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Ranbaxy Laboratories & Havells India

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RANBAXY LABORATORIES
Reco price/date: Rs 552/September 3
Current/target price: Rs 568.55/Rs 450
After the launch of Actos, Ranbaxy has given 14 per cent absolute returns, outperforming the market and the healthcare index by three per cent. However, the downward earnings revisions show the initial euphoria during the launch was not sustained. Also, except Lipitor, stocks have given negative returns in a six-month period. The trade recorded in a month was reversed in a two-quarter timeframe. Though the launch of Actos removes the overhang of the result of forfeiting exclusivities, analysts believe the competitive dynamics of the product launch would be tougher than initially estimated. They say this could lead to a downward estimate revision, as seen earlier. Maintain 'Sell'.

Antique Stock Broking

HAVELLS INDIA
Reco price/date: Rs 550/September 3
Current/target price: Rs 555.25/Rs 680
The stock underperformed the Sensex by 6.0 per cent during the past three months. It is now trading at 12.1 times the 2013-14 estimated price/earnings ratio, which analysts believe is an attractive valuation. Analysts see steady growth in a tough operating environment, a strong balance sheet, improving free cash generation and a potential rise in the dividend payout as strong stock price drivers. JP Morgan thinks the recent guidance cut for Sylvania margins is priced in, and recent forex trends have become favourable. This could help alleviate concern on a further downside to Sylvania's margins. JP Morgan has raised its FY14 estimated earnings per share five per cent. Upgrade to 'Overweight' from 'Neutral'.

JP Morgan

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