Sharekhan Investor's Eye

Cipla
Cluster: Cannonball
Recommendation: Buy
Price target: Rs670
Current market price: Rs585

Price target revised to Rs670
Cipla is a bulk drug supplier to Roxane. We believe that Cipla has an alliance with Roxane for supplying the bulk drug for Flonase. This is expected to be a significant source of earnings for Cipla. We expect earnings of close to Rs32.6 crore in FY2007 (4.8% upside) and Rs14.7 crore in FY2008 (2% upside) from the sale of Flonase to accrue to Cipla.



Tata Motors
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,004
Current market price: Rs880

Upgrading estimates
Tata Motors quotes at 16.8x its FY2007E and 13.9x its FY2008E on our consolidated earnings per share (EPS) estimates of Rs55.2 and Rs67.1 respectively. Based on the improving momentum in the sales volumes and the earnings growth outlook we maintain our BUY recommendation on the stock and are revising our target price to Rs1,004. With a bounce back in the heavy truck cycle and the strong duty cut benefit coming for diesel Indica, car volumes of the company would get a strong push ahead. This coupled with the strong earnings growth in the company's subsidiaries like Tata Daewoo, Tata Technologies, Telcon, etc and a strong possibility of value unlocking in HV Axles and HV Transmissions through an IPO would drive up the valuations.