BUY LUPIN Headquartered in Mumbai, India, Lupin Limited today is an
innovation led transnational pharmaceutical company producing a wide
range of quality, affordable generic and branded formulations and APIs
for over 70 countries in the world. Lupin remains amongst the prolific
R& D spenders in the industry which we believe bodes
well for its growth.
Lupin can turn out to be a major winner with the recent Japanese
crisis by tapping the opportunity. The Japanese subsidiary Kyowa
pharma to see rise sale of CNS drugs and anti-infective grew by 16% to
Rs. 1,727 Mn during Q3, FY 2010-11 which has 200 brands and adds 11%
-12 % revenue to the company. Kyowa also plans to launch atleast 4 – 5
products every year.
Lupin remains the 5th largest Generic player in the U.S. in terms of
prescriptions (IMS Health). Lupin emerged as the market leader (No. 1
by market share) in 13 out of 29 generic products in
the U.S. and 28 out of these 29 generic products rank in the Top 3
positions by market share
Pharma Major, Lupin Ltd. reported a top-line growth of 17% and net
profit growth of 39% for the third quarter, FY 2010-11.
Key Financial & Performance Highlights
• Net sales grew by 17% to Rs. 14,672 million during Q3, FY 2010-11,
up from Rs. 12,554 million (Q3, FY 09-10)
• Net profits grew by 39% to Rs. 2,240 million during Q3, FY 2010-11,
as compared to Rs 1,606 Mn. (Q3 FY 09-10)
• Earnings before Interest, Tax, Depreciation and Amortization
(EBITDA) grew by 15% to Rs. 3,007 Mn. during Q3, FY 2010-11, from Rs.
2,619 Mn. (Q3 FY 09-10).
Lupin is investing Rs.450 cr on capacity expansion, ramping up sales
force and launching new products.
The company has already expanded its reach from 890 medical
representatives 3 years back to 3,500 at present and is looking to
hire more employees this fiscal in India.
• Lupin has got a rich pipeline for various geographies. They have
close to about 145 filing for America as of now; and there could be a
few more by the end of this fiscal targeting annual revenue of $3
billion, three times that of the revenue in 2010.
• Lupin's profit margin has gone up from 14% to 20% ie on an average
50 to 70 base points increase, owing to better realization of products
& cost reduction.
• Lupin has grown from manufacturing of medical ingredients to
manufacturing of bulk medicine. With its hold in global market, entry
in bulk pharma has high potential for growth.
Intact growth in FY 2011-12 in the sector due to 1) Visibility
increase in launches in US. 2) OCs launch from Sep 2012E.3) Minimal
threat of generic competition to Suprax.
We believe the recent fall in stock is a good opportunity point as
long term drivers are intact.
We recommend 'BUY' on the stock at CMP 406 with a target price of Rs…
510... Valuing it at 20x FY2012E earnings.
BUY AREVA T&D India Ltd, the Indian subsidiary of AREVA France SA,
engages in the design and manufacture of equipment, systems, and
services for transmission and distribution of electricity in India.
Areva managed to retain its leadership position for the third year has
posted a net profit after tax jump of 181.03% to Rs. 62.95 crore on
39.54% increase in net sales to Rs. 1047.85 crore in Q3 September 2010
over Q3 September 2009.
Eight new factories were built at three locations: Vadodora in
Gujarat, and Hosur and Padappai in Chennai in Tamilnadu.
The comply of Areva T&D India's business at global level by the
Consortium of Alstom-Schneider continues to fortify on the stock.
Although the signs of recovery are emerging, the stock is currently
trading at lower valuations that contradict the fundamental.
Building on the strong operating performance with relatively low
interest and depreciation cost as proportion to sales and lower tax
incidence, we expect company to register CAGR of 13.5% respectively.
We expect the stock perform dominant in earning at CMP 245 with a
target price of …440…
BUY FIRSTSOURCE SOLUTION LTD formerly known as ICICI OneSource was
incorporated in 2001.
Firstsource Solutions Limited provides a range of business process
outsourcing services.
