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Summary
of Contents
STOCK
UPDATE
Ranbaxy
Laboratories
Cluster: Apple
Green
Recommendation: Buy
Price target: Rs558
Current
market price: Rs344
GSK alliance strengthens discovery R&D
focus
The new drug discovery research team of Ranbaxy
Laboratories Limited (Ranbaxy) has achieved a significant milestone
in its collaboration with GlaxoSmithKline (GSK). The steering
committee, consisting of senior members from GSK's Center of
Excellence for External Drug Discovery and Ranbaxy, has approved the
candidate selection of a compound for respiratory inflammation.
Indian Hotels
Company
Cluster: Apple Green
Recommendation:
Buy
Price target: Rs175
Current market price: Rs139
Another acquisition
Key points
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Indian Hotels Company Ltd has acquired Hotel
Campton Place, San Francisco through its 100% US subsidiary
company. The acquisition would be made at a cost of US$60 million
(including estimated transaction costs).
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Indian Hotels will acquire Hotel Campton Place
in partnership with financial investors. The sale purchase
agreement was signed on April 02, 2007 and the transaction closure
is scheduled for April 30, 2007. The structure of the deal is yet
to be disclosed.
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At the current market price of Rs139 Indian
Hotels is quoting at a price/earnings ratio (PER) of 22.5x FY2007E
consolidated earnings per share (EPS) of Rs6.2. We maintain our
Buy recommendation on the stock with a price target of Rs175.
Bharat Heavy
Electricals
Cluster: Apple
Green
Recommendation: Buy
Price target: Rs2,650
Current
market price: Rs2,254
Targeting $10 billion turnover
Result highlights
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At Rs2,385 crore the FY2007 net profit of
Bharat Heavy Electricals Ltd (BHEL) grew by 42% and the same is in
line with our estimates. The turnover for FY2007 grew by 29% to
Rs18,702 crore.
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Order inflows during the year grew by a
whopping 88% to Rs35,633 crore. In the power business, BHEL
secured orders worth Rs27,722 crore and in the industry sector, it
secured the highest order ever worth Rs6,008 crore during the
year. The order backlog at the end of March 31, 2007 stood at
Rs55,000 crore, which is around 3x its FY2007 sales.
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In the international business, BHEL secured
export orders of Rs1,903 crore during the year in comparison with
an average yearly order book of Rs1,275 crore in the last five
years.
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At the current levels, the stock is trading at
18.0x its FY2008E earnings and 10.7x its FY2008E earnings before
interest, depreciation, tax and amortisation (EBIDTA). We maintain
our Buy recommendation on the stock with a price target of
Rs2,650.
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