Lupin
Reco: ACCUMULATE
CMP: Rs469
Target Price: Rs496
Robust earnings; Revise target price upwards
· Strong operating performance largely driven by robust growth momentum in US, Europe, Japan and India coupled with favorable product mix
· US branded business grew at 24% (adjusted for one time impact of change in accounting treatment for rebates) and India formulations at 22% (adjusted for inventory correction)
· Both existing and new prescriptions seeing growth in Antara; OC launches in US in Q312 will aid long term revenue visibility
· On account of improved performance, revise earning estimates and raise target to Rs496; Maintain Accumulate, owing to limited upside
HPCL
Reco: BUY
CMP: Rs454
Target Price: Rs515
Results above expectation, Maintain BUY
· HPCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to issuance of oil bonds/Cash receivables during the quarter
· EBIDTA at Rs.24.8bn, against Rs1.7bn, YoY, mainly due to inventory Gain and issuance of oil bonds/cash receivables from the government of India
· Average gross refining margin for 1H FY11 was at $3.2/bbl as compared to $3.8/bbl (decline by 18% YoY) below our expectation of $3.7/bbl.
· Valuations look attractive at 1x FY12E ABV, mainly due to recent change in reforms, Continue BUY rating with TP of Rs.515
Glenmark Pharma
Reco: ACCUMULATE
CMP: Rs348
Target Price: Rs381
On a comeback trail; Upgrade to Accumulate
· Adjusted PAT growth of 27% was in-line driven by a) 23% growth in sales at Rs7.4bn (est. of Rs7bn) and b) 11% growth in EBITDA at Rs1.87bn (est. Rs1.77bn)
· Revenue growth was driven by a) 19% growth in Speciality business (55% contribution to top line) and b) 27% growth in Generics business (45% contribution to top line)
· Managements conscious effort to clean the balance sheet is a welcome move; further improvement in working capital situation can lead to expansion in valuation
· Positive Ph-III trials a step forward for Crofelemer launch
· Tweak earning estimates; raise target price to Rs381 (Rs308 earlier); upgrade to Accumulate from Hold
IOCL
Reco: ACCUMULATE
CMP: Rs403
Target Price: Rs458
Results above expectation, ACCUMULATE
· IOCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to inventory gain and issuance of oil bonds/Cash receivables during the quarter
· EBIDTA at Rs.68.9bn, against Rs.6.1bn a year ago, mainly due to Inventory gain and issuance of oil bonds/cash receivables from the government of India
· Average gross refining margin for 1H FY11 was at $4.7/bbl as compared to $5.4/bbl (declined by 13% YoY) above our expectation of $3.5/bbl.
· Valuations look attractive at 1.4x FY12E ABV, mainly due to recent change in reforms, Accumulate rating with TP of Rs.458
Tata Steel
Reco: ACCUMULATE
CMP: Rs606
Target Price: Rs712
Getting fit for future; Accumulate
· Higher volume in Indian operations and slightly higher realization in European operation helped revenue growth of 5% to Rs 286.5 bn, in line with our expectations
· Higher raw material costs (up ~20% QoQ) weighed on the EBITDA margin, which fell 348 bps QoQ to 12.8%. EBITDA/ tonne for Tata Steel Europe remained at ~US$60
· Higher other income due to stake sales in Tata Motors and Tata Power helped consolidated PAT to grow 8.4% on QoQ to Rs 19.8 bn
· Revising up our earnings estimates for FY11E and FY12E to Rs 81.4 and Rs 97.8 respectively. We assign Accumulate on the stock
IVRCL Infrastructure & Project
Reco: HOLD
CMP: Rs139
Target Price: Rs160
Earnings continue to disappoint
· Q2FY11 PAT at Rs 233 mn sharply below estimates (Rs434 mn) led by revenue decline of 16%. Execution impacted by delays in financial closure of own BOT projects & extended monsoons
· EBITDA at Rs 706 mn down 41% margins at 6.7%, contracted 287 bps – as slow execution rate led to poor overhead absorption –impacting margins to an extent of 230 bps
· Mgmt revenue guidance of ~Rs6.75 bn, lowered to Rs 6.5 bn still implying a steep H2FY11E revenue growth of 42% & EBIDTA growth of 47%
· We believe IVRCL will continue to face execution headwinds as ~ 40% of order backlog remains slow moving. We cut FY11E/12E EPS by 19.5%/16.5%. Maintain HOLD - cut target to Rs160
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