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Bonanza
VIP Industries (Buy)
CMP: Rs 921
Target: Rs 1,000
VIP Industries recorded impressive set of numbers for Q1FY12 on the back of robust growth in sales volumes and values.
VIP enjoys strong brand royalty from the customers and thus was able to successfully pass on the cost increase without significant dip in demand. Management is confident that in FY12 also the company will be able to repeat the performance. Aiding the improved volumes will be the introduction of two new brands — Carltonm, the premium fashionable English luggage brand, and Skybags.
VIP Industries is planning to ramp up its focus on the fashion baggage and accessories segment. The company is expected to launch products in the ladies fashion bag segment.
MSEC
Biocon (Buy)
CMP: Rs 341
Target: Rs 405
We expect Biocon to register 20 per cent CAGR in adjusted revenues over FY11-13 on the back of strong visibility in revenues. Profitability is expected to register 29 per cent CAGR over the mentioned period on improving EBIDTA margins. After the recent correction, the stock is available at attractive valuations of 16x FY13E core EPS of Rs 21. We recommend a Buy, with a SOTP target price of Rs 405, implying an upside of 20 per cent from current levels. Our target price is based on 17x FY13E core EPS and the Pfizer deal fetches NPV of Rs 52 a share.
M & M (Buy)
CMP: Rs 798
Target: Rs 901
M&M is gearing up to ride structurally stronger farm equipment sector growth. M&M is investing Rs 300 crore to augment its tractor capacity by setting up a greenfield, 100,000 unit per annum plant in Zaheerabad, Andhra Pradesh, which is expected to get operational in CY12. On completion of this plant, M&M's installed capacity for tractors would stand at 356,000 units. After M&M's expansion, we expect the industry to grow at 12-15 per cent over FY14-19. We recommend a Buy on the stock. Our fair value for M&M's core business stands at Rs 739, based on 13x FY13E EPS of Rs 56.8. We have assigned 30 per cent holding discount to M&M's fair stake in its other businesses fetching Rs 157 a share.
BP Wealth
Gujarat Pipavav (Buy)
CMP: Rs 69
Target: Rs 79
Gujarat Pipavav Port Ltd is managed and operated by APM Terminals (43.01 per cent stake), the ports and terminals company of the maritime giant A.P. Moller-Maersk Group. The company has repaid significant amount of its debt during the past 18 months which has reduced its interest payment substantially. On the back of capacity and margin expansion we believe GPPL will post healthy revenue and profits. At CMP the stock is trading at 12.9x CY13E EV/EBITDA and 20.5x CY13E P/E. We initiate coverage on GPPL with a BUY rating.
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