SMART INVESTMENT BY SMART PROFIT BUY LUPIN CMP: 445; Target: 510 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 Key Financial & Performance Highlights- FY 2010-2011 • Net sales grew by 20% to Rs.57,068 Mn. during FY 2010-11, up from Rs.47,736 Mn. (FY 2009-10) • Net profits grew by 27% to Rs.8,626 Mn. during FY 2010-11, as compared to Rs.6,816 Mn. (FY 2009-10) • Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) grew by 20% to Rs.12,000 Mn. during FY 2010-11, from Rs.9,981 Mn. (FY 2009-10) • Debt Equity Ratio improved to 0.22 as on 31st March, 2011 from 0.37 as on 31st March, 2010 Key Highlights Q4, FY 2010-11 • Net sales growth for Q4 FY 2010-11 was 18% at Rs.15,214 Mn. as against Rs.12,925 Mn. • Advanced markets sales (U.S., EU & Japan) grew by 10% to Rs. 7,853 Mn. over Q4 FY 2009-10 • Emerging markets sales grew by 45% to Rs.1,220 Mn, Q4 FY 2010 -11 as against Rs.840 Mn, Q4 FY 2009-10 • Net sales within India grew by 20% during Q4 FY 2010-11 recording revenue of Rs.3,907 Mn. and net sales outside India grew by 17% recording revenue of Rs.11,209 Mn. SALES CAGR – 27% EBIDTA CAGR – 32% PAT CAGR – 38% 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. 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 430 with a target price of Rs. 510... Valuing it at 20x FY2012E earnings. BUY RURAL ELECTRIFICATION CORPORATION LIMITED (REC) CMP: 205; Target: 300 Rural Electrification Corporation Limited (REC), under Ministry of Power, was incorporated on July 25, 1969 under the Companies Act 1956. REC a listed Public Sector Enterprise Government of India with a net worth of Rs.11,080 Crore as on 31.03.10. REC provides loan assistance to SEBs/State Power Utilities for investments in rural electrification schemes through its Corporate Office located at New Delhi and 17 field units (Project Offices), which are located in most of the States. The company has been rated among the top 500 Global Financial Services brands for 2010 by UK-based plc Brand Finance. REC is also among the Forbes Global 2000 companies for 2010. Rural Electrification Corporation (REC)'s net profit rose 28.4% to Rs. 2569.92 crore on 26.7% increase in total income to Rs.8495.26 crore in the year ended March 2011 over the year ended March 2010. At the time of announcing Q4 results, the board of directors of the company recommended a final dividend of Rs 4 per share for the year ended March 2011 For 2011-12, we expect REC’s loan growth to stabilize around 25 per cent, led by slowing disbursements and higher competition. Its disbursements are estimated to grow by 20 per cent, with some cushion from undisbursed loans of over Rs.100,000 crore. We have a ‘BUY’ rating on the stock at CMP of 202 due to REC’s robust long-term business outlook and valuations. Also to post compounded earnings growth of 25 per cent and average return on equity (RoE) of 22 per cent over 2011-12. BUY SYNDICATE BANK CMP: 110; Target: 160 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 has posted sharp growth of 72.02% in its net profit at Rs.2.89 billion for Q4FY11 as against Rs.1.68 billion for corresponding quarter a year ago. Total income of the bank has increased by 24.58% at Rs.34.16 billion for Q4FY11 from Rs.27.42 billion for Q4FY10. On an annual basis, the company posted revenue of Rs.11450.86 cr , up by 14% and net profit of Rs.1047.95 cr , up by 28.5% in March 2011. The board has recommended a dividend of Rs.3.70 a share (37%) for the year 2010-2011. The Global Business of the Bank increased to Rs.2,43,946 crore from Rs. 2,08,476 crore. Global deposit reached to Rs.1,35,596 crore while advances reached to Rs.1,08,350 crore as on 31.03.2011. 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 160 BUY AREVA T&D CMP: 245; Target: 440 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 of Rs. 88.08 crore in Dec 2010 quarter, an increase of 30% Y-o-Y. Net sales rose to Rs.1327 cr in Dec quarter compare to Rs.1150 cr in previous year’s quarter. Eight new factories were built at three locations: Vadodora in Gujarat, Hosur and Padappai in Chennai in Tamil nadu. 