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
- 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).
- 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.
- 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
- 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.
- 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.
- 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.
- 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.