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PINC Research
Lupin (Accumulate)
CMP: Rs 443.85
Target: Rs 513
The District Court of Delaware (US) has granted Shionogi Pharma's (Sciele Pharma) motion for preliminary injunction on generic Fortamet thereby prohibiting Lupin from further selling the product in US. We expect this injunction to lead to loss of Lupin's 180-day exclusivity. However, Lupin had partially monetised the opportunity by filling the channels in the two weeks of October 2011 at-risk launch. Further, if Lupin is able to secure favourable judgement in the case then it would receive $15 million from Shionogi Pharma as part of compensation. As a result, we don't see a material impact of the loss of exclusivity. We are positive on the stock given strong growth across regions over the next few years. We maintain ‘accumulate' on the stock with a target price of Rs 513.
Emkay Global
Havells India (Buy)
CMP: Rs 440.60
Target: Rs 460
New product launches across business segments and expansion in distribution network will drive 14-15 per cent domestic revenue growth. Europe business continues to remain fairly stable while Latin America and Asia continue as revenue-growth drivers for Sylvania. Margins are likely to be sustained at 7.3 per cent for FY12E. Strong H1FY12 is expected; continuity of growth momentum in domestic operations and sustainability of Sylvania profitability in H2FY12 is seen as well. We retain ‘buy' with price target of Rs 460, thereby implying target multiple of 8.6x FY13E EV/EBIDTA.
Bonanza
GSFC (Buy)
CMP: Rs 431
Target: Rs 505
During Q2FY12, even in challenging economic environment, the company came out with satisfactory results. The revenue for the September 2011 quarter came in at Rs 1,264.1 crore against Rs 1,300.6 crore recorded during the year-ago period. The results are better off on Q-o-Q basis, as sales increased by 4.7 per cent and PAT recorded increase of 50 per cent aided by substantial increase in other income. The company commissioned 8.4-MW wind mill power project. Recently, GSFC decided to enhance production capacity of its nylon-6 engineering plastic plant to meet the requirement of engineering and film grade plastics.
Sharekhan
Divi's Labs (Buy)
CMP: Rs 739.85
Target: Rs 1,047
After a full year of stock downsizing, the outstanding results in H2FY2012 have reaffirmed our confidence in the company's growth potential. The new facility at Vishakhapatnam started production from one of its blocks in June 2011. The remaining blocks are likely to get operational in a phased manner over FY2012-13, which will provide further thrust. The nutraceutical business could become a big opportunity with limited competition. With the order inflow picking up from H2FY2011 and its new plant getting operational, Divi's has a strong revenue growth visibility and the operating leverage in the business will boost its margins. At the current market price, the stock trades at a price-earning multiple of 20x and 16.1x. We maintain our ‘buy' recommendation on the stock.
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