An Engineering Company, A Drugmaker That May Gain 20% This Year
KR Choksey On ABB India
- Initiated ‘Buy’ with target price of Rs 1,823, implying a potential upside of 21 percent from yesterday’s close.
- Higher government spending on power offers strong growth prospects for ABB.
- ABB’s power grids segment to support financial performance over medium to long term.
- Triggers: National Solar Mission, electric vehicles in India and railways modernisation and electrification.
- Expect order flow, revenue and net profit to grow at a compounded annual growth rate of 25 percent, 23 percent and 42.2 percent, respectively, over the years till 2019.
- Robust execution to support strong top-line growth.
- Increase in localisation of manufacturing projects to lower operational cost.
- Higher return ratios to help company demand higher valuations.
Daiwa Capital Markets On Crompton Greaves Consumer
- Initiated ‘Outperform’ with target price of Rs 300, implying a potential upside of 9.2 percent from yesterday’s close.
- India’s electronic appliances industry to see double-digit growth over the next five years; well positioned to seize these opportunities.
- Impressive franchise, strong management pedigree and growth outlook.
- Focus on distribution, branding and segments to support sales growth.
- Company has multiple levers for growth.
- Positives: premiumisation, entry into new categories, brand building, and expanding distribution.
- Expect revenue and earnings per share to grow at a compounded rate of 17 percent and 25 percent respectively over the financial years through March 2020.
- Valuations not cheap, but strong sales and profits to support.
- Bull case price target of Rs 340.
Motilal Oswal On Laurus Labs
- Initiated ‘Buy’ with a target price of Rs 651, implying a potential upside of 22.2 percent from yesterday’s close.
- In a sweet spot to get business in regulated market due to cost efficiency and consistent compliance.
- Formulations business in take-off mode; positive on forward integration to formulation in regulated markets.
- Expect U.S. sales to multiply as company targets 30 ANDA (abbreviated new drug application) filings over three years.
- Expect revenue, operating income and net profit to grow at a CAGR of 17 percent, 20 percent and 28 percent, respectively over the financial years till March 2020.
- Addition of formulations and healthy momentum in API (active pharmaceutical ingredient) business to lead growth.
- Volume growth to drive anti-retroviral (HIV) and Hepatitis-C base businesses.
- Interest outgo to reduce; capital expenditure to continue to support growth.
- Return ratios to improve on higher asset utilisation.
- Expect revenue and net profit to grow at a CAGR of 20 percent and 35 percent, respectively over the financial years till March 2020.
- Bull case target price is Rs 769.
Credit Suisse On Godrej Agrovet
- Initiated ‘Neutral’ with target price of Rs 630, implying a potential upside of 2.9 percent from yesterday’s close.
- Indian agricultural value chain offers business opportunities.
- Brand and corporate pedigree a key advantage, diversification hedges risks.
- Expect earnings to grow at a CAGR of 18 percent over the financial years through March 2020.
- Good long-term potential, but valuations leave little upside.
- Key earnings driver will be crop protection which will see new launches and exports growth.
- Animal feed will be a drag as it is facing headwinds.
- New product introductions a key lever for growth, may come in from March 2019.
- Dairy margins will bounce back in the second half of the current financial year, likely to see gradual margin expansion from thereon.
- Poultry to see much faster growth if Godrej management takes over control of joint venture.
- Bull case target price is Rs 725.