It offers business process management services to the banking,
financial services and insurance (BFSI); telecommunications and media;
and healthcare industries. Firstsource has a "rightshore" delivery
model with operations in India, U.S., UK and Philippines.
INVESTMENT VIEW:-
Firstsource Recognized with Top Honors at the International Quality
and Productivity Council (IQPC) Conference
Leadership position in the healthcare industry
About 40% of the revenue comes from its healthcare vertical catering
mainly to US markets
Divestment of Stake
ICICI bank is likely to reduce its stake in FSL from 19.4% to 5%;
ICICI bank is looking to sell it at 5% premium to the market price.
Stable relationships with existing clients
The Company works with more than 1000 clients. 7 of the top 10 clients
have grown during the quarter.
Foreign Exchange Hedges
Outstanding FX hedge sat $ 31million and £ 35million for USD and GBP
respectively.
Employee Strength
26,668 (as of 31st Dec, 2010) added 1,759 employees in this quarter.
Revenues of Rs. 5,146 million, up 4.8% Y-o-Y compared to Rs. 4,909
million for the quarter ended December
2009 and up 2.2% Q-o-Q compared to Rs. 5,036 million for the quarter
ended September 2010
Operating EBIT (earnings before interest and tax) of Rs. 479 million,
up 2.7% Y-o-Y compared to Rs. 467 million for the quarter ended
December 2009 and down 3.1% Q-o-Q compared to Rs. 494 million for the
Quarter ended September 2010.
As of December 31, 2010 Firstsource derived 55% revenues from the US,
33% from UK and 12% from APAC, including India.
As of December 31, 2010 Firstsource derived 37% revenues from Telecom
& Media, 34% from Healthcare, 27% from BFSI and 2% from others.
Inspite of Q3 being a seasonally weaker Quarter, Strong performance
both on revenues and profitability. We recommend a Buy on FSL at CMP
17 with a target price of …23…. with a upside of 35% from current
level.
BUY NEYVELI LIGNITE CORPORATION LIMITED (NLC) is a government-owned
lignite mining Indian company, which is wholly owned by the Union
Government (49%) and administered via coal ministry.
NLC Neyveli spreads over an area of around 54 square km, comprising
Neyveli Township and temporary colonies around 32 blocks. The company
runs the biggest open-pit lignite mines in India and mines around 24
million tonnes of lignite annually for fuel, with an installed
capacity of 2490 MW of electricity per annum.
NLC now elaborated its project to Rajasthan also in mining as well as
thermal stations, 3 big mines also supplies a huge amount of sweet
water to Chennai. The Tamil Nadu electricity board has a JV with the
Neyveli Lignite Cooperation (NLC) for two projects – A 1000-MW coal-
based project at Tuticorin in southy Tamil Nadu at the cost of Rs 4000
crore and the Jayamkondam lignite power project at a cost of Rs 5000
crore for 1000 – MW power plant.
The company has also planned to develop clean coal technologies like
extraction of coal bed methane (CBM) and Underground coal gasification
for which several steps have been taken.
Neyveli Lignite is an open-cast mechanized lignite mine. The Company
has 50 percent joint venture with Tamil Nadu Electricity Board.
Recently, the company announced its plans to invest about $8.2 billion
on power generation and mining capacity augmentation by 2017. The plan
also includes development of power projects using other fuel feed. Of
the proposed investment, $2.04 billion has already been spent on
ongoing projects.
Excessive monsoon in Q3 hit earnings but strong expansion plans and
with regard to aggressive expansion & diversification plans to explore
coal-based, wind and solar power generation projects will add on
strength to the cashbook.
With the recommended target price of Rs 140.
BUY SYNDICATE BANK was established in 1925 spanning over 80 years of
pioneering expertise, the Bank has created for itself a solid customer
base comprising customers of two or three generations.
Syndicate Bank recorded 57% increase in its operating profit for the
nine months ended December 2010. The operating profit was Rs2078 crore
for the period ended December 2010 as against Rs1321 crore recorded
during the corresponding period of the previous - year.
Net Interest Income increased from Rs1880 crores for the nine months
ended December 2009 to Rs3222 crore for December 2010 registering
growth of 71%.
