DLF
Reco price: Rs 204;
Target price: Rs 265
DLF is set to witness improvement in operations in FY13, with strong visibility of launches, robust demand and execution ramp-up shortening cash conversion cycle. Analysts expect positive operational surplus (post interest) from FY13, which would free up divestment proceeds for reducing financial leverage. Negotiations for three major assets — wind mills, Aman Resorts, and Mumbai NTC mill land (expected value: Rs 5,000 crore) are expected to reach a conclusive stage in the first half of FY13. Analysts expect improving core operations to drive stock upside. The stock currently trades at 1.3 times FY13 estimated book value — 35 per cent discount to its median of two times. Analysts value DLF’s land bank at Rs 295/share. Buy.
MOSL
CIPLA
Reco price: Rs 311;
Target price: Rs 393
Cipla’s partner Akorn Inc (Akorn), a niche speciality pharmaceutical company, has announced the launch of oral Vancocin in the US. This comes shortly after Cipla started generic Lexapro supplies to Teva. Analysts estimate Vancocin to add Rs 0.25/share on recurring basis to Cipla’s EPS, while Lexapro supplies would add Rs 1.5/share on NPV basis during the 180-day exclusivity period. While each of these products may not be significant as standalones, they add up to improve traction in Cipla’s exports, which have slowed recently. Moreover, pick-up in Seroflo in Russia and South Africa will further boost exports. Maintain buy.
ICICI Securities
Jaiprakash Associates
Reco price: Rs 82;
Target price: Rs 42
Jaiprakash Associates’ (JPA) stock is up 50 per cent in 2012 so far because of high beta. An expected cut in interest rate will improve JPA’s earnings, as 85 per cent of Ebitda goes in meeting interest cost. However, analysts assess JPA’s balance sheet will remain overleveraged with debt/equity of 4.2 times, as the company needs to fund large cash flow shortfalls. The positives, such as secured coal supply for the power plant and possible commencement of the Yamuna Expressway from April are priced in. Sell.
Kim Eng Research