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HCC – Market Tips

ashimvig — Sat, 01 Jan 2011 19:40:26 +0000

Karvy Stock Broking is bullish on Hindustan Construction Company (HCC) and has recommended buy rating on the stock with a target of Rs 71 in its December 30, 2010 research report. The report says that “Hindustan Construction Company (HCC), management expects revenue booking of Rs 25 billion for H2FY11 which implied the growth of 24% in H2FY11 and higher than expected growth (~25%-30%) in FY12. The traction in revenue growth is expected through the momentum in large projects like-Kishanganga (Rs 27bn) and west Bengal NH32 project (Rs 28.6bn).
HCC has current portfolio of worth Rs 55 billion includes six NHAI road projects (2 operating and 4 under construction) and expected to add NHAI road development project worth Rs 30-40 billion in portfolio annually. The company has commissioned the Badarpur elevated expressway project ahead of the scheduled (30th Nov.’10). The company has targeted to create Rs 200 billion portfolio in roads, power and urban infrastructure developments.At the current market price of Rs. 47, the stock is trading at PER multiple of 20x. The stock is almost risk free. If Lavasa project gets green signal from environment ministry, the stock will zoom to Rs. 60 level. Buy.

Ranbaxy Labs an underperformer: Karvy

admin — Mon, 30 Nov 2009 08:37:21 +0000

Karvy Stock Broking has come out with a research report on Ranbaxy Labs. The research firm has maintained underperformer rating on the stock.

“Ranbaxy has launched Valtrex in US markets. This enables the company to get a 6 month exclusivity for the period in the USD 2.2 billion market. There is no authorized generic (AG) in the market currently but should come in shortly. We believe on account of the launch the company’s earnings upside would go up in CY 2009 by Rs 3 due to absence of AG in this market. However this is a one time opportunity. Further there has been no update on the USFDA re-inspection of the company ‘s Dewas plant. We believe the Valtrex approval re-inforces the company’s ability to protect its First to File (FTF) opportunities”, says Karvy Stock Broking.

The report also says, “On account of the generic Valtrex approval we upgrade the core multiple of the company from 18x to 20x. We value the core EPS of Rs 6.6 of CY10 at 20x and arrive at a price of Rs 132. We also value Nexium API supply opportunity of EPS upside of Rs 5.7 which is a recurring business at 20x and arrive at a price target of Rs 114. In line with the re-rating of the sector we value one time opportunities of Valacyclovir and Flomax upside of Rs 17.8 at 5x and arrive at a price of Rs 89. We also attribute a DCF value of Rs 72 to Lipitor and Caduet opportunity. We hence arrive at a price of Rs 407. Despite the upgrade in price target by 15% to Rs 407 we maintain our Underperformer rating on the stock.”

Buy Lupin, target of Rs 900: Karvy

admin — Fri, 17 Apr 2009 12:37:59 +0000

Karvy Stock Broking has recommended a buy rating on Lupin with a price target of Rs 900 in its April 17, 2009 research report.

“Lupin’s net revenues for the quarter are expected to be up by 20% to Rs 9 billion for the quarter. Revenue growth is expected to be driven by strong performance in domestic formulations and formulations exports. However margins are expected to be lower at 17.2 % than the preceeding quarter on back of higher other expenses. Profits for the quarter is expected to be higher by 4% to Rs 1001 million for the quarter on back of higher interest charges and lower other income.”

“We introduce FY 11 estimates and roll over our price target to FY 11. The stock is currently quoting at Rs 11.1 x FY 2010E and 9.2x FY 11E. With gradual ramp up of niche opportunities in both US and Europe we believe the company is on a strong wicket. The high margin formulations business contributes 70% of the revenues. With earnings growth of 18.4% in the period FY 09-11E we rate the stock as a BUY with a price target of Rs 900 based on 12x FY 11E (EPS Rs 75.3),” says Karvy Stock Broking’s research report.

Buy Bank Of India, target of Rs 455: Karvy

admin — Fri, 17 Apr 2009 12:19:37 +0000

Karvy Stock Broking has recommended a buy rating on Bank Of India with a price target of Rs 455 in its April 17, 2009 research report.

