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IDFC & Biocon

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IDFC
Reco price/date: Rs 116/May 21;
Current/Target price: Rs 120.4/Rs 147
IDFC has delivered strong performance on growth and margin front. Expected monetary easing and reformatory steps by the government would be major catalysts in further improving the growth and profitability outlook. Healthy asset quality track record and prudent provisioning policy makes IDFC better placed compared to its peers in infra financing. The growth in IDFC’s outstanding disbursements remained well-diversified across telecom, energy and transportation segments. Analysts expect IDFC to report an EPS of Rs 11 and Rs 13 and estimated adjusted book value (for investment in other ventures) of Rs 82 and Rs 92 for 2012-13 and 2013-14, respectively. Maintain Buy.

Motilal Oswal Securities

BIOCON
Reco price/date: Rs 217/May 21;
Current/Target price: Rs 215/Rs 186
Biocon's (BIOS) shares have had an uninspiring run after the termination of the Pfizer deal, which dealt a big blow to its biosimilar insulin aspirations. While the deal is now terminated, it would continue to throw its shadow over future earnings, thanks to an aggressive accounting policy that would see BIOS shift biosimilar insulin R&D costs off the P&L. This, along with use of a creative transaction structure for AxiCorp, leaves analyst frustrated with corporate governance standards in the company, and they have downgraded their accounting and corporate governance rating from amber to red. Stripping out biosimilar insulin (90 per cent valuation haircut) and Dificid, BIOS is currently trading at 12 times FY13 estimated earnings. Espirito has cut its fair value by 47 per cent to Rs 186 (from Rs 350 earlier). Downgrade to sell.

Espirito Santo Securities


Note: Reco price/date refers to the price and date at which the recommendation was made. Target price refers to the fair value of the stock as per the said brokerage

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