Analysts' corner

HCL Technologies, Dr Reddy`s Lab, Sobha Developers & Sun TV

HCL TECHNOLOGIES
Reco price: Rs 388
Target price: Rs 500
The large multi-year deals worth $6.5 billion signed between FY08 and FY11 are likely to provide HCLT a steady revenue run rate over the next three years. Also, higher exposure to infrastructure management services, and leadership in product engineering and enterprise application services, which contribute 20 per cent each to revenues, are likely to drive earnings growth. A high amount of deal churn is likely to benefit HCLT, given its aggressive pricing strategy. Led by these, and a 22 per cent annual growth in MIS business, the brokerage has forecasted the IT services revenues to grow 19 per cent annually over the financial year 2012-14 in rupee terms. During this, earnings are expected to grow 18 per cent annually. The brokerage values the stock at 13 times its December EPS to arrive at the target price of Rs 500 a share. Maintain buy.

Avendus Securities

DR REDDY'S LAB
Reco price: Rs 1,601
Target price: Rs 1,950
Dr Reddy's Lab is confident of close to $2.7 billion sales in FY13. Analysts remain excited about the product pipeline in the US, which includes a slew of limited competition opportunities over the next nine months. Analysts forecast US sales of $950 million and $ 840 million in FY13 and FY14, respectively. They believe execution of some large generic opportunities will play a decisive role. Analysts believe Dr Reddy's is best positioned to capture a large share of bolus patent expirations in 2012. Maintain overweight.

HSBC Global research

SOBHA DEVELOPERS
Reco price: Rs 206
Target Price: Rs 227
Sobha Developers had guided for pre-sales of Rs 1,500 crore and volume guidance of three million square feet (sq ft) for FY12, which is achievable. In nine months ended FY12, the company has reported pre-sales of Rs 1,230 crore and 2.4 million sq ft, which has been ahead of expectations. However, no new project launch in the December 2011 quarter is a concern due to lack of new projects in Bangalore and a delay in getting government approvals in Chennai. The company has done 3.1 million sq ft of new project launch in the first half of FY12 across Bangalore, Gurgaon and Mysore. Though it has reported a strong growth of 47 per cent year-on-year in pre-sales at Rs 440 crore (in Dec quarter) led by Gurgaon project, this is down 7.8 per cent sequentially. Maintain hold.

Nirmal Bang

SUN TV
Reco price: Rs 275
Target price: NA
Sun TV Network announced the launching of three more pay channels - Sun Life and Sun TV RI (Rest of India) in Tamil and Gemini Life in Telugu. Sun Life and Gemini Life will focus on lifestyle, religion, health and education, while Sun TV RI (Rest of India) will transmit the same Sun TV content but specialised for the Rest of India. After the launch of these pay channels, Sun TV will enter the life genre, apart from its existing ones of general entertainment, movies, music, news, kids, comedy and action. Analysts believe the newly channels are a value addition to the existing bouquet. Maintain Neutral.

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