Saturday, 19 January, 2008

Analyst Picks

CMP: Rs 1,209.45
Target price: Rs 1,348

CLSA expects ONGC shares to consolidate, citing absence of major triggers for at least a year.“With valuations at par with global peers, we see a more challenging near term stock outlook — especially as visibility on other triggers (discoveries, East Coast developments, ONGC Videsh re-rating, gas price deregulation, fuel pricing overhaul) is a year or more away,” the investment bank said in a recent note.

“While there is potential for 15-16% EPS upgrades if the likely Re1-2/litre price hike and Rs 2/litre excise cut in auto fuels is not followed by a hike in ONGC’s OIDA (Oil Industry Development Act) cess or subsidy sharing, the lacklustre outlook for ONGC’s production growth over FY09-10CL and its relatively modest leverage to crude prices (every $/bbl changes EPS by 0.5%) is a dampener for future surprises,” CLSA added.

CMP: Rs 209.25
Target price: Rs 195

Citigroup rates IDFC a sell with a price Target of Rs 195. It believes the recent rise in this stock factors in possible positive surprises. “While the business momentum continues to remain strong and in line with expectations; we believe wholesale funded institutions such as IDFC are relatively more exposed to interest rate tightness/cyclicality (as is the case with many global markets currently) and should be valued at a discount to private banking peers,” the investment bank said in a note.

Citi estimates the infrastructure financier’s earnings per share (EPS) for 2007-08 at Rs 6.54 and Rs 8.82 in 2008-09. For 2006-07, IDFC reported EPS of Rs 4.48.

CMP: Rs 65.25
Target price: Rs 90

Kotak’s private client group recommends a buy on Marico, with a 12-month price Target of Rs 90.
“We expect business revenues to grow at a CAGR (compounded annual growth rate) of 23% over FY07-09. The PAT (profit after tax) is expected to grow to Rs 2.25 billion ( Rs 225 crore) at a CAGR of 41% over FY07-09E,” the retail brokerage said in a note.

“We forecast Marico will consolidate its leadership position in the beauty and wellness segment on the back of changing lifestyles, demand for high quality products and consistent introduction of new products and brand extensions. Kaya Skin Clinic, the skincare solutions business, is also expected to witness high growth post consolidation in FY07,” Kotak added.

CMP: Rs 518.70
Target price: NA

IDBI Capital Markets has rated Biocon a buy, after its lower-than-expected third quarter earnings. It advises clients to buy the stock on fall citing better growth prospects.

“There are quite a few positive developments, the management has indicated intent of unlocking value in its contract research subsidiary ‘Syngene’ though an IPO. Also, Clinigine has now broken even and though much smaller presently, is likely to follow a similar path,” the institutional brokerage said in a report.

“The other research programmes - both in Oral Insulin and other biosimilars are progressing well. In fact, the company hopes to launch some of these in the Indian market as early as 2010. The process for registration and sale in a number of markets for injectible insulin/insugen is ongoing. The earliest launch in US / Europe could be 2-years hence, but the opportunity is big,” IDBI Cap added.