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STOCK UPDATE
New Delhi
Television
Cluster: Emerging
Star
Recommendation: Buy
Price target:
Rs300
Current market price: Rs186
Takeaways from management
meeting
We believe that with numerous revenue
streams, NDTV has smartly put a strong business model in
place. However, we have downgraded our earnings estimates by
4% to take into account the equity dilution on account of
stock options that is likely to take place over FY2007E. In
the short term, the stock may underperform as competitive
pressures increase and the company needs to work on improving
its content further to overcome the same.
At the
current market price of Rs186, the stock is quoting at 14.2x
it FY2008E earnings per share and 8.8x FY2008E enterprise
value/earnings before interest, depreciation, tax and
amortisation. We maintain our Buy recommendation on the stock
with a price target of Rs300 based on the sum-of-parts
valuation method.
Lupin
Cluster: Apple
Green
Recommendation: Buy
Price target:
Rs1,130
Current market price: Rs989
Increasing global
footprint
Lupin has
received the approval from the US Food and Drug Administration
(USFDA) to market the tablet form of Quinapril, a high blood
pressure drug, in the USA. The approval was given for tablets
in 5mg, 10mg, 20mg and 40mg strengths.
Aban Loyd Chiles
Offshore
Cluster: Emerging
Star
Recommendation: Buy
Price target:
Rs1,760
Current market price: Rs979
Earnings visible at least till
FY2009
We attended the conference call of Aban Loyd
Chiles Offshore (ALCO) conducted to brief investors on the
company's recent USD446-million acquisition of Sinvest, a
Norwegian oil drilling company. Also we have studied the
company's recently released annual report for FY2006. We
present below the highlights of the company's annual
report.
Key highlights
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Higher-than-expected debt on
books: As per the annual report the company has on its
balance sheet a total debt of Rs1,100 crore, which is higher
than our expectation and hence unwelcome. We fear that the
high debt would increase ALCO's interest charge, thereby
affecting its earnings.
-
Proposal to raise equity
capital: ALCO is toying with the idea of raising funds
worth USD200 million (about Rs900 crore) through a foreign
currency convertible bond/global depository/American
depository receipt issue. If the proposal gets the nod of
the shareholders, it will be a positive as it will lower the
company's debt/equity ratio.
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Delay in deployment of Aban
Abraham: We had expected ALCO's drill ship, Aban
Abraham, to commence operations from Q4FY2007. However the
drill ship is expected to become operational only in
Q2FY2008. The delay in deploying Aban Abraham is likely to
depress ALCO's FY2007 earnings.
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