’s EPC order book, discounted valuations for the power portfolio and robust business model. “We expect both projects(Rajpura, Dhopave) to achieve financial closure in the next 12 months, leading to healthy addition in Lanco’s power portfolio. We estimate Lanco’s operational power capacity at 2,000 mw in the next 15 months and do not anticipate any cashflow concerns for the ongoing power projects,” the note to clients said.

Centrum Broking on HCL Technologies

Centrum Broking has assigned a ‘reduce’ to HCL Technologies, citing pressure on medium-term earnings due to recent acquisitions, and hedging losses. “HCL Tech bagged deals amounting to $1 billion in Q2FY09. However, the deals are unlikely to make a significant impact on revenues as they have a component of free transitioning,” the Centrum note to clients said.

Stock views on Triveni Engineering, Shree Renuka Sugars

India Infoline on SHREE RENUKA SUGARS

In the midst of a weak pricing scenario over the past two years, Renuka Sugars continues to expand through acquisitions and greenfield projects. It will invest Rs 3.5 bn in a 2,000-tpd refinery in Mundra SEZ to be commissioned by 2010. This will take its refining capacity to 6,000 tpd. With sugar prices set to improve by end of 2008-09 crushing season, ongoing capex would boost sugar volumes.


Centrum Broking on Triveni Engineering

Triveni Engineering (TEIL) is among the largest sugar producers in India with a presence in sugar and engineering segments. This makes the stock a strong play in the sugar cycle at relatively lower risk, given its additional presence in engg business. We expect the company to clock 21.9% revenue and 58.1% net profit CAGR over FY08-10E. Sugar prices will rise, given the domestic and global deficit situation.

Stock views on NTPC, Bank of India, Inox Leisure

Ambit Capital on INOX LEISURE

AMBIT Capital has downgraded its rating on Inox Leisure from ‘buy’ to ‘sell’ citing disappointing quarterly numbers as one of the reasons. “Despite strong performance of key movies during the quarter, the company reported poor numbers that were way below our estimates. In our opinion, the company has failed to capitalise on an otherwise strong content supply,” said a brokerage note to clients. The brokerage says that it expects company’s earnings to be under pressure for some time. “Weak macro environment has taken a toll on the occupancies. Moreover, supply of content and screen space is not likely to improve in the forthcoming quarters. Consequently, we expect Inox to report a muted topline growth, going forward,” the note added.


Centrum Broking on BANK OF INDIA

Domestic brokerage house Centrum Broking has maintained its ‘buy’ rating on Bank of India, but lowered target price to Rs 330. According to brokerage’s estimates, the stock is trading at 0.9 times FY10 (estimated) adjusted book value. “We believe BoI would continue to command premium versus its peer PSU banks, primarily due to its strong returns ratios, better asset quality and higher profitability,” a Centrum note to clients said. BoI’s profit after tax for the quarter ended December rose 70% Y-o-Y to Rs 870 crore. “BoI continues to witness strong financial performance on the back of steady Net interest income (NII) and strong non-interest income growth and lower opex. We have raised our PAT estimates for FY09 by 29% and for FY10 by about 28% factoring in higher NII and other income growth.


Goldman Sachs on NTPC

Goldman Sachs has maintained its ‘buy’ rating on NTPC, saying that Central Electricity Regulatory Commission’s final tariff norms for FY10-14 are neutral to positive for NTPC’s earnings outlook, relative to the draft norms announced in September 2008. “We maintain that effective tax rate and economic life of projects are critical

Stock Views on Hero Honda, Jet Airways, HDFC, Hindustan Zinc

Centrum Broking on HINDUSTAN ZINC

Centrum Broking has cut earnings estimates of Hindustan Zinc following disappointing quarterly results, but upgraded its rating on the stock from ‘reduce’ to ‘hold.’ The company has hefty cash on books of Rs 9310 crore and its capex requirement for next two years is only about Rs 2600 crore, which translates into Rs 220/share. “We believe a part of the cash would be given back to investors in the form of dividend as the outlook for core business looks gloomy,” the Centrum note to clients said. Centrum has cut earnings estimates for FY09 by 21.5% to Rs 66.1 (earlier Rs 84.2) and for FY10 by 24.5%. We believe the stock is cheap on valuation parameters. Besides, company has indicated that it would maintain volume growth and also cost would decline by about 5-7% going forward. This along with the imposition of 5% import duty on zinc would help improve margins going forward.

Deutsche Equities on HDFC

Deutsche Equities has retained its ‘buy’ rating on HDFC, post its third quarter earnings, but slashed price target of the stock. “The exceptionally difficult environment of Q3FY09 for both demand and cost of funds has already started improving. We have pared our earnings estimates, reflecting lower treasury profits and mark-to-market on foreign currency bonds,” the Deutsche Equities note to clients said. “The sharp sell-off post announcement of results appears excessive as we believe that in such an environment, keeping margins reasonable is more important than growth. Key risks are continued high property prices hurting mortgage demand and high capital needs of subsidiaries putting pressure on HDFC’s balance sheet,” the note added.

Prabhudas Lilladher on JET AIRWAYS

Prabhudas Lilladher has retained its accumulate rating on Jet Airways, saying the company’s earnings could be under pressure for some more time, despite the price of aviation turbine fuel coming down by half. “Benefit of this (lower ATF price) has been passed on to consumers as the company announced around 40% cut in basic fares effective January 2009. This should allow the airliner to operate closer or even above the break-even load factors for the subsequent quarters,” the Prabhudas Lilladher note to clients said. “Correction in the ATF prices has provided pricing flexibility, which in turn, should drive passenger volume growth. However, this is not enough as high interest burden and depreciation expenses will result in the company reporting losses for at least for next two years,” the note added.

Merrill Lynch on HERO HONDA

Merrill Lynch has retained its buy rating on Hero Honda citing better than expected third quarter earnings. “Margins expanded 50 basis points year-on-year and 90 basis points quarter-onquarter at 14.5%, mainly driven by lower raw material costs. We expect margins to improve further as the full benefit of softening commodity prices will be reflected hereon,” the Merrill note to clients said. “We expect the industry to end the fiscal year with low-single digit growth, constrained by lack of financing. However, we expect Hero Honda to stay ahead on the strength of its brand, and new launches. We maintain our 9% and 6% volume growth assumptions for FY09 and FY10 respectively,” the note added.