LUPIN
Reco price/date: Rs 757/August 28;
Current/target price: Rs 809/Rs 850
Reiterate positive view on Lupin and expect a gradual recovery in operating performance over the next three quarters. The research firm expects recovery to be driven by improved US launch period in H2FY14, stable branded market performance and favorable currency. They believe the recent stock correction offers an attractive entry opportunity-maintain add with unchanged target price at Rs 850. Expect the visible US pipeline and diverse presence in branded markets to provide medium-term earnings support. Generic entry for Suprax and approval delays are key risk factors. Lupin's June quarter performance performance has been negatively impacted by weak sales performance across key regions. Operating performance is expected to improve on a sequential basis. Expect India sales to recover from the negative growth witnessed in Q1, ramp-up in recent US launches and clarity of launches in H2FY14 and currency turning positive. Maintain Add.
BHARTI AIRTEL
Reco price/date: Rs 294/August 28;
Current/target price: Rs 299/Rs 392
Key takeaway from FY13 annual report list priorities for FY14 which include Margin expansion, free cash flow generation, and debt reduction. Focus continues on regaining pricing power in India as competitive environment turns benign. Higher penetration for three growth engines of Africa business - Mobile money, data and value added services. Pricing power and lower subscriber acquisition costs in India coupled with initiatives in Africa (launch of airtel money, expansion of 3G network and distribution) should lower debt/equity to 0.8x in FY14 (1x in Q1FY14). Target price pegged at Rs 392 (7x FY15E EV/Ebitda). Maintain Buy.
PVR
Reco price/date: Rs 368/August 26;
Current/target price: Rs 390/Rs 470
Post the acquisition of Cinemax, PVR has become India's largest multiplex chain with 89 properties, 383 screens and 93000 seats. Being the only player that is still expanding aggressively, it is further extending its leadership. Post amalgamation of Cinemax, PVR will get the benefit of economies of scale, helping to reduce costs in the F&B segment, a 70 per cent gross margin business. Besides film exhibition and distribution, it is expanding in lifestyle/entertainment businesses like restaurants, coffee shops, gaming zones and in-mall entertainment. Expect PVR's revenues to grow at a CAGR of 47 per cent and net profit at a CAGR of 49 per cent over FY13-15. RoCE and RoE should improve from 7.6 per cent and 7.8 per cent, respectively, to 13.3 per cent and 15 per cent in FY15, aided by merger synergies and lower capex. Value PVR at 8.5x FY15E EV/Ebitda, in line with most global players. Buy.
Reco price/date: Rs 757/August 28;
Current/target price: Rs 809/Rs 850
Reiterate positive view on Lupin and expect a gradual recovery in operating performance over the next three quarters. The research firm expects recovery to be driven by improved US launch period in H2FY14, stable branded market performance and favorable currency. They believe the recent stock correction offers an attractive entry opportunity-maintain add with unchanged target price at Rs 850. Expect the visible US pipeline and diverse presence in branded markets to provide medium-term earnings support. Generic entry for Suprax and approval delays are key risk factors. Lupin's June quarter performance performance has been negatively impacted by weak sales performance across key regions. Operating performance is expected to improve on a sequential basis. Expect India sales to recover from the negative growth witnessed in Q1, ramp-up in recent US launches and clarity of launches in H2FY14 and currency turning positive. Maintain Add.
-Kotak Securities
BHARTI AIRTEL
Reco price/date: Rs 294/August 28;
Current/target price: Rs 299/Rs 392
Key takeaway from FY13 annual report list priorities for FY14 which include Margin expansion, free cash flow generation, and debt reduction. Focus continues on regaining pricing power in India as competitive environment turns benign. Higher penetration for three growth engines of Africa business - Mobile money, data and value added services. Pricing power and lower subscriber acquisition costs in India coupled with initiatives in Africa (launch of airtel money, expansion of 3G network and distribution) should lower debt/equity to 0.8x in FY14 (1x in Q1FY14). Target price pegged at Rs 392 (7x FY15E EV/Ebitda). Maintain Buy.
-Axis Capital
PVR
Reco price/date: Rs 368/August 26;
Current/target price: Rs 390/Rs 470
Post the acquisition of Cinemax, PVR has become India's largest multiplex chain with 89 properties, 383 screens and 93000 seats. Being the only player that is still expanding aggressively, it is further extending its leadership. Post amalgamation of Cinemax, PVR will get the benefit of economies of scale, helping to reduce costs in the F&B segment, a 70 per cent gross margin business. Besides film exhibition and distribution, it is expanding in lifestyle/entertainment businesses like restaurants, coffee shops, gaming zones and in-mall entertainment. Expect PVR's revenues to grow at a CAGR of 47 per cent and net profit at a CAGR of 49 per cent over FY13-15. RoCE and RoE should improve from 7.6 per cent and 7.8 per cent, respectively, to 13.3 per cent and 15 per cent in FY15, aided by merger synergies and lower capex. Value PVR at 8.5x FY15E EV/Ebitda, in line with most global players. Buy.
-Motilal Oswal Securities