Ajanta Pharma
Reco price: Rs 300
Target price: NA
Ajanta Pharma has reduced its exposure to tender based sales (five per cent in FY11 vis-à-vis 23 per cent in FY07), as a result of which Ebitda margins have expanded by 386 basis points to 19.1 per cent over the same period. The management has guided for 16-18 per cent CAGR growth from domestic markets over FY11-13E, driven by 10-12 new product launches, line extensions and therapy expansions.The company has planned a capex of Rs 35 crore in FY11 & Rs100-125 crore over FY13-14 in order to gear-up for its entry into the regulated market of US. The stock trades at steep discount to its comparable peers at 7.0x FY11E EPS and 5.5x FY11 EV/Ebitda. With improving growth trajectory, analysts believe the valuation gap to narrow going forward.
—Emkay Global
IDFC
Reco price: Rs 135
Target price: Rs 174
There has been a lot of issues surrounding the infrastructure space recently, especially in the power segment. IDFC management is of the opinion that most current concerns are related to execution, and are likely to see some improvement in second half of FY12. IDFC's loan growth should remain healthy in FY12 at around 25 per cent. Management says NIM pressure is seeing signs of easing as banks have been raising their lending rates and interest spreads have limited downside from current levels (2.2 per cent currently). IDFC does not have much exposure to the merchant power segments and believes key in asset quality will be selection of the sponsors — IDFC relatively well placed. IDFC's broking, investment banking, and asset management remain challenging as increasing competitive intensity has impacted profitability.
—Citigroup
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HDIL
Reco price: Rs 162
Fair value: Rs 225
HDIL’s Mumbai International Airport (MIAL) project got a green signal as the issue with respect to ‘eligibility criteria’ has been sorted and MMRDA has commenced the shifting of eligible slum dwellers from MIAL slums to Kurla Premier Compound. This decision of MMRDA is a positive move for HDIL as (1) it paves way for Phase-II of the project leading to ramp up in phase-I & II of the project.(2) the development work in phases is likely to help increase TDR generation. Analysts expect TDR generation to exceed 1 msf post two quarters; this is higher from company’s earlier guidance of 0.75-0.9 msf per quarter for FY12 given in their Q4FY11 conference call. (3) Tax rate going forward might be lower than earlier as MAT rate is applicable on TDR sale. Maintain buy.
—Pinc Research
Exide Industries
Reco price: Rs 153
Fair value: Rs 175
Exide Q4FY11 sales at Rs 1,226 crore has grown by 19 per cent and net profit at Rs 164 crore has grown by 22 per cent YoY. On Q-o-Q basis, company has recorded growth of 17 per cent and 32 per cent respectively. Company is confident that on-going work on new capacity addition in both automotive and two-wheeler segments will ease the capacity constraints by end of Q2FY12 which will lead to higher sales volume and higher margins. It has an edge over its competitors in in-house lead procurement from its own two smelters, which is expected to increase from 55 per cent to 70 per cent by FY12. It has comparatively less exposure to fluctuating international lead prices. Maintain buy.
—Bonanza Portfolio