Ranbaxy Laboratories
Recommendation: sell at Rs 570
Ask Raymond Securities
Ask Raymond has turned bearish on Ranbaxy at Rs 570, largely due to the unfavourable risk-reward ratio as compared to its peers Dr Reddys and Cipla. At 18 times its CY2003 earnings Ranbaxy trades at a premium to its peers which are discounted at 14 times their forward earnings.
Though Ranbaxy has done pretty well last quarter, there are two points to be noted: US sales, other than cefuroxime axetil, are stagnant and consolidated net operating margins have declined.
HDFC
Recommendation: buy at Rs 629
Merrill Lynch Securities
Merrill Lynch Securities continues to remain bullish on HDFC Securities at Rs 629, with a 12-month price target of Rs 750. The better-than-expected volume growth of 32 per cent in disbursements and improvement in operating margins enabled HDFC to beat the topline estimates by a huge margin of five per cent last quarter.
While the bonus issue of 1:1 is a positive sentiment driver, the buyback, should potentially enhance ROE to 28.30 per cent and help the company use its excess capital more optimally.
Wipro
Recommendation: sell at Rs 1,439
CLSA Emerging markets
CLSA has reiterated its sell recommendation on Wipro at Rs 1,439 and expects a possible decline of 27 per cent to Rs 1,044. Although the second quarter results were in line with the expectations, the 130 basis points decline in margins and 2.7 per cent fall in offshore rates was a negative surprise.
The current valuations at 35.3 times FY03 earnings are indefensible, especially considering that Wipro's growth remains below peers. If the company fails to report spectacular performance in the next couple of quarters, the stock could witness some correction.
Asian Paints
Recommendation: hold at Rs 344
Pioneer Intermediaries
In a result update, Pioneer Intermediaries feels that Asian Paints, trading at 15.3 times its FY03 estimated earnings, is fully priced at Rs 344.
The brokerage house, however, has revised upwards both revenue and earnings estimated by one per cent to Rs 1,480 crore and 2.5 per cent to Rs 140 crore respectively, for FY03, on the back of robust topline growth of 14.8 per cent to Rs 392.9 crore in the last quarter.
Hero Honda
Recommendation: buy at Rs 255.8
CLSA Emerging Markets
CLSA has given a buy recommendation on Hero Honda at Rs 255.8, with a possibility of 55 per cent upside from current levels to Rs 397. The strong performance in second quarter should trigger a rally in the stock as volume growth and margins pressure concerns have proven to be unfounded.
Hero Honda's sales volumes have grown 30 per cent in the first half and estimated to comfortably achieve the targeted yearly sales of 18 lakh units.
