Torrent Pharmaceuticals Ltd: Target price Rs 655, upside 37%
Torrent Pharmaceuticals plans to launch 2 products each in the chronic and the acute existing, 8-9 products in the new businesses derma, pain and Gynaecology etc. for the year.
Torrent Pharmaceuticals expects to launch 15 new products every year for the next 5 years. Further, the 3 markets to focus in the International markets are the Germany, Brazil and US. It is also quite bullish on the UK market going forward.
Torrent Pharmaceuticals has entered into a definitive binding agreement with Elder Pharmaceuticals Limited to acquire its branded domestic formulations business in India and Nepal (“India Business”) for a consideration of about Rs 2000 crores. This acquisition strengthens its position in the Women Healthcare, Pain management & Vitamins/Nutrition segments by enhancing & accelerating market access.
Torrent Pharmaceuticals is planning to improve its development through expansion into further locations and increasing its presence in new therapeutical area as well as launch of new products to fill gaps in its current portfolio.
SMC sees a price of Rs 655 in one year time frame, based on estimated FY15E EPS of 36.38 on target P/Ex of 18.
Cairn India Ltd: Target price Rs 421, upside 32%
Cairn India maintained its trajectory of gross production growth in Rajasthan to an average of 175,478 boepd during the quarter ended September 2013, up 1 per cent QoQ. The asset is currently producing around 178,000 boepd, and remains on track to deliver a FY’14 exit production target of over 200,000 boepd.
Cairn India’s consolidated net profit jumped by 45.8% to Rs 3385.08 crore. Its new sales grew by 4.7% to Rs 4649.91 crore in Q2 September 2013 over Q2 September 2012.
In the last few years, Cairn India has delivered strong financial performance. Cairn India is focused on exploration across the asset portfolio both in India and core areas internationally and has also started the seismic survey in its South Africa block, which is in line with it’s exploration led growth strategy focused on replacement and growth of reserves leading to long term sustainable value creation.
SMC has a price target of Rs.421 in one year time frame on a target P/E of 7x and FY15 (E) earnings of Rs.60.21.
Adani Ports: Target price Rs 219
Adani Ports, in the last few years, has reported steady growth in its revenue and profits. Going forward, Adani Ports is likely to maintain the growth momentum on the back of huge capex undertaken by it.
Adani Ports registered 24 per cent growth in consolidated net profit to Rs 343.03 crore for the quarter ended September 2013. On strong growth in throughout the sales grew by 47 per cent to Rs 1045.87 crore.
Adani Ports is also in the process of developing facilities at the Murmugao Port, the Vizag Port and the Kandla Port (Tuna) and plans to handle 200 million tonnes of cargo by 2020.
SMC expects Adani Ports to see a price target of Rs.219 in one year time frame on one year average P/E of 20.98x and FY15 (E) earnings of Rs.10.45.
Crompton Greaves Ltd: Target price Rs 202, upside 53%
Crompton Greaves, during the FY13, has acquired 100 per cent of ZIV, a global leader in the high value Smart Grid and Automation Solutions segments for Industrial and utilities companies.
This acquisition expands Crompton Greaves’ portfolio for power system automation and protection and creates a strong platform for it in the smart grid arena. Crompton Greaves maintains its FY14 revenue guidance of 8-10% given at the start of the current fiscal.
With a unique combination of businesses, Crompton Greaves is well poised to capitalise on future global growth opportunities. Going forward, Crompton Greaves is expected to register a healthy sales growth, supported by strong order backlog.
On the estimated September FY15E EPS of Rs 8.09 and target P/Ex of 25x, SMC sees a price of Rs 202 in one year time frame.
Escorts Ltd: Target price Rs 179, upside 28%
Escorts had incurred a capex of about Rs 80 crore in 12 months ending Sep’13 and will incur another capex of about Rs 50 crore in next 12 months. Small changes at the management level have started yielding results in terms of improvement in utilization rates, continuous introduction of new products, improved gross margins, cost efficiencies, along with the decrease in member of staff cost and company’s performance in the last two-three quarters.
Escorts will continue to remain focused on execution to further improve the operating performance in the months ahead. Consistently strong results over the past few quarters is an outcome of introducing high power and specialized tractors, which are improving volumes and strengthening margins.
On the estimated September FY15E EPS of Rs 17.68 and two year average P/Ex of 10.13x, SMC sees a price target of Rs 179 in one year time frame.
