Hindustan Lever
Cluster: Apple Green
Recommendation: Buy
Price target: Rs300
Current market price: Rs268
It is just getting better
HLL has increased the prices of a few of its products in the soap and detergents segment like Surf Excel, Lifebuoy, Rin Advanced and also in the personal care products segment like shampoos. Besides this the company has also decreased the pack size of Vim Bar & Rin Shakti thus increasing its realisations.
This is the second time in the last five months that the company has increased the prices of Surf Excel (see our note HLL increases Surf Excel prices dated November 29, 2005). Unlike the last time, where the price increase was restricted to the premium segment, this time it is across the entire detergent segment.
Orchid Chemicals & Pharmaceuticals
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs460
Current market price: Rs363
Price target revised upwards by 30% to Rs460
Key points
- The entry into the generic non-antibiotic business in the USA by Orchid Chemicals & Pharmaceuticals is expected to result in a significant increase in the bottom line for FY2008.
- The company is expected to benefit from the sale of non-antibiotic big molecules along with antibiotics like Cefdinir, Ceftiofur and Zosyn in FY2008. We expect the US generics business to provide a substantial upside as we expect the consolidated net profit to increase by 33% in FY2008 on a year-on-year basis.
- We estimate the company's FY2008 earnings at Rs27.8 per share. At the current market price of Rs363, the stock is trading at 13.1x its FY2008 earnings estimate. We reiterate our Buy recommendation on Orchid Chemicals with the revised price target of Rs460