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RANBAXY
Reco price: Rs 497;
Target price: Rs 358
The management indicated the company was working towards improving productivity across businesses, with key focus on monetising critical products in the US. Site transfers to Mohali, early resumption of Dewas and incremental approvals (including two FTFs and Isotretinoin) will add upsides to the US business. Ranbaxy expects to achieve industry-level margins (18-20 per cent) by CY16-17, with complete resolution of FDA issues. Analysts have, thus, built back-ended expansion into margins and see that recovery is built-in current valuations. Maintain reduce.

Edelweiss Securities

(INDIA)
Reco price: Rs 3,323;
Target price: Rs 3,480
Standard Chartered Equity Research has downgraded Asian Paints with a revised price target of Rs 3,480, based on forward price/earnings of 24 times. Lower economic growth and weak consumer sentiment will lead to moderate volume growth of 13-14 per cent over the next couple of years, compared to 16-17 per cent over FY06-11. Continued inflationary pressures and a weak rupee have trimmed the EPS estimates for FY13 and 14 by four per cent and 5.2 per cent, respectively. Analysts expect 100 basis points margin expansion by FY14 but continued input cost inflation poses a risk to earnings. In-Line.

Standard Chartered Equity Research

ALLCARGO LOGISTICS
Reco price: Rs 127;
Target price: Rs 173
An established presence in high-traffic ports, good relationship with marquee shipping lines and an expanding footprint through container freight station/inland container depot (CFS/ICD) makes Allcargo Logistics’ business unique with tremendous synergies across divisions. Following lower capex likely in FY14 and a higher share of high margin/high RoCE CFS business, net profit should show 14 per cent CAGR over FY12-14, RoIC should improve by 54 basis points over the same period and the company should break even on free cash flow basis in FY13. It should report positive free cash flow of Rs 170 crore in FY14, which calls for a re-rating of its stock price. Buy.

Nirmal Bang Institutional Equities

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Aanalysts' corner

The Ranbaxy management indicated the company was working towards improving productivity across businesses, with key focus on monetising critical products in the US. Site transfers to Mohali, early resumption of Dewas and incremental approvals (including two FTFs and Isotretinoin) will add upsides to the US business. Ranbaxy expects to achieve industry-level margins (18-20 per cent) by CY16-17, with complete resolution of FDA issues. Analysts have, thus, built back-ended expansion into margins and see that recovery is built-in current valuations. Maintain reduce.

RANBAXY
Reco price: Rs 497;
Target price: Rs 358
The management indicated the company was working towards improving productivity across businesses, with key focus on monetising critical products in the US. Site transfers to Mohali, early resumption of Dewas and incremental approvals (including two FTFs and Isotretinoin) will add upsides to the US business. Ranbaxy expects to achieve industry-level margins (18-20 per cent) by CY16-17, with complete resolution of FDA issues. Analysts have, thus, built back-ended expansion into margins and see that recovery is built-in current valuations. Maintain reduce.

Edelweiss Securities

(INDIA)
Reco price: Rs 3,323;
Target price: Rs 3,480
Standard Chartered Equity Research has downgraded Asian Paints with a revised price target of Rs 3,480, based on forward price/earnings of 24 times. Lower economic growth and weak consumer sentiment will lead to moderate volume growth of 13-14 per cent over the next couple of years, compared to 16-17 per cent over FY06-11. Continued inflationary pressures and a weak rupee have trimmed the EPS estimates for FY13 and 14 by four per cent and 5.2 per cent, respectively. Analysts expect 100 basis points margin expansion by FY14 but continued input cost inflation poses a risk to earnings. In-Line.

Standard Chartered Equity Research

ALLCARGO LOGISTICS
Reco price: Rs 127;
Target price: Rs 173
An established presence in high-traffic ports, good relationship with marquee shipping lines and an expanding footprint through container freight station/inland container depot (CFS/ICD) makes Allcargo Logistics’ business unique with tremendous synergies across divisions. Following lower capex likely in FY14 and a higher share of high margin/high RoCE CFS business, net profit should show 14 per cent CAGR over FY12-14, RoIC should improve by 54 basis points over the same period and the company should break even on free cash flow basis in FY13. It should report positive free cash flow of Rs 170 crore in FY14, which calls for a re-rating of its stock price. Buy.

Nirmal Bang Institutional Equities

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