India Cements
Reco price/date: Rs 67/April 17;
Current/target price: Rs 70.85/Rs 108
India Cements' stand-alone return ratios have remained subdued over the years due to weak profitability. However, we expect the company's earnings profile to improve going ahead due to better demand and realisation resulting in higher return ratios. The company recently announced a merger of two of subsidiaries Trinetra Cement and Trishul Concrete Products with itself. This is a move in the right direction as it would result in a healthier Balance Sheet considering India Cements' substantial advances and investment in these companies. We recommend a Buy rating on the stock.
Reco price/date: Rs 2,492/April 17;
Current/target price: Rs 2,497.40/Rs 2,336
GSK India's performance continues to suffer, adversely affected by the implementation of NLEM and DPCO 2013. We expect earnings to pick up, led by upward price revisions. While we anticipate margins to improve; it is unlikely to recover to the earlier range. In light of the weak performance, we downward our CY14E and CY15E earnings by 14 per cent and by 10 per cent, respectively. At the CMP, the stock is trading at 38xCY14E revised earnings and 32x CY15E revised earnings. The company has enjoyed superior valuations, given its leadership presence, healthy balance sheet and absence of a 100% subsidiary. At the current levels, the stock is trading higher than its peak valuation of 35x. We reiterate Sell.
Reco price/date: Rs 487/April 17;
Current/target price: Rs 498.6/Rs 582
IndusInd Bank (IIB) results surprised positively with NIM (net income margin) expansion of 10 basis points (3.75 per cent), fee income growth of 28 per cent, cost to income ratio improvement of 165 basis points QoQ and slippages contained at 1.4 per cent annual. Net earnings growth of 29 per cent (eight per cent ahead of estimates) was driven by steady 18 per cent and 42 per cent NII and non-interest income growth respectively along with the controlled opex growth. IIB's third planning cycle (FY14-17) strategy indicates gaining market-share (in select areas) with profitability. The bank would continue to focus on increasing income avenues, client base and branch network. Over FY14-17, management expects loan growth of 25-30 per cent annually, current to saving account ratio to inch up above 35 per cent and fee income growth greater than loan growth. With diversified loan book, improving liability franchise, strong fee income traction and superior asset quality, IIB is well placed to deliver 22 per cent PAT annually over FY14-16E. Maintain Buy.
Reco price/date: Rs 67/April 17;
Current/target price: Rs 70.85/Rs 108
India Cements' stand-alone return ratios have remained subdued over the years due to weak profitability. However, we expect the company's earnings profile to improve going ahead due to better demand and realisation resulting in higher return ratios. The company recently announced a merger of two of subsidiaries Trinetra Cement and Trishul Concrete Products with itself. This is a move in the right direction as it would result in a healthier Balance Sheet considering India Cements' substantial advances and investment in these companies. We recommend a Buy rating on the stock.
-Angel Broking
GlaxoSmithKline Pharma Reco price/date: Rs 2,492/April 17;
Current/target price: Rs 2,497.40/Rs 2,336
GSK India's performance continues to suffer, adversely affected by the implementation of NLEM and DPCO 2013. We expect earnings to pick up, led by upward price revisions. While we anticipate margins to improve; it is unlikely to recover to the earlier range. In light of the weak performance, we downward our CY14E and CY15E earnings by 14 per cent and by 10 per cent, respectively. At the CMP, the stock is trading at 38xCY14E revised earnings and 32x CY15E revised earnings. The company has enjoyed superior valuations, given its leadership presence, healthy balance sheet and absence of a 100% subsidiary. At the current levels, the stock is trading higher than its peak valuation of 35x. We reiterate Sell.
-Elara Capital
IndusInd BankReco price/date: Rs 487/April 17;
Current/target price: Rs 498.6/Rs 582
IndusInd Bank (IIB) results surprised positively with NIM (net income margin) expansion of 10 basis points (3.75 per cent), fee income growth of 28 per cent, cost to income ratio improvement of 165 basis points QoQ and slippages contained at 1.4 per cent annual. Net earnings growth of 29 per cent (eight per cent ahead of estimates) was driven by steady 18 per cent and 42 per cent NII and non-interest income growth respectively along with the controlled opex growth. IIB's third planning cycle (FY14-17) strategy indicates gaining market-share (in select areas) with profitability. The bank would continue to focus on increasing income avenues, client base and branch network. Over FY14-17, management expects loan growth of 25-30 per cent annually, current to saving account ratio to inch up above 35 per cent and fee income growth greater than loan growth. With diversified loan book, improving liability franchise, strong fee income traction and superior asset quality, IIB is well placed to deliver 22 per cent PAT annually over FY14-16E. Maintain Buy.
-HDFC securities