Analysts' corner

RESEARCH CALLS

Tayo Rolls
Current Price: Rs 186
Target: Rs 300

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Antique Stock Broking has given a strong buy for this Tata group company which is the largest integrated (makes its own pig iron) manufacturer of rolls in India. With steel industry estimated to grow at 10% till 2012, TRL's revenues are expected to grow at a CAGR of 25- 30% till FY10.

The company has been regularly increasing its capacities and plans to take it up to 18,000 TPA by 2010 from the current 13500 TPA. Exports will get a further boost post TISCO's acquisition of Corus as it plans to supply rolls to all nine plants of Corus across Europe.

BASF India
Current price: Rs 269
Target: Rs 300

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Sharekhan has put a buy on BASF India with a price target of Rs 300 from the current price of Rs 273. On the back of decent numbers in Q4, 2007, the company is expanding its capacities in key products like expandable polystyrene and polymer dispersion to cater to the consumption boom in its user sectors of white goods, home furnishings, paper and construction.

Further, it also has access to the wide product portfolio of its parent company to add to its existing line up in its three divisions""agriculture, performance products and plastics. Considering its growth prospects, the research firm believes that the company is trading at attractive valuations of 13.3x FY2007 earnings and 9.5x FY2008E earnings.

JK Lakshmi Cement
Current Price: Rs 107
Target: Rs 129

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SBICAP Securities is bullish on JK Lakshmi Cement (JKL) and believes that at current levels there is an upside of 20%. The recommendation is based on the robust growth in the earnings driven by savings in power cost and various other initiatives, cheaper valuations and an improved balance sheet.

The stock, research firm believes, is trading at hefty discount to its peers and deserves a rerating. The company is expanding cement production capacity by 1.2mn tonnes by the Oct'08 including split grinding unit of 1.1mn tonnes capacity which will result in savings of Rs 24mn on PAT level or addition of Rs 0.4 in the EPS for FY09E.

Dabur India
Current Price: Rs 100.85
Target: Rs 120

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Macquarie Research recommends a "buy" on Dabur India, at a price of Rs 99.60, with a 12-month target of Rs 120, denoting an upside of 20 per cent. Dabur India has achieved a niche positioning of being a premium player in herbal personal care products. Its brand portfolio includes ayurvedic hair care, oral care, and health supplement products, which deliver high margins to the company.

The company has delivered a consistent earnings growth of 20-50 per cent over the past five years. Macquarie expects Dabur India to maintain its sales momentum at a compounded rate of 17 per cent annually over the next three years. The stock is valued at 17 times its estimated FY08 earnings, which is at a 20 per cent discount to its Indian consumer goods sector peers.

Marico
Price Rs 56
Target Price Rs 69

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Emkay Share and Stock Brokers has recommended a buy on stock of Marico on the the back of growth in its well established core business, increasing presence in the broader "wellness and beauty" platform, rising international business and continued pursuit of newer avenues for growth-both organic and inorganic.

Emkay expects revenue growth to be at a CAGR of 17.5 per cent in FY2007-09E period and earnings growth at CAGR of 26.5 per cent, which is higher than industry earnings growth. At a recommonded price Marico is trading at PER of 18.9 times FY2009E earnings and EV/ EBIDTA of 11.7X FY2009E.

Dishman Pharma
Current Price: Rs 291
Target: Rs 360

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Karvy Stock Broking puts a "buy" recommendation on Dishman Pharma at the price of Rs 288, with a target price of Rs 360. The company had acquired Carbogen Amcis of Switzerland in August 2006, for $74.5 million.

Further, it has set up a QUATs facility in China. Add to this, its diverse customer base, the technology transfer model, and strengthening international presence is expected to boost the company's performance with greater revenue and earnings momentum. The stock is valued at 15 times its expected FY09 earnings.