MAHINDRA AND MAHINDRA
Reco price/date: Rs 964/December 19
Current/Target price: Rs 967/NA
Mahindra and Mahindra (M&M) has announced that it will buy out Navistar’s stake in the commercial vehicle joint venture (JV), Mahindra Navistar Automotives Ltd (MNAL) and Mahindra Navistar Engines Pvt Ltd (MNEPL) for Rs 175 crore. M&M intends to acquire Navistar’s 49 per cent stake in both the JVs and make them wholly owned subsidiaries. Post the stake buyout, Navistar can continue sourcing components from India while M&M would continue to provide engineering services to Navistar. Further, the Navistar group would continue to support M&M through a license agreement and extend necessary support to MNAL and MNEPL. In the near term, M&M would require to infuse more capital as both the entities are loss making. Neutral.
Angel Broking
GODREJ CONSUMER PRODUCTS
Reco price/date: Rs 719/December 18
Current/Target price: Rs 732/Rs 660
Godrej Consumer Products Ltd (GCPL) continues to see strong growth across its household insecticides, soaps and international businesses. In analysts’ view, GCPL could see some gross margin improvement in the second half of FY13, but higher brand investment coupled with product launches are likely to cap Ebitda margins. Edelweiss has marginally pared its FY13 earnings estimate on account of higher advertisement and promotional spends. Valuations appear rich at 27.1 times/22.8 times FY14/FY15 estimated earnings. Investors should wait for a better entry point at about Rs 600 share price. Maintain Hold.
Religare Institutional Research
INDUSIND BANK
Reco price/date: Rs 421/December 6
Current/Target price: Rs 432/Rs 480
Though valuations have recently run up sharply and look expensive, analysts maintain their positive stance as IndusInd Bank is best placed in the emerging environment of steady and strong retail growth and declining interest rates. Analysts expect margins to improve over the next few quarters and asset quality to remain impeccable. The recent capital raising should support faster growth and analysts expect the bank to return to RoEs of 20 per cent over the next three years. The stock trades at 2.5 times FY14 estimated book value and 16 times FY14 estimated earnings and is likely to deliver an earnings CAGR of 29 per cent over the next two years. Maintain Buy.
Deutsche Bank Markets Research