“In 4th QFY09, we expect the bank to record 24% (Y/Y) growth in deposits and 29% growth (Y/Y) in net advances and the bank’s NII is expected to grow by 34% (Y/Y) to Rs 16.3 billion. For FY09, we revise our earning estimates upward by 15% to Rs 31.5 billion to factor in higher NII growth and fee income and for FY10, we reduce our earning estimates downward by 18% to Rs 27.1 bilion to factor in lower business growth, pressure on margin and higher loan losses provisions. We decrease our target price by 5% to Rs 455. At current price, the stock quotes at 1.16x FY2010 adjusted book value; we rate the stock as a ‘BUY‘ with a price target of Rs 455 at 2.05x adjusted book value FY2010,” says Karvy Stock Broking’s research report.

Petronet LNG an underperformer: Karvy Stock Broking

admin — Thu, 16 Apr 2009 11:32:08 +0000

Karvy Stock Broking has changed its rating on Petronet LNG from buy to underperformer with a price target of Rs 49 in its April 16, 2009 researcvh report.

“We expect the revenue growth of 32.8% YoY (QoQ decline of 5.9%) to Rs 23,280 million. LNG sales volume is likely to be flat YoY as the company took planned shutdown of its import terminal at Dahej. EBIDTA margins are likely to fall to 7.6% from 12.3% a year ago. The operating profit is expected to decrease by 17.2% YoY to Rs 1,778 million. Interest is unlikely to change significantly as the incremental borrowings are being made for expansion on which the interest is being capitalized till the time of commercial commissioning of the expanded capacity. Depreciation is expected to remain flat in the absence of any new expansion coming on stream. Overall, the net profit is expected to decline by 15.5% YoY to Rs 1,015 million translating in to EPS of Rs 1.4 during the quarter.”

“For FY09, we expect the revenue growth of 9.8% to Rs 71,948 million and adjusted profit to fall by 13.1% to Rs 4,123 million. But we change our rating from BUY to Underperformer due to the recent surge in the stock price, price target of Rs 49,” says Karvy Stock Broking’s research report.

Hero Honda an outperformer: Karvy

admin — Thu, 16 Apr 2009 11:28:21 +0000

Karvy Stock Broking has maintained its outperformer rating on Hero Honda Motors with a price target of Rs 1,250 in its April 16, 2009 research report.

“Hero Honda Motors (HHML) is expected to report robust topline and bottom line growth during 4QFY09. On YoY basis, we expect the company’s revenues to grow by 17.5% from Rs 27,887 million to Rs 32,762 million. Revenues during the quarter are expected to grow on account of volume growth and increase in realization. On YoY basis the company has registered a healthy 12.9% growth in volumes on back of 100% growth in the scooter segment and 11% growth in the sub125cc segment. Net realization in the quarter is expected to improve by 4% on YoY basis on back of excise duty benefits and passing of raw material price increase onto the consumers.”

“We are marginally increasing our sales and net profit estimates (by 1%) for FY09 on back of better than expected volume nos. for the month of March (8% higher than our estimates). We continue to maintain our Outperformer rating on the stock with our price target of Rs 1,250,” says Karvy Stock Broking’s research report.

SBI an underperformer: Karvy Stock Broking

admin — Thu, 16 Apr 2009 11:21:17 +0000

Karvy Stock Broking has downgraded its rating on State Bank of India as an underperformer with price target of Rs 1,022 in its April 16, 2009 research report.

“We revise State Bank of India, SBI’s earning estimates to factor in some concerns on total business growth, increase in NPAs, and decline in net interest margin. We expect SBI’s total business to grow at 18.6% (Y/Y) compared to our earlier estimate of 22.1% (Y/Y) in FY10, reduction in margin by 8 bps to 2.41% (from earlier estimate of 2.49%) and downward drift in return ratio (RoAE) to 12.8% (from earlier estimate of 15.8%).”

