Buy Sun Pharma with target price of Rs 782

 

The summary page of Sun Pharmaceutical Industries Ltd. captures the information on its Live Stock Price and Volume, 52 Week High Low, Intraday and Historical Price Chart, Key Ratios, F&O Quotes, Competitors, Comparative Analysis, Buy Sell Recommendations, Company News and Announcements, Shareholding Pattern, Key Quarterly and Annual P&L A/c items, and Community Prediction.

 Accumulate Raymond For Target Rs.424

 

Weak quarter despite festive season: Raymond’s performance across major segments was extremely poor despite the festive quarter which is usually the strongest quarter for the company. The consumer sentiment was extremely poor through the quarter and hence, despite festivals and marriages, the offtake remained weak.
The company reported revenues of Rs10.5bn, a 10% YoY increase and 5.6% sequential decline. However, the major disappointment was on margins, with EBITDA margins at 9.6% as against 16.4% in Q3FY13 and 14.3% in Q2FY13. Reported PAT stood at Rs128.4m, 79% YoY and 75% QoQ decline. The company incurred VRS expenses of Rs124m on retiring employees in their retail segment.
* Textile division hit with cost increases: Although volumes were stable for the worsted textile segment, the segment witnessed a 2% price decline. Growth in sales of 7.8% YoY was on account of the ‘Makers’ brand contributing which is now present across 7500 points of sale. However, margins in the segment declined to 19% from 25% in Q3FY12 and 23% in Q2FY13. The sharp decline in margins was on account of increase in raw material costs aided by the rupee depreciation as well as an increase in the cost of utilities. Further, the additional
capacities of 7m metres, that were added last year, remained under-utilized on account of the weak demand which further helped in mounting costs.
* Inventory overhang woes continue for branded apparels: The segment witnessed a decline of 7% YoY in sales and 86% decline in EBITDA, with margins at a mere 2% for the quarter. Heavy discounts to clear the inventory resulted in poor financial performance. Besides, the company has also been transitioning the sales channel for its ‘Park Avenue’ brand from operating out of ‘The Raymond Stores’ (TRS) to a focused EBO sales channel which resulted in a decline in presence of the brand at several TRS.
* Valuations: As per our estimates, the stock currently trades at PER of 16.6 x FY14E and 11.4 x FY15E. Our target price is based on 12X FY15E which gives us a value of Rs424. We maintain ‘Accumulate’.
  Buy Infosys Ltd

 
Infosys reported Q3FY13 results ahead of PLe/consensus expectation in a challenging seasonally weak quarter. The company’s  performance has delivered positive surprise across the line items. Moreover, the com pany’s guidance for FY13 US$ revenue has been revised ahead our/consensus estimates. We see stock price to go up by 10‐12% due to strong result. Despite seasonality and wage hike the
company delivered strong performance in the quarter.

* Strong beat to PLe/consensus expectation: Infosys’ revenue grew by 5.7% QoQ to Rs104.24bn for Q3Y13 (PLe: Rs100.76bn, Cons: Rs101.64bn) in Indian rupee term, whereas revenue in USD term grew by 6.3% to US$1,911m (PLe: $1,860m). The company reported an operating margin erosion by 66bps QoQ to 25.7% (PLe: 25.2%, Cons: 25.6%) due to wage hike and shutdowns. The company reported EPS of Rs41.46 (PLe: Rs38.80, Cons: Rs39.37), a muted growth.

* Geography and segments – Across geography and BFSI & Manufacturingstable: Revenue for NA, Europe and India grew by 1.6%, 16.6% (@cc 14.4%) and 44.7% QoQ, respectively, whereas in terms of vertical BFSI, Maunfacturing, and Retail grew by 6.4% (@cc 6%), 4.6% (@cc 4%) and 6.6% (@cc 6.2%) QoQ, respectively. Products (6.3% QoQ), IMS (7.9% QoQ) and Testing (3.9% QoQ)

* Pricing – pricing uptick after steady downturn over the last 3 quarter: The pricing declined by 3.7% QoQ(Onsite: 3.7%, Offshore: 2.3%). It added 89 new clients including Lodestone. Utilization excluding trainees increased by 50bp to 70.1%, however trainee addition pushed including trainee utilization to 73.2. ! Outlook – Higher than our expectation of US$ revenue guidance: Infosys has revised their US$ revenue guidance upward against our expectation of no change (includiing Lodestone. The new guidance in USD revenue growth is 6.5% for FY13 (PLe: 5%, Cons: 4.5-5%). Its rupee EPS guidance revised upward by 1.4% YoY to Rs162.8 (PLe: Rs159-160).

* Valuations and Recommendation – See strong uptick in todays trading session: We see strong uptick of 10-12% in the stock price due to strong result. We may revisit our estimates post conference call. Reiterate “BUY”.

* Conference Call Details: Infosys Ltd will conduct Q2FY13 Earnings conference at 2:00 p.m. (IST) & 6:00 p.m. (IST). Mumbai (+91 22  66290463, 40392463), Singapore (800-101-2045), Hong Kong (800-964-448), USA (Primary: 1-866-746- 2133, Secondary: 1-323-386-8721), UK (0808-101-1573)
  Buy VST Industries Ltd For Target Rs.2073.00

 

VST Industries Ltd. is a public conglomerate tobacco company headquartered in Hyderabad, India.
* VST Ltd. is third largest cigarette manufacturing company in India.
* VST Ltd has recommended dividend for the year 2011-12, Rs. 65.00 per Equity Share of Rs. 10.00 each.
* During the quarter ended, the robust growth of Net Sales is increased by 6.94% to Rs. 1761.90 million.
* Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 30% over 2011 to 2014E respectively.
* Company has recorded leaf export turnover  of Rs. 154 crore, in the year 2011-12.
* During the year under review the cigarette volumes stood at 762 millions up by 12% when compared to 2010-11.
* The company manufactures & distributes cigarettes under the brands Charms, Charminar, Gold.
Investment Highlights
Results updates- Q2 FY13,
The company’s net profit jumps to Rs.276.00 million against Rs.335.90 million in the corresponding quarter ending of previous year, a decrease of 17.83%. Revenue for the quarter rose 6.94% to Rs.1761.90 million from Rs.1647.60 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.17.88 a share during the quarter, registering 17.83% decrease over previous year period. Profit before interest, depreciation and tax is Rs.458.50 millions as against Rs.541.40 millions in the corresponding
period of the previous year.
Outlook and Conclusion
* At the current market price of Rs.1885.00, the stock P/E ratio is at 16.15 x FY13E and 13.94 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.116.74 and Rs.135.18 respectively.
*  Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 30% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 10.04 x for FY13E and 8.75 x for FY14E.
*  Price to Book Value of the stock is expected to be at 9.16 x and 8.37 x respectively for FY13E and FY14E.
*  We recommend ‘HOLD’ in this particular scrip with a target price of Rs.2073.00 for Medium to Long term investment.