Sun Pharma - FDA seizure to affect US sales
Monday, June 29, 2009
On the back of the FDA's product seizures at Sun's US subsidiary, Caraco on June
25th, Analysts across the street have lowered revenue and earnings estimates by 8-10% across FY2010E-2012E to reflect the impact on Sun's US sales. As a consequence of declining earnings (19% decline in FY10 vs. FY09) and lowered returns in FY10, Goldman's Returns-based TP is reduced by 18% to Rs947 and we downgrade the stock to a Sell with a potential downside of 17%.
I am a little concerned on why only Indian pharmacy companies are being targeted in the US ? Any pointers ?
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Published by Webmaster @ 12:17 PM IST.
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Sintex Industries Consistent Performance - Add on Decline
Monday, June 22, 2009
The UPA government's focus on increased investment in infrastructure, education and healthcare will likely drive demand for Sintex's building products segment. We believe higher allocation to schemes such as Bharat Nirman, Sarva Siksha Abhiyan and other similar schemes will drive demand for pre-fabricated structures and monolithic
constructions. Signs of early revival in the economy indicate faster growth in demand for composites from the automotive and electrical industries.
As per management the various subsidiaries are expected to show stable performance with demand scenario not deteriorating further.
Existing Investors of Sintex Industries can hold on to the stock and others can Add on Decline sub-200 levels for a target price of Rs 280. The company is expected to report a fully diluted EPS of Rs 25 for FY10 and Rs 28 for FY 2011.
The average trading multiple for Sintex over the last five years has been around 10X one-year forward EPS.
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Published by Webmaster @ 1:28 PM IST.
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Zee + Dish TV + Sun TV - Coverage by Goldman Sachs
Thursday, June 18, 2009
According to a report by Goldman Sachs, the media sector is now nearer to the start of a cyclical recovery. Indeed, bottom-up data from India's largest media spenders indicates the possibility of a sequential pickup of 10%-12% for the second half of FY2010 (ending March 2010) and a return to five-year median industry growth thereafter (which was about 14% over past 5 years).
With the digital subscription market having expanded by 29% over the past three months- with only moderate incremental pressure on ARPUs. Even with stocks under coverage having risen an average 67% over past 3 months, valuations remain close to midcycle.
Zee should expand on the strength of its content pipeline (has kept an average 18% market share over the last year, despite increased competition) and higher quality of its revenues as digitization takes off.
Goldman raises 12-month P/E-based target price to Rs229 from Rs190, as we roll over to FY2011 EPS, but retain our 16X mid-cycle multiple.
Goldman downgraded Sun TV (SUTV.BO) to Neutral, as current valuations price in the structural strength in Sun TV's business model. Raises 12-month P/E-based target price to Rs264, from Rs216, as we roll over to FY2011 EPS, but retain our 18X mid-cycle multiple.
Downgrade Dish TV to sell as the best is behind us. 12-m DCF-based target price to Rs30, from Rs24.
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Published by Webmaster @ 11:41 AM IST.
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Reliance Capital - Life Insurance Valuations Stretched - Citi
While equity market performance has a strong correlation with RCaps' businesses, expect growth in most businesses to lag the rebound in broader markets - in particular, expect relatively moderate growth in life insurance, non-life insurance and consumer finance segments.
RCap is seeking to sell up to a 26% stake in its life insurance business, including likelihood of inducting a strategic stakeholder. The transaction does not come under current FDI cap (100% owned) but requires other regulatory approvals.However, current stock price implies valuations of 20x 1Yr Fwd NBAP multiples, which is at 30-40% premiums to our benchmark values for peers.
RCap's asset management and brokerage segments should be the first to rebound. While AUMs in the domestic business have grown 46% over Dec'08, retail equity inflows so far, have been modest. We expect brokerage revenues to grow but led by institutional segment as retail investors participate with a lag.
Sum of the Parts Valuation of Reliance Capital according to Citi.
Reliance Mutual Fund AMC - Rs 237
Life Insurance Rs 417
General Insurance - Rs 4
Broking Rs 53
Consumer Finance Rs 92
Investments - Rs 19
taking the total to Rs 821.
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Published by Webmaster @ 11:33 AM IST.
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Changing Coverage Patern - Your Views ?