“We expect SBI’s bottomline to record 13% de-growth (Y/Y) to Rs 75.7 billion; for FY10 we reduce our earning estimates by 20% to Rs 75.7 billion compared to our earlier estimates of Rs 94.1 billion. For SBI’s associate banks we assign total value of Rs 251 per share and we value SBI Life subsidiary at Rs 68 per share and other investments (including mutual fund business) at Rs 40 per share. We reduce our SBI (consolidated) target price by 40.2% to 1,022 per from our earlier target of Rs 1,708. We downgrade the stock as an Under Performer with price target of Rs 1,022,” says Karvy Stock Broking’s research report.

Container Corporation an underperformer: Karvy

admin — Thu, 16 Apr 2009 02:01:56 +0000

Karvy Stock Broking has revised its rating on Container Corporation of India from market performer to underperformer with a target price of Rs 706 in its April 15, 2009 research report.

“Container Corporation of India is expected to report revenue decline of 12.4% YoY (QoQ decline of 6.5%) to Rs 7.91 billion and net profit is expected to decline by 11% YoY (QoQ decline of 12.4%) to Rs 1.8 billion during the Q4FY09. We have revised the revenue estimated downward by 4.3% to Rs 33.6 billion in FY09 and by 9.9% to Rs 36 billion in FY10 and net profit estimates downwards by 0.6% to Rs 8.07 billion in FY09 and by 8.6% to Rs 8.34 billion in FY10 considering slowdown in container trade and increased competition from private players. We are revising our target price from Rs 770 to Rs 706 based on 11xFY10 earnings. We are revising our rating from Market performer to Underperformer,” says Karvy Stock Broking’s research report.

Indoco Remedies an outperformer: Karvy Stock Broking

admin — Thu, 16 Apr 2009 01:59:55 +0000

Karvy Stock Broking has downgraded its rating on Indoco Remedies to outperformer with a target price of Rs 170 in its April 15, 2009 research report.

“Revenues for the quarter are expected to be down by 4.4 % to Rs 812.1 million for the quarter mainly on back of lack of requisite traction in domestic formulations business. Domestic formulations business is expected to show a degrowth of 15% for the quarter with revenues of Rs 520 million. Exports formulations will show growth of 10% to Rs 240 million for the quarter. Operating margins are expected to be marginally better than the preceeding quarter at 7.9%. Profits for the quarter would be lower by 84% to Rs 11.71 million for the quarter which is higher than the preceeding quarter profits of Rs 6.3 million.”

“We have reduced our EPS estimates for FY 09E by 21% to Rs 22.9 mainly on back of longer turnaround time in the domestic formulations space. We however downgrade our FY10E estimates by 2.3% to Rs 46.3. We downgrade our price target by 2.8% to Rs 170 based on 3.7x FY 10E. The stock has an attractive dividend yield of 4.3%. Due to price performance we downgrade the stock to Outperformer,” says Karvy Stock Broking’s research report.

Sun Pharmaceutical a marketperformer: Karvy Stock Broking

admin — Thu, 16 Apr 2009 01:58:14 +0000

Karvy Stock Broking has rated Sun Pharmaceutical Industries as a marketperformer with a price target to Rs 1245 in its April 15, 2009 research report.

“Revenues for the quarter are expected to show a degrowth of 31% to Rs 8715 million. The lower growth can be attributed to negligible sales of Pantaprazole. Operating margins are expected to be lower at 41.9 % mainly on back of lower gross margins, higher staff and other expenses on account of the Chattem facility. Profits are expected to decline by 52% to Rs 3488 million.”

“We have reduced our FY 09E estimates by 0.8 % to Rs 84.7 on account of amortization of goodwill. We have also reduced our FY 10E estimates by 3.8% to Rs 70.8 on account of lower gross margins and higher other expenses and amortization of goodwill. We also introduce our FY 11E estimates and roll over our price target to FY 11E. We upgrade our price target to Rs 1245 based on 16x FY 2011E (EPS Rs 77.8) and continue to rate the stock as Marketperformer,” says Karvy Stock Broking’s research report.