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Summary of Contents
PULSE
TRACK
STOCK
UPDATE
Bharat
Electronics
Cluster: Apple Green
Recommendation:
Buy
Price target: Rs1,715
Current market price: Rs1,550
Budget positive for BEL
The budgetary allocation for the defence sector has
been pegged at Rs96,000 crore for 2007-08, which amounts to a growth
of 7.9% over the earmarked figure of Rs89,000 crore in the last
year's budget. The same is 11.6% higher than the Rs86,000 crore
shown in the revised estimate for 2006-07. The growth in the total
defence allocation is in line with the trend seen in the past couple
of years.
The huge jump in the capital outlay for equipment
is likely to benefit a company like Bharat Electronics Ltd (BEL),
which has emerged as one of the key suppliers of electronic and
other high tech equipment to the defence forces. This coupled with
the order backlog of around Rs7,300 crore (as on December 2006) and
a strong traction in civilian business provides a reasonably strong
revenue growth visibility for the company. Moreover, the recent
alliances with leading defence contractors would also add to the
overall growth in revenues over the coming years.
VIEWPOINT
GlaxoSmithKline
Pharmaceuticals
Powered by rich product pipeline of
parent
GlaxoSmithKline Pharmaceuticals (Glaxo), for the full
year CY2006, reported a marginal revenue growth of 4.6% to
Rs1,552.92 crore. The growth was lower because the company had
divested its low-margin animal healthcare business during Q3CY2006.
The operating profit margin (OPM) expanded by 180 basis points to
30.6%, resulting in an 8.6% rise in the net profit to Rs545.5 crore.
The full year numbers are not strictly comparable with those of the
previous year, as the company had divested its animal healthcare
business during Q3CY2006.
SECTOR
UPDATE
Automobiles
Two-wheelers in low gear
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Bajaj Auto's February sales were disappointing,
the same declined by 1.2% year on year (yoy).
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Hero Honda Motors' performance continued to be
steady. It recorded a growth of 11.9% yoy in February 2007, with
sales of 280,515 vehicles.
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After a dismal performance in the last two
months, growth in TVS Motors' sales was in line with the industry
growth. The company sold 120,110 vehicles, recording a growth of
10.3%.
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Maruti Udyog reported a growth of 53.3% for
February 2007. The growth rate appears high due to a low base in
February 2006 in anticipation of an excise duty cut in the last
budget.
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Mahindra and Mahindra's February sales were
good, however the growth rate seems to have slowed down in
comparison with the earlier months.
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