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 265 with a target price of 440. BUY KAMANWALA HOUSING CONSTRUCTION CMP: 42; Target: 90 Kamanwala Housing Construction Limited (KHCL), a company with a 25- year track record, based at Mumbai is into construction and development of commercial and residential buildings. It owns the famous Filmistan studio in partnership and has been in news recently that it is selling the land for a whooping amount of Rs. 600 cr. Kamanwala completed a commercial project “Pinnacle Corporate Park” at Mumbai’s most developing commercial hub Bandra Kurla Complex. Kamanwala’s Savoy Residence, a residential project of 60000 sq ft. in Santacruz West has been completed. Work at Savoy chambers, a commercial project of 67000 sq.ft in Santacruz West is completed. Kamanwala is constructing 5 towers residential project in Malad West .They are developing SRA project at Mahim. Kamanwala owns 125000 sq ft of land in Oshiwara area. They are soon starting with development of 35 acres of land in Hyderabad. Kamanwala holds huge land in Noida and Turbhe as well. With total land asset of more than Rs.1000 cr, market is severely undervalued at 40 with market capital of Rs.55 cr. Considering the zeroing of debt the company has undertaken, completion of its various projects and its land bank, we recommend a STRONG BUY on Kamanwala with it more than doubling to Rs.90 in 9 months. BUY NEYVELI LIGNITE CORPORATION LIMITED (NLC) CMP: 107; Target: 150 NLC is a government-owned lignite mining Indian company, which is wholly owned by the Union Government (49%) and administered via coal ministry. It is recently announced as “Navratna” by Government of India in April 2011. 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. Strong expansion & diversification plans to explore coal-based, wind and solar power generation projects will add on strength to the cashbook. BUY FIRSTSOURCE SOLUTION LTD CMP: 20; Target: 40 Formerly known as ICICI OneSource, 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 added 1,759 employees in this quarter. • FSL gave net sales of Rs.182.96 cr in March2011 quarter compare to Rs.175 cr in previous year. FSL displays Strong performance both on revenues and profitability. We recommend a Buy on FSL at CMP 20 with a target price of Rs.40 within 9 months. BUY HOTEL LEELA CMP: 40; Target: 60 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 Leela venture, plans to raise funds through divest as much as 14.95% stake through a fresh issue of shares to unnamed investor(s) and besides monetize 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. With an ever increasing demand in tourism business synergizing with growth plans of Leela, we recommend a BUY at current level of 40 with target of Rs.60. SELL BAJAJ AUTO CMP : 1300; Target : 1100 BAL, 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. Two wheeler auto industry is going through turmoil with declining demand reasoned because of increasing interest rate & restrained financial availability. Supply of two wheelers is on an increase with players like Honda, Hero Honda, TVS, M&M expanding their capacities. Bajaj is to be most affected with this gap in demand and supply as its brand preference has fallen from 2nd position to 5th position in market. Bajaj reported sale of 322235 two wheeler units, which includes export of 158422 units in April 2011 month. Last year in same month, Bajaj saw sale of 276095 units with export of 113911. This implies that the domestic sale of Bajaj remained stagnant with around 163000 units over the year showing no growth. Hero Honda, market leader in two wheeler, showed growth of whooping 40% in domestic market in the same time frame. Hero Honda is venturing into exports as well. With Government withdrawing DEPB benefit scheme for exporters, Bajaj auto will face severe problems in terms of their export profit. Rajiv Bajaj, MD, Bajaj Auto, stated his concern regarding the fall in export to take place due to withdrawing of DEPB scheme and increasing competition from China market in exports. He also shard his worry about further slowdown expected in two wheelers. With increase in competition, fall in demand, pressure rising due to high input cost, tightening of export policies, Bajaj Auto is losing grounds from domestic as well as export market. We recommend a STRONG SELL on Bajaj Auto with target of Rs.1100. DISCLAIMER:- Smart Profit has taken due care and caution in compilation of data for its reports. The market view and investment tips expressed on Smart Profit are in no way a guarantee either express or implied. However, Smart Profit does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.-- Thanks & Regards Shailesh Gowda Smart Profit 9967394114 / 9920266712 -- In association with www.buildingarabia.com You received this message because you are subscribed to the Google Groups "Dubai & International Trading Society" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/DubaiTrading?hl=en?hl=en
