KJMC Research

Canara Bank (Hold)

CMP: Rs 455

Target: Rs 482

Canara Bank reported PAT of Rs 87,556 crore, down by 20.8 per cent year-on-year which was below our estimates of Rs 94,855 crore. NII for the quarter also declined by 9.5 per cent which was mainly due to jump in interest expenses by 55.6 per cent to Rs 589,353 crore, while interest income grew by 32.2 per cent to Rs 78,1208 crore, which resulted in lower bottom line. However, other income grew sharply by 45.2 per cent to Rs 77,907 crore during the quarter. On the asset quality front, gross NPAs increased marginally by 8 basis points to 1.8 per cent, while NNPA to 1.5 per cent. The stock is currently trading at 1.0x of its FY13E ABV. We value the standalone business at 1.0x of its FY13E ABV at Rs 482 and revise from ‘Buy' rating to ‘Hold' with target price of Rs 482 from Rs 434.

Sushil Finance

Torrent Pharma (Buy)

CMP: Rs 550

Target: Rs 692

TPL's Q3FY12 numbers were in line with our estimates as the strong international business growth compensated for the prolonged sluggishness in its domestic business. We are optimistic of TPL's international business driving the next phase of growth with it reaping the benefits of its investments in markets such as the US, Brazil and Europe. With its US business likely to break even in 2012-13 and due to its operating leverage from the new Sikkim plant, its margins will receive further boosts. Also its tie-ups with AstraZeneca and two other MNCs will contribute to the top line growth. We believe the revival of domestic business will take time. In view of the scalability in its international business coupled with a healthy balance sheet, we maintain our target price of Rs 692.

Emkay Global

Divi's Lab (Buy)

CMP: Rs 783

Target: Rs 927

 Divi's Q3FY12 performance was below expectations with (a) Revenue at Rs 420 crore; (b) EBIDTA at Rs 150 crore & (c) PAT at Rs 123 crore. Top-line growth was aided by rupee depreciation, which contributed 13 per cent to the top-line growth. Capacity utilisation at Vizag plant remained flat quarter-on-quarter, expected to scale up from the first quarter next year. EBITDA margins at 36.2 per cent were lower than expectations in spite of rupee depreciation led by increase in expenses due to commissioning of Vizag plant and higher proportion of API sales. Growth story remains intact – Maintain Buy with a target price of Rs 927 on the stock (20x FY13 EPS of Rs 46.3).

Petronet LNG (Accumulate)

CMP: Rs 162

Target: Rs 180

 Results were above our and street estimates at bottom line, mainly due to higher volume growth of 7.3 per cent to 144.9tbtu during the quarter. EBIDTA margin declined by 157 bps mainly on account of higher input costs and increase in other expenditure. Company is planning to set up third LNG terminal at Gangavaram port, Andhra Pradesh, with the total capacity of 5 mtpa, while Kochi terminal will start from end of CY12. The recent news on proposed cap on gas marketing margin which is to be decided by PNGRB would keep the stock under pressure until any clarity emerges. Maintain accumulate with target price of Rs 180.

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