The Global Business of the Bank was at Rs.2, 25,910 crore as on
31.12.2010 as against Rs1, 91,619 crores as on 31.12.2009 registering
a growth of 18%.
Inflationary expectations & tight liquidity adversely impacted the NIM
(Net Interest Margin) which leads to fall in this stock price. The
concern negative points appears to be unfreeze & correction in the
stock overdone. Syndicate loan books expected to grow by 20%. Thus the
stock looks attractive investment opportunity.
Since its 52 week high of Rs 164 has been declining in a well defined
channel lows and highs. At its current low of Rs 113, the stock has
underperformed Sensex & Bankex & the close to its book level.
We think the stock is cheap at 1.4x estimated FY12 book value. Thus
studying all the aspect we recommend a strong BUY with the target …
195………..
BUY HOTEL LEELA India's fifth-biggest luxury hotel chain founded in
1957. Leela Group is engaged in the business of ready-made garments
and luxury hotels and resorts.
Hotel Leelaventure, plans to raise funds through divest as much as
14.95% stake through a fresh issue of shares to unnamed investor(s)
and besides monetise its land bank by selling non-core assets
including a major portion of a commercial office space next to its
hotel in Chennai. It expects to generate about Rs 950 crore from such
sale of land and joint development, which would be used for reducing
its debt. The other decision to sell a stake will bring around Rs 270
crore ($60 million) additionally as cash into the firm, according to
estimates based on current market price. The strategic or financial
investor will pick just a tad less than 15% stake that would trigger
an open offer...
India is one of the fastest growing tourist markets in the world
inherently rooted concept of hospitality in form of "Ätithi Devo
bhava" . At present, your Company operates six hotels at the
locations viz. Mumbai, Bangalore, Goa, Kovalam, Udaipur and Gurgaon
comprising 1523 guest rooms and 90 serviced apartments.
Hotel Leela is expected to commence to aided by addition of 260 rooms
in Delhi and 332 rooms in Chennai properties.
However, as the results are expected to be seen only in the medium
term and given the rich valuations, these estimates will most probably
change depending on how soon the company's fund raising plans
materialise. Broadly, while the company's profit at the net level will
get a boost, its EPS may not change proportionately given the planned
equity dilution.
At this level, at Rs 38, we believe the stock looks richly valued (EV/
Ebitda of over 17 times 2011-12 estimates) and largely factors in most
of the recent positive developments the stock is unlikely to rise in a
hurry. Thus studying the fundamental aspect of Hotel Leela we
recommend a STRONG Buy with a target of Rs 58.
SELL BAJAJ AUTO, the 2nd largest manufacturer of two-wheelers in
India, reported less growth compared to its peers, with production
constraints, diminishing brand image and market acceptance, coupled
with detoriating quality & inability to achieve target sale, the stock
looks struggling. Its not far that within 6 months Bajaj will
downgrade to 4th position from its 2nd position in two wheeler giving
its way to Honda & TVS in Indian market.
Fierce competition with expansion plan of Honda, Hero Honda, TVS,
Mahindra in two wheeleres and TVS, Piaggio,Mahindra in three wheelers
will make survival difficult for Bajaj Auto. Input costs have
increased recently following the spurt in steel, rubber and aluminum
prices. Thus, Margins of Auto universe is expected to contract
sequentially to reflect higher input costs. This will result in very
high operating margin pressure.
Considering the fact that the scrip is currently trading at a PE of
15.88x which is very high, the scrip is available at the premium hence
we advice to stay away from this counter
2 years back Bajaj was trading at 300/share price. On 3rd November,
2010 the stock touched 3200 i.e.1600 due to 1:1 bonus and its is more
than 1000% increase in price. This is not fundamentally or technically
justified. Fundamentally, Bajaj is losing its ground by decreasing
market share. 4 years back, it enjoyed market share of more than 35 %
and currently its market share is mere 17.5 % (as explained above) and
further on a fall.
Thus studying the fundamental and technical aspect of Bajaj Auto, it
is trading at its highest level and we recommend a STRONG SELL on
Bajaj Auto at CMP 1380 with target it falling down to 1100 soon.
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