Sun Pharma
Reco Price: Rs 1,721
Target Price: Rs 1,500
The Supreme Court of Israel has ruled in favour of Sun Pharma in the Taro case. The company will now move ahead with its plan to integrate Taro. Taro’s US business has substantial synergies with Sun Pharma’s US business in terms of the product portfolio as well as the customer access. Taro’s unaudited financials show an improvement; as OPMs have moved from negative 28 per cent in CY06 to positive 18 per cent driven by improvement in selling, general and administration expenses. Pinc awaits audited numbers before including Taro in the estimates. With the base business in US under pressure due to the ongoing issues with the US FDA there is little margin of safety at current valuations of 23 times 2011-12 recurring earnings' estimates. Maintain sell.
—Pinc Research
Pantaloon Retail
Reco price: Rs 469
Target price: Rs 543
Pantaloon Retail's (PRIL) core retail (including value, lifestyle and home) business reported revenue of Rs 8,900 crore (up 41 per cent y-o-y), Ebitda of Rs 820 crore (up 23 per cent) and profit after tax of Rs 230 crore (up 64 per cent) for FY10. Comparing the results on a like-to-like basis i.e. excluding Home Solutions (HSRIL), the revenue grew to Rs 7,900 crore (up 25 per cent y-o-y) and Ebitda to Rs 830 crore (up 24 per cent) in FY10, in-line with expectations. HSRIL, now merged with standalone PRIL, had revenue of Rs 1,000 crore and reported loss of Rs 88 crore in FY10. Given the merger with core retail business, the ability to turn HSRIL around will remain the key earnings trigger for PRIL. Maintain sector outperformer .
— Enam Securities
IDBI Bank
Reco Price: Rs 128
Target Price: Rs 141
IDBI Bank’s CASA was just 13 per cent in Q1, FY11. It has a target of 20 per cent for 2010-11. ICICI Direct expects the CASA to be at 18.5 per cent and 22 per cent for 2010-11 and 2011-12, respectively. This is supported by aggressive branch addition plans for 2010-11 at 270 plus. They have moderated loan growth target to 15 per cent for this fiscal from 22-25 per cent targeted earlier. The above measures will lead to a drop in cost of funds to 6.8 per cent in 2011-12 leading to an expansion in NIM to 1.8 per cent. Due to a waiver of charges on the CASA account, the commision based fee growth is likely to get dragged down. At a price of Rs 128, the bank is trading at 1.2 times its 2011-12 adjusted book value. Maintain buy.
—ICICI Direct
PVR
Reco Price: Rs 174
Target Price: Rs 226
PVR's diversified model ensures de-risked business. It is present across the movie value chain (exhibition-production-distribution) and has forayed into retail entertainment through PVR Blu-O. Promising movie pipeline and rise in Hollywood movies to aid top-line. Healthy screen adds of 28 screens over the last six months is a positive. The company expects to fund exhibition capex via internal accruals and funds realised from unlocking of Phoenix Mills property (expect it to rake in Rs 80-100 crore cash via sale and lease back by 2010-11). Earnings are expected to register a whopping CAGR of 436 per cent over 2010-12 on a low base and margin expansion. At Rs 174, the stock is trading at attractive-valuations of 11.5 times its estimated 2011-12 EPS. Maintain buy .
—Angel Broking
