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Analysts' corner

NTPC, Power Grid Corp, Dabur India & Divis Laboratories

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Reco price/date: Rs 147/June 15
Current/target price: Rs 147/Rs 158
NTPC Ltd has commissioned the unit 3 (660 Mw) of Sipat Super Thermal Power Station stage-I on June 2. With this, the total capacity of NTPC has become 38,674 Mw. The company targets to add 4,160 Mw of capacity in FY13 and has till date added 1,660 Mw this financial year. At current market price, the stock is trading at 1.4 times FY13 estimated and 1.3 times FY14 estimated price/book value. Maintain accumulate.

Angel Broking


Reco price/date: Rs 104/June 4
Current/target price: Rs 105/Rs 125
Powergrid Corp of India Ltd’s (PGCIL) FY12 results corroborate its ability to deliver strong execution growth, which was 35 per cent ahead of analysts’ estimates and up 97 per cent year-on-year, driving up return ratios. Notwithstanding emerging concerns on new capex growth, owing to a slowdown in generation capex, analysts believe PGCIL is geared to maintain its earnings CAGR (compound annual growth rate) of 21 per cent and asset CAGR of 24 per cent over next three years. Thanks to the new transmission pricing formulae, favourable regulatory policies reaffirm PGCIL’s strong bargaining power. Maintain Buy.

Deutsche Bank Markets Research


Reco price/date: Rs 103/June 4
Current/target price: Rs 102/Rs 125
With the launch of ‘Dabur Uveda Sunblock Cream SPF 30’, Dabur India Ltd has entered the Rs 240-crore sun-protection market. The new launch is a premium product and indicates Dabur’s focus on its skin care portfolio. Also, it has a unique water-resistant formula. Analysts believe marked step-up in new launches in FY13 and funneling gross margin expansion to ad spend are likely to aid volume growth for Dabur. The stock has corrected nine per cent after the March quarter results were announced, in spite of improving volume growth (9.5 per cent, eight per cent and five per cent in Q4, Q3 and Q2’FY12, respectively). Maintain Buy.

Edelweiss Securities


Reco price/date: Rs 925/June 5
Current/target price: Rs 934/Rs 1,107
Analysts believe Divis Laboratories Ltd is likely to sustain its high growth rates of over 25 per cent, best-in-class margins (37-39 per cent Ebitda— earnings before interest, taxes, depreciation, and amortisation) and superior return ratios. A strong base of a stellar FY12 will not tame growth in FY13. Management has guided for 25 per cent growth in constant currency terms, with upside risks from rupee depreciation. Additional capex plans enhance confidence given the company’s commitment to capital efficiency (capacities hardly remain idle at Divis). IIFL has raised its estimate for FY13-14 core earnings by 8-10 per cent. Maintain Buy.

IIFL

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