Comments
Anand Rathi
Jyothy Labs (Buy)
CMP: Rs 165
Target: Rs 210
The positives of Jyothy Laboratories' acquisition of Henkel India are expected to play out in FY13.
The company has strong nationalisation and sub-segmentalisation strategies to unlock brand potential in its detergents business.
Jyothy is leveraging its key Ujala brand with a strong sub-segmentation strategy. Further, the company plans to launch regional brands such as Maxo, Exo & Margo on a national scale, by leveraging its new pan-India distribution network.
It also plans lower freebies, price hikes and re-launches. It also plans to reduce debt with sale of land assets.
Further, the recent 42 per cent stock price correction has created an attractive entry point. We upgrade the stock to a Buy, but lower the target price.
Motilal Oswal
IDFC (Buy)
CMP: Rs 108
Target: Rs 150
The monetary easing and expected government intervention to address the key issues faced by the Indian infrastructure sector could act as major catalysts in improving the growth and profitability outlook for IDFC, leading to its re-rating. Among the IFCs, IDFC is well-poised (compared to peers) to tide through the current phase of moderation in economic growth. We believe risk- reward is favourable and upgrade our rating to ‘Buy', with an SOTP-based price target of Rs 150.
CRISIL
POCL (Fundamental)
CMP: Rs 25
Fair value: Rs 34
Pondy Oxides & Chemicals Ltd (POCL), set up in 1995, manufactures 17,400 tonnes a year (tpa) of metals and 14,280 tpa of metallic oxides, mainly lead and zinc oxides and polyvinyl chloride (PVC) stabilisers (6,000 tpa). Lead and zinc metals, and oxides account for 85 per cent of POCL's net sales, while PVC accounts for the remainder. It has four manufacturing facilities in Tamil Nadu and Puducherry. POCL is awaiting approval of merger from the Madras High Court. POCL will issue fresh shares for acquiring the remainder stake in LMPL at a swap ratio of 2:5. CRISIL Research has assigned a CRISIL IER fundamental grade of ‘2/5' (pronounced ‘two on five') to POCL. The grade indicates that the company's fundamentals are ‘moderate' relative to other listed equity securities in India. CRISIL Research has assigned a valuation grade of ‘5/5', indicating that market price has ‘strong upside' from the current levels.
Emkay Global
Sintex Ind (Buy)
CMP: Rs 70
Target: Rs 93
Sintex's 3Q12 APAT was lower than estimates due to lower monolithic (25 per cent y-o-y revenue decline and fall in EBITDA margins) and subsidiaries performance (59 per cent drop in PAT). Given FCCB repayment next year and working capital requirements increasing, management in the call sounded cautious on growth and has reserved its comments on FY13E for now. Working capital has gone up by Rs 250 crore versuss September 2011 (mainly due to monolithic), cash has gone down by Rs 190 crore versus September 2011 and debt remains at the same level. We have adjusted FY12 capex to Rs 400 crore versus Rs 500 crore earlier. Estimates cut by 23/28 per cent for FY12/13E. Current valuations pricing in negatives — free cash-flow, part FCCB repayment likely through debt, business momentum.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.