Institutional Activity

Merrill Lynch has reiterated a buy recommendation on Hero Honda Motors at Rs 235 with a 12-month price target of Rs 280. It has upgraded the earnings estimates by 8 per cent and 6 per cent for FY02 and FY03 respectively. Though the increased competition would result in pricing pressure, volume benefits are expected to offset the loss in margins.

Hindalco's strong fundamentals on back of a recent uptrend rise in LME prices have found favour with CLSA,. CLSA is bullish at a price of Rs 697 with a price target of Rs 850. Another reason for the bullishness is the expected cash inflow from a speedy decision on sale of AV Birla's stake in MRPL.

Niche segments and a move towards high margin products are the basis for ICICI Securities maintaining a buy recommendation on Sun Pharmaceuticals at Rs 584. The firm expects Caraco, Sun's US subsidiary to achieve cash break even in CY2003.

The US subsidiary has obtained three ANDAs approvals this year and awaits approval for seven others. They have revised upwards their earnings by 9.3 per cent for FY02 to Rs 36.4.

At Rs 215, SBI Caps expects HLL to be a market performer with a 5.5 per cent topline growth and an increase in operating margins by 200 basis points in FY02. Lower raw material costs, improving efficiencies in supply chain, and better realisations are likely to drive growth in the next two years

CLSA has put out a buy recommendation on Grasim at Rs 258 and has set a target price of Rs 425. The research house believes that the rising capital efficiency and higher dividend pay out will drive the re-rating of the stock. Capital efficiency is set to increase mainly due to the improving operating profitability, restructuring of its investment portfolio and loss making businesses.