Thursday, March 24, 2011

Analysts' corner Bse Nse Stock

Analysts' corner
Ranbaxy, Adani Power, Lanco Infratech & Madhucon Projects

Reco Price: Rs 437,
Target Price: Rs 480

Mylan has sued the US FDA for inaction and failure to disclose the status on 180-day marketing exclusivity relevant to Ranbaxy’s ANDA on generic Lipitor. While it would be difficult to comment on US FDA action but any denial of 180-days exclusivity (a rare possibility) to Ranbaxy for generic Lipitor would shave-off Rs36/share from Pinc research's target price (Rs480/share) and provide huge negative sentiment for the stock. However, analysts continue to believe that Ranbaxy would be able to monetize generic Lipitor exclusivity through Ohm labs (as seen in case of generic Aricept). Further, analysts are cognizant of the competitive scenario in generic Lipitor (Watson-AG) during the exclusivity period and have factored in only Rs36/share. Maintain hold.

— Pinc Research

Adani Power
Reco Price: Rs 108,
Target Price: Rs 125

Adani Power’s pre PPA merchant sales could be to a lesser quantum (3-6 months) and capacity ramp-up could be slower than earlier. Also, coal prices would be higher than expected. However, analysts believe the company is building a solid business model that can deliver 20-25 per cent RoE over next five years. Citigroup has revised earnings downwards by 7-38 per cent over FY11E-14E to factor in delay of two months across all future power plants; imposition of MAT, which is NPV negative but EPS neutral; Mahanadi Coalfields coal price hike by Rs90-100/ton; and higher auxiliary consumption in initial years. Target price is also revised to Rs125 (from Rs130 earlier). Adani Power can weather Coal India shortages in FY12E using Bunyu coal. Maintain buy.

— Citigroup

Lanco Infratech
Reco Price: Rs 36,
Target Price: Rs 43

Lanco Infratech (Lanco) has commercially added close to 1045MWs in FY11, thereby, increasing the operating capacity by 101 per cent YoY. The company also synchronised 600MWs of Udupi–2 recently. However, commercial operation is expected to start in Q2FY12 on account of delay in transmission line set up. For other plants, Kondapalli continues to face gas supply issues from KG D6 and GAIL. The COD of Budhil Hydro (70MWs) has been delayed by six months and now expected to start in Q2FY12. Maintain accumulate.

—Prabhudas Lilladher

Madhucon Projects
Reco Price: Rs 91,
Target Price: Rs 171

Madhucon Projects (MPL) has bagged an annuity project worth Rs1,500 crore from National Highway Authority of India for four-laning of Ranchi-Rargaon-Jamshedpur section of NH-33, Jharkhand. The project is awarded under the National Highway Development Programme-III on DBFOT basis, with semi-annual annuity of Rs 133.2 crore. The concession period is 15 years, including a construction period of 30 months. This is the same order in which MPL was disqualified and later the Delhi High Court had intervened. With this order, MPL’s outstanding order book stands at Rs 5,600 crore (3.3 times FY11E revenue), thus enhancing revenue visibility. This is positive for MPL, as the company will be able to book EPC revenue in the coming quarters (FY2013 onwards), thus boosting its overall revenue. Maintain buy.

—Angel Broking       

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