Buy calls
Sterlite Tech at cmp
beml at cmp
powergrid @ cmp
Tuesday, February 19, 2008
tip 19/2
Oil Country Tubular, CMP- Rs. 86, Target - Rs. 105, Short term
Mcdowell, CMP- Rs. 1602, Target - Rs. 2000, Short term
Mcdowell, CMP- Rs. 1602, Target - Rs. 2000, Short term
India Foils
We had initated buy call in India Foils at Rs 27 which got hammered to Rs 14 in very thin volume in last 2 weeks.
Mr Dutta CEO of ESS DEE Aluminium in an interview to a wire channel has indicated a price of Rs 150 crs for India Foil and also indicated to acquire 90% shares which mean the shares will be de listed and the current market cap of Rs 46 crs too much under priced.
At Rs 150 crs market cap basis and in view of the fact that promoters hold only 39% the first fair price of open offer could Rs 50 per share where the market cap of Rs 150 crs gets matched.
The scope of revision in the price is also not ruled out as 57% stake is held by others.
Investors may take their own call on the approximate price of open offer as our price calculations are only indicative.
We have vested interest in the stock.
Mr Dutta CEO of ESS DEE Aluminium in an interview to a wire channel has indicated a price of Rs 150 crs for India Foil and also indicated to acquire 90% shares which mean the shares will be de listed and the current market cap of Rs 46 crs too much under priced.
At Rs 150 crs market cap basis and in view of the fact that promoters hold only 39% the first fair price of open offer could Rs 50 per share where the market cap of Rs 150 crs gets matched.
The scope of revision in the price is also not ruled out as 57% stake is held by others.
Investors may take their own call on the approximate price of open offer as our price calculations are only indicative.
We have vested interest in the stock.
Monday, February 18, 2008
some accumulation for BSE
Market seems to be volatile and weak. I would like to advise investors to be cautious and keep investing in step in every fall and keep some cash available.
Some value stocks to keep watch on and accumulate -
Bharati Shipyard - CMP- Rs 580 , target - Rs. 700, Short term
Alps Industries, CMP- Rs 46.8, Target - Rs. 60 , short term
Gv films , CMP- Rs 6.83, Target Rs. 9, short term.
Nagarjuna Fertilizer, CMP- Rs. 48, Target - Rs. 60, short term
Some value stocks to keep watch on and accumulate -
Bharati Shipyard - CMP- Rs 580 , target - Rs. 700, Short term
Alps Industries, CMP- Rs 46.8, Target - Rs. 60 , short term
Gv films , CMP- Rs 6.83, Target Rs. 9, short term.
Nagarjuna Fertilizer, CMP- Rs. 48, Target - Rs. 60, short term
BSE tips for 18/02
Buy Petronet @ 77 tgt 90
Buy Bombay dyeing at 700 tgt 850
Sell R power at 430 (closing buy call)
Cuy Rpower at 400-410 if available today only
Buy Nifty 5250 March
Buy Powergrid 107 tgt 120
Buy Bombay dyeing at 700 tgt 850
Sell R power at 430 (closing buy call)
Cuy Rpower at 400-410 if available today only
Buy Nifty 5250 March
Buy Powergrid 107 tgt 120
Wednesday, February 13, 2008
Long Term Tips
Infosys buy @ cmp tgt 2000
RCom cmp tgt 800
Bharti cmp tgt 1100
Ranbaxy cmp tgt 550
R Power cmp tgt 525
Powergrid cmp tgt 136 in a month
NTPC @ cmp tgt 300
RCom cmp tgt 800
Bharti cmp tgt 1100
Ranbaxy cmp tgt 550
R Power cmp tgt 525
Powergrid cmp tgt 136 in a month
NTPC @ cmp tgt 300
Tuesday, February 12, 2008
Friday, February 8, 2008
Ahmednagar Forgings
Recommendation: Book Out
Current market price: Rs203
Book out
Result highlights
*
The Q2FY2008 results of Ahmednagar Forgings Ltd (AFL) are below our estimates.
*
The company's sales for the quarter grew by only 8.8% to Rs165.8 crore. The domestic sales remained flat at Rs111 crore and the export sales grew by 30% to Rs54 crore. The export revenues were flat on a quarter-on-quarter (q-o-q) basis.
*
The operating profit margin (OPM) has been maintained at 20.6%. As a result, the operating profit grew by 8.5% to Rs34.2 crore. Higher interest and depreciation costs led the profit after tax (PAT) to remain flat at Rs17.7 crore.
*
The ramp up in exports is not happening, as expected. There has been a delay in product approvals for exports. The domestic revenues are also not growing due to a slowdown in the domestic market.
*
AFL is making preferential allotment of 17 lakh shares and 38 lakh warrants to its promoters at a price of Rs240, thereby raising Rs132 crore. The funds will be used in buying assets such as forging lines. The preferential allotment would lead to an equity dilution of 16%. The resolution to raise money through debt of Rs2,000 crore has also been cleared.
*
Slow ramp up in exports, slow down in domestic market and 16% equity dilution would be a dampener on AFL's performance. We downgrade our earning estimates for FY2008 and FY2009 by 25% to Rs16.3 and Rs20.6 respectively. At the current market price of Rs203, the stock is trading at 9.9x its FY2009E earnings and is available at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 6.0x. We advise investors to Book out of the stock.
Current market price: Rs203
Book out
Result highlights
*
The Q2FY2008 results of Ahmednagar Forgings Ltd (AFL) are below our estimates.
*
The company's sales for the quarter grew by only 8.8% to Rs165.8 crore. The domestic sales remained flat at Rs111 crore and the export sales grew by 30% to Rs54 crore. The export revenues were flat on a quarter-on-quarter (q-o-q) basis.
