Apollo Hospitals and Bharat Forge - Underperformers
Wednesday, December 27, 2006India's leading Hospital Chain Apollo Hospitals Ltd and leading Auto Component manufacturer, Bharat Forge Ltd are likely to underperform in the next 2 quarters said a research note by HSBC Global Research.
HSBC said that margin recovery maybe delayed as Apollo embarks on another round of capital expenditure. The stock has consistently been rerated on the back of expectations of medical tourism taking off, improving macro parameters and more importantly as the only available play in the Indian hospital sector. However, HSBC believes that valuations continue to look expensive.On the DCF model, they set a target price of Rs 375 from current levels of Rs 430.
HSBC expects slowdown in sale of commercial vehicles in the US in 2007. HSBC has cut EPS estimates of Bharat Forge Ltd by 18% for FY2007 to Rs 13 and for FY08 to Rs 16 on lesser margins from subsidiaries. On a 3 stage DCF methord of valuation, HSBC is underweight on Bharat Forge Ltd and has set a price target of Rs 320 from current levels of Rs 350.
Tags: Dalal Street, Apollo Hospitals, Medical Tourism, Bharat Forge
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