Analysts' corner

Tata Motors, Abbott India, TTK Prestige & South Indian Bank

TATA MOTORS
Reco price: Rs 214;
Target price: Rs 172
JLR’s December volumes, 30,981 units, were significantly ahead of expectations, with the impact of the new Evoque. While its launch did shore up volumes, the strong numbers — especially for the Land Rover range — suggest a healthy momentum for incumbent brands as well. Luxury majors, too, closed CY11 with healthy growth rates; these remain optimistic, with most expecting new launches to propel volumes in CY12. With higher-than-estimated volumes for over a quarter now, coupled with tailwinds from favourable currencies, JLR is set to deliver a strong operational performance in the near term. Concerns over the euro zone, however, blur visibility over the long-term. Hold.

Religare Institutional Research

ABBOTT INDIA
Reco price: Rs 1,434;
Target price: Rs 1,852
Abbott India, a 50.44 per cent subsidiary of Abbott Capital India Ltd, UK, is involved in the manufacture and marketing of pharmaceutical, diagnostic, nutritional and hospital products. Consolidation of Solvay Pharma India Ltd (SPIL) with the company is expected to improve operating efficiencies, leading to expansion of Ebitda margin and an extended product portfolio with addition of brands from SPIL. Analysts expect the company to post a 24 per cent compounded growth in the top line over CY2010-13, on the back of continued focus on advertising, increased employee expenses, new therapeutic segments and its agreement with Zydus Cadila. At the current price of Rs 1,434, the stock is trading at 13.9 times CY13 estimated EPS, believed attractive for an MNC. Initiate coverage with buy rating.

Angel broking

TTK PRESTIGE
Reco price: Rs 2,320;
Target price: Rs 3,106
TTK Prestige reported revenue growth of 41 per cent year-on-year, in line with analysts’ estimates. The strong revenue growth across products reiterates analysts stance that the product categories in which TTKP operates will see minimal impact of the slowdown, as these are consumed by the mass market and cater to the necessities. Operating margin stood at 15.8 per cent, in line with estimates. Adjusted net profit grew 18 per cent, in line with estimates. Analysts continue to remain positive on the company, after the recent correction of 18 per cent in the last three months. Upgrade the stock to buy from accumulate.

IDBI Capital

SOUTH INDIAN BANK
Reco price: Rs 23;
Target price: Rs 25
South Indian Bank’s December 2011 results are in line with expectations. Net interest income (NII) was Rs 270 crore and net profit Rs 102 crore. The growth was aided by 20.4 per cent year-on-year growth in non interest income to Rs 60 crore.The NII grew by 33.5 per cent year-on-year, led by strong 30.6 per cent year-on-year growth in advances, and eight basis points quarter-on-quarter expansion in net interest margins (NIMs) to 3.05 per cent. High concentration of gold loans at 26 per cent of the book is a concern. Change in management strategy to shift focus from gold loans to corporate loans could put pressure on margins. Risks due to concentration in gold loan portfolio in terms of loan growth and NIMs remain. Downgrade to hold from accumulate.

Emkay Global