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PULSE TRACK
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Q4FY2006 GDP beats expectation—FY2006
estimates revised upwards
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Infrastructure index grows by 6.7% for April
2006
STOCK
UPDATE
Wockhardt
Cluster: Ugly
Duckling
Recommendation: Buy
Price target:
Rs552
Current market price: Rs360
On the look out for
acquisitions
We believe that Wockhardt is poised at a very
interesting phase with both its organic and inorganic growth
plans lined up over the next couple of years. The company's US
business will be a key organic growth driver and a good
out-licencing deal for its New Chemical Entities will act as
another trigger. The inorganic plans hold huge potential and
the company from its recent deliberations has shown good due
diligence and prudent resource management discipline.
Considering the expected size of the acquisition we believe
that further re-rating of the company will depend upon the
nature of the businesses acquired and the valuations of the
acquired company.
Keeping in mind the organic
growth plans of the company we are revising our estimates for
CY2006 upwards by 2.2%. We now estimate an EPS of Rs23.4 for
CY2006 and Rs27.6 for CY2007. At the current market price of
Rs360 the stock is trading at 13x its CY2007 earnings
estimate. Considering the stable organic growth and strong
inorganic growth prospects of Wockhardt, we re-iterate our Buy
recommendation on the stock with the price target of Rs552.
VIEWPOINT
Alfa Laval
India
Double-digit growth going
ahead
Key points
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ALIL has enhanced the capacity of its
equipments segment, represented by doubling the capacity to
manufacture decanters and by increasing the assembling
capacity of the separators.
-
ALIL will continue to be a preferred
destination for the group in sourcing mainly as a result of
the cost advantage and the quality of people with the
technical skills. Moreover, the closing down of the group's
facilities at other locations will also result in more
sourcing from ALIL.
-
The key feature of ALIL over other
engineering companies remains that it has a well-diversified
product and user industry portfolio, which enables it to
serve a broad spectrum of industries. The same ensures a
secular growth over a sustainable period of time as
deceleration in the growth in one industry is cushioned by
the growth in some other industry.
-
The management sees that user industries
like distilleries and fuel ethanol plants, environmental
engineering, paper, metal and marine engineering would be
the growth drivers at present. The management expects ALIL
to report a good double-digit growth going ahead.
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At the current market price of Rs985,
ALIL is trading at 18x its CY2006E consensus earnings per
share (EPS) of Rs53 and 16x its CY2007 consensus EPS of
Rs62. On the basis of enterprise value (EV)/order book, the
stock trades at 5.8x its present order book of Rs298
crore. |