Essel Propack Ltd: Target price Rs 68, upside 30%
Essel Propack expects strong third quarter in FY’14 and continues to remain positive about its mission hi 5, which depicts a target of about US $ 465 million turnover at consolidated at the level by 2015.
Essel Propack’s Net profit rose 23.66% to Rs 28.69 crore in the quarter ended September 2013 as against Rs 23.20 crore during the previous quarter ended September 2012. Sales rose 10.38% to Rs 526.07 crore in the quarter ended September 2013 as against Rs 476.60 crore during the previous quarter ended September 2012.
Essel’s business is driven by strong and sustained growth of the FMCG sector. Its R&D capability, global customer network, large scale and manufacturing expertise, may help in seizing the opportunity that is being continuously thrown up across the globe.
SMC sees a price of Rs 68 in one year time frame, based on estimated FY15E EPS of 9.04 on one year average P/Ex of 7.55.
Mahindra & Mahindra Ltd: Target price Rs 1202, upside 25%
Mahindra & Mahindra’s recent acquisition Ssangyong Motor Company Limited, S. Korea, has reached brake-even in Q1FY14, thus providing with profitable ways with a 20% growth in consolidated revenues and a 114% growth in profits. In SsangYong, M&M is looking at a total of 1 trillion won of investment from CY 2013, 2014, 2015, and 2016.
Mahindra & Mahindra has so far invested Rs. 120 crore in the agriculture business, which includes Rs. 70 crore invested in Engineering, Procurement and Construction (EPC) Industries, the micro irrigation company it acquired in 2011.
Mahindra & Mahindra plans to also invest around Rs. 200 crore in the agriculture business in the next two years. Overall, by fiscal 2016, Mahindra has a target to achieve revenues of Rs 1,000 crore in the agriculture business
As its farm equipment expertise has grown over the years, Mahindra & Mahindra has expanded into key overseas markets. Currently, it has a strong presence in more than 40 countries and a global customer base of over 1.45 million.
The price increases will help to protect and maintain margins at around 11 per cent, going forward. SMC sees a price of Rs 1202 in one year time frame, based on estimated FY15E EPS of 75.56 on a one year average P/Ex of 15.91.
Punjab National Bank: Target price Rs 798, upside 27%
PNB is expecting the capital infusion of Rs 500 crore from Government through preferential allotment of 8596530 equity shares at Rs. 581.63 per share. This would improve the CRAR ratio by 15 bps and ploughing back of half-yearly profit would improve CRAR by another 54 bps.
Capital Adequacy ratio stood at 12.32 per cent with the Tier-I capital of 9.48 per cent 0at the end September 2013 under Basel II and 11.62 per cent with the Tier-I capital of 8.97 per cent under Basel III.
PNB’s September quarter ended performance is just an aberration as sluggish economy and high interest rates due to depreciating rupee and inflation have taken a toll on the profitability of bank.
But in the next half year, it is expected to be healthier with stable rupee an improving economic conditions in the country. On the estimated book value of Rs 1072.48 for FY15E and one year average P/BV of 0.74x, Punjab National Bank is expected to see a price target of 798 in one year time frame.
Wipro Ltd: Target price Rs 705, upside 29%
Wipro, backed by the improved performances in key verticals and geographies, during the quarter ended September 2013 reported 19% growth in the top-line at Rs 10990.70 on YoY basis. The bottom-line during the same period grew by 20% to Rs 1932.10 crore.
During the quarter ended September 2013, Wipro has posted its strongest growth in seven quarters. The strategy of focusing on the top 125 accounts is delivering the results. There is a broad based growth across the customers.
Going forward, Wipro’s growth momentum is likely to continue on the back of improved deal win rates and couple of large multi-year deal won by the company. SMC sees a price of Rs.705 in one year time frame on a target P/E of 20x and FY15 (E) earnings of Rs.35.27.
Sesa Sterlite Ltd: Target price Rs 264, upside 33%
Sesa Sterlite has world class assets, efficient operations and has strong track record. Despite volatile commodity prices and temporarily suspended iron ore operations at Goa and Karnataka, Sesa Sterlite has delivered a strong operational and financial performance during the quarter ended September 2013.
Sesa Sterlite expects to recommence mining in Karnataka soon and is hopeful that the Goa mining suspension will be resolved by the Supreme Court soon.
On this back drop, Sesa Sterlite has a robust growth potential going forward. SMC sees a price of Rs.264 in one year time frame on two year average P/E of 9.24x and FY15 (E) earnings of Rs.28.62.