Monday, June 15, 2009
In the past 3 years you have read us covering about individual companies from various Research entities. Since 2008, research reports have followed the markets, the fall and then the rise. Hence, we got together and have come with a new idea on presenting the coverage that will be more helpful to Investors / Readers. We now propose to overhaul the entire reporting pattern so that Investors can take informed decision and invest wisely.
Here are some tips on how we will be shaping future coverage,
We will henceforth be covering only BSE-200 companies with a new Tracker interface.
The interface will include fundamental update on the company and as and when the operational metrics change [Govt Policies, Equity Dilution, Rise in Interest Rate etc] we will cover the impact on the same. In the above interface we will voice the opinion of every research house that has revised the coverage.
We will restrict coverage to top research house only - 9 to 10 Foreign and 3 to 4 Indian.
If there are any out of the box [outside BSE-200] multibaggers, then we will definitely update about the same.
We would like to hear your views, especially if you have any ideas to enhance the reading experience as well as decision making process. Kindly feel free to leave a comment or, e-mail us to feedback @ dalalstreet.biz
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Published by Webmaster @ 8:01 PM IST.
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ATUL Ltd - Multibagger from Anand Rathi
Thursday, June 11, 2009
Atul Ltd is a diversified Specialty chemical company, engaged in manufacturing of - agrochemicals, Bulk chemicals, Dyes, intermediates and polymers. It is also undertaking toll manufacturing of herbicides & custom manufacturing of bulk drugs for large MNCs. Company is also increasing capacities of various products mainly by de-bottlenecking, so as to involve less capital expenditure. It is also expanding capacities of - bulk chemicals & Intermediates; Vat & Reactive dyes; Pharma & Intermediates and in polymers divisions. They will mostly go on stream in current year and thus lead to significant growth for company from current year onwards.
To add value, Atul is moving up from basic building block kind of chemicals to niche value added down stream products in each category. It is increasing the sales of branded products significantly.
Company is world's largest manufacturer of - Para cresol, Para Anisic aldehyde, Para Anisyl alcohol and curing agent. It is also second largest manufacturer of - high performance colourant and Vat dyes. Its third largest manufacturer of - Indoxcarb insecticides and fourth largest for 2,4-D herbicides. [see details of products on next page.]
Company is technologically very advanced and has perfected a number of difficult chemical processes/technologies e.g. Phosgenation, Hydrogenation, Bromination and Sulfonation. The research led technology improvements and cost reduction in these processes, makes it quite competitive and quality producer of a number of key products.
Attractive Valuations:
Based on current year's earnings outlook, which is quite robust, the stock is available at about 2.5X 2010 earnings.
If we go by Price to book value, stock is again available at less then half of the 2010 expected book value of about Rs 140/-.
If we go by sales to Mkt cap valuations, the stock is available at 1/6th of the valuation, while recent sale of Mfg assets of Gwalior Chem was valued at around 1:1 to sales.
Further if we value company's Mfg assets, R&D assets and other non core assets [residential & land in Atul town] the total replacement costs may come to many times of present Mkt cap.
From the CMP of Rs 63, the stock can easily touch Rs 150 to Rs 180 within the next 18 months.
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Published by Webmaster @ 6:57 AM IST.
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Real Estate - Equity Dilution an Overhang
Tuesday, June 02, 2009
A significant increase in risk appetite, capital flows and preference for high-beta names have largely driven the 55% out performance of property stocks over the past 3 months. While $1.7bn raised last month (more on the anvil) has eased liquidity, we believe it's coming at the cost of sizeable dilution, which would take time to digest and act as an overhang.
Fundamentals are still weak. Some pick-up is seen in volumes with new launches and B/S concerns addressed, but there are no signs of a meaningful recovery yet. Risk of cancellations/bad debts is high, and there is a marked slowdown in leasing and mortgage growth to 8% in 4Q (vs. 10% in 3Q) despite the recent price/rate cuts. We await sustainability of sales, improved execution and cash flows to get positive.
India's narrowing NAV disc. similar to China - This is unwarranted given China's strong and more sustained recovery in volumes. Trends in China suggest property stocks offer maximum upside when trading around 40% or more NAV disc. But downside risks are high at 20%
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Published by Webmaster @ 9:56 AM IST.
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