RELIANCE POWER
Reco price/date: Rs 96/Jan 4;
Current/Target price: Rs 96/Rs 110
Having won three of the four ultra-mega power projects (UMPPs), Reliance Power has secured fuel linkage for 84 per cent of its planned capacity.
In the wake of existing coal shortage, this comes as a shot in the arm for Reliance Power.
Add to this, the competitively bid levelised tariffs of Rs 1.19/unit for Sasan and Rs 1.77/unit for Tilaiya.
Currently, ROSA being a completely cost plus model, insulates the company from rising fuel prices.
Analysts expect the return on equity to bottom out by FY13. Analysts expect the commissioning of Butibori, Solar CSP, Sasan and Samalkot by FY16,would add to the ‘operational ‘content in profit after tax as against treasury income.
Analysts have valued Reliance Power on the sum-of-the-parts basis. Accumulate.
Elara Capital
WYETH
Reco price/date: Rs 873/Jan 7;
Current/Target price: Rs 885/Rs 1,265
Wyeth’s sales growth in Q2FY13 was affected by retailer schemes. The company has modified the schemes to even out sales growth across the quarters.
In FY12, the company launched six products in the Branded Value Offerings (BVO) segment. Most of these products are in the women’s healthcare segment and are likely to drive future growth.
Further with the modification in retailer schemes and stabilisation of the rupee, the management expects improvement in margins. The company’s major brand prevenar 13 is performing well. However, the management expects a major hit in the price of Folvite, which is likely to be offset partially by the increase in volumes. Wyeth’s other income in Q2FY13 grew by 23 per cent Y-o-Y mainly from treasury operations. Wyeth is a debt-free cash rich company and has Rs 179 cash per share. Buy.
Centrum
SOBHA DEVELOPERS
Reco price/date: Rs 386/Jan 4;
Current/Target price: Rs 388/NA
The sales momentum remained flat Q-o-Q across cities, while realisations improved on sales of higher end properties.
Apart from this, analysts expect flat debt in Q3FY13 as receipts from PE deal would have been used for land payments. Stable Bangalore market should help Sobha maintain volume targets, but the scope for outperformance remains limited on volumes/cash flow/debt management.
Average realisations improved eight per cent Q-o-Q and Y-o-Y, helped by sales in new phases with higher ASP (new phases of Sobha City, Forest View and Morzaria). Analysts expect this to increase further once city-centric properties get launched in FY14.
Analysts see limited scope for near-term outperformance given higher focus on investment capex and land purchase. Maintain Hold.
Religare Institutional Research
SAIL
Reco price/date: Rs 95/Jan 4;
Current/Target price: Rs 97/Rs 82
The management indicated that the part commissioning of Rourkela and IISCO would start in Q1FY14. At first, they would start with hot metal, slabs and billets. Overall, for FY14, the company expects full commissioning of Rourkela and IISCO and also CRC mill at Bokaro and mild structural steel mill at Durgapur. Full commissioning of Bhilai project is expected to be during FY15, while the coke over battery is likely to be commissioned during June, 2013. Full commissioning of Bhilai project is expected to be during FY15, while the coke over battery is likely to be commissioned during June, 2013. Recently the stock price of SAIL has run- up sharply broadly on market optimism and despite no significant change in weak fundamentals of the sector. At Rs 95, the stock trades at 10.6 times FY14 estimated EPS and 8.5 times FY14 estimated EV/ EBITDA. This looks expensive. Downgrade to Sell.
Emkay Global Financial Services
GLENMARK PHARMA
Reco price/date: Rs 520/Dec 24;
Current/Target price: Rs 519/Rs 600
Glenmark Pharmaceuticals (Glenmark Pharma) has entered into an agreement with Forest Laboratories Inc (Forest Labs) to develop novel mPGES-1 inhibitors to treat chronic inflammatory conditions, including pain. Under the terms of agreement, Forest Labs will make a $6-million up-front payment and provide an additional $3 million to support the next phase of work. Analysts expect strong performance in branded generics business to continue. Maintain 'Buy'.
Sharekhan