*
The operating profit margin (OPM) has been maintained at 20.6%. As a result, the operating profit grew by 8.5% to Rs34.2 crore. Higher interest and depreciation costs led the profit after tax (PAT) to remain flat at Rs17.7 crore.
*
The ramp up in exports is not happening, as expected. There has been a delay in product approvals for exports. The domestic revenues are also not growing due to a slowdown in the domestic market.
*
AFL is making preferential allotment of 17 lakh shares and 38 lakh warrants to its promoters at a price of Rs240, thereby raising Rs132 crore. The funds will be used in buying assets such as forging lines. The preferential allotment would lead to an equity dilution of 16%. The resolution to raise money through debt of Rs2,000 crore has also been cleared.
*
Slow ramp up in exports, slow down in domestic market and 16% equity dilution would be a dampener on AFL's performance. We downgrade our earning estimates for FY2008 and FY2009 by 25% to Rs16.3 and Rs20.6 respectively. At the current market price of Rs203, the stock is trading at 9.9x its FY2009E earnings and is available at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 6.0x. We advise investors to Book out of the stock.
Ranbaxy Laboratories
Recommendation: Buy
Price target: Rs558
Current market price: Rs374
Generic Nexium—a potential exclusivity opportunity
Key points
*
Ranbaxy Laboratories (Ranbaxy) has received tentative approval from the US Food and Drug Administration (US FDA) for generic Esomeprazole Magnesium Delayed-Release Capsules, 20 mg (base) and 40 mg (base), the generic version of Astra Zeneca's blockbuster drug Nexium. Annual sales of Nexium is around $5.5 billion (IMS - MAT: December 2007).
*
Ranbaxy was the first to file a Para IV abbreviated new drug application (ANDA) with the US FDA, seeking approval to market Nexium in the USA. It will thus gain from being awarded a 180-day period to exclusively market the product in the USA upon final approval from the USFDA. We expect the final approval for Ranbaxy's version of generic Nexium to come by April 2008, when the 30-month stay expires, thus allowing Ranbaxy to launch the product 'at-risk' in the USA with 180-day exclusivity.
*
Based on our calculations, we believe the Nexium opportunity could yield $550 million in revenues and $220 million in profits for Ranbaxy during the 180-day exclusivity. This will translate into incremental earnings of Rs21 per share for Ranbaxy. However, we do not believe Ranbaxy would launch the product 'at-risk' in the USA before the outcome of the litigation. In such a case, Ranbaxy could attempt to enter into an out-of-court settlement with Astra Zeneca for the launch of generic Nexium.
*
Ranbaxy has already announced four exclusivity opportunities until 2010, collectively valued at Rs68 per share. Further, Ranbaxy has in its kitty, 18 more Para IV filings with potential first to file (FTF) status, representing a market size of about $27 billion. The company expects to monetise at least one FTF opportunity every year. We expect the news flow on Para IV challenges and associated exclusivity opportunities to continue.
*
We expect the announcements on de-merger of the new drug discovery research (NDDR) division, clarity on the Lipitor launch in Canada and other countries across the world and news flow on potential FTF opportunities to act as positive triggers for the stock. At the current market price of Rs374, Ranbaxy is trading at 17.5x its estimated CY2008E and 15.3x its estimated CY2009E earnings. We maintain our Buy recommendation on the stock with a sum-of-the-parts price target of Rs558 (20x CY2009E earnings of base business plus Rs68 for exclusivity opportunities).
Price target: Rs558
Current market price: Rs374
Generic Nexium—a potential exclusivity opportunity
Key points
*
Ranbaxy Laboratories (Ranbaxy) has received tentative approval from the US Food and Drug Administration (US FDA) for generic Esomeprazole Magnesium Delayed-Release Capsules, 20 mg (base) and 40 mg (base), the generic version of Astra Zeneca's blockbuster drug Nexium. Annual sales of Nexium is around $5.5 billion (IMS - MAT: December 2007).
*
Ranbaxy was the first to file a Para IV abbreviated new drug application (ANDA) with the US FDA, seeking approval to market Nexium in the USA. It will thus gain from being awarded a 180-day period to exclusively market the product in the USA upon final approval from the USFDA. We expect the final approval for Ranbaxy's version of generic Nexium to come by April 2008, when the 30-month stay expires, thus allowing Ranbaxy to launch the product 'at-risk' in the USA with 180-day exclusivity.
*
Based on our calculations, we believe the Nexium opportunity could yield $550 million in revenues and $220 million in profits for Ranbaxy during the 180-day exclusivity. This will translate into incremental earnings of Rs21 per share for Ranbaxy. However, we do not believe Ranbaxy would launch the product 'at-risk' in the USA before the outcome of the litigation. In such a case, Ranbaxy could attempt to enter into an out-of-court settlement with Astra Zeneca for the launch of generic Nexium.
*
Ranbaxy has already announced four exclusivity opportunities until 2010, collectively valued at Rs68 per share. Further, Ranbaxy has in its kitty, 18 more Para IV filings with potential first to file (FTF) status, representing a market size of about $27 billion. The company expects to monetise at least one FTF opportunity every year. We expect the news flow on Para IV challenges and associated exclusivity opportunities to continue.
*
We expect the announcements on de-merger of the new drug discovery research (NDDR) division, clarity on the Lipitor launch in Canada and other countries across the world and news flow on potential FTF opportunities to act as positive triggers for the stock. At the current market price of Rs374, Ranbaxy is trading at 17.5x its estimated CY2008E and 15.3x its estimated CY2009E earnings. We maintain our Buy recommendation on the stock with a sum-of-the-parts price target of Rs558 (20x CY2009E earnings of base business plus Rs68 for exclusivity opportunities).
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