Do Dr Reddy's, Hero Moto look attractive post Q1 results?

In an interview to CNBC-TV18 Dilip Bhat of Prabhudas Lilladher gave readings on the first quarter numbers of stocks across various sectors like Dr Reddy’s, Hero MotoCorp and Bhat is bullish on both these stocks.

He has a target price of Rs 1,900-2,000 for the next 8-12 months on Dr Reddy's. "Dr Reddy’s will still continue to be a pick as far as we are concerned. We still feel that it has better cash flows and reasonably good outlook." "We would still look to buy Hero Moto may be not at these levels, may be slightly at lower levels. If you were to take their EPS, RoE and free cash flow it is very difficult to ignore this stock, it should be a part of your core portfolio," he added. Below is the edited transcript of Bhat's interview with CNBC-TV18. Q: What is your analysis of what Dr Reddy’s has done this quarter? A: I haven’t gone so much in detail about Dr Reddy's results at the moment. By and large we are expecting this particular year to end with something like USD 2 billion of turnover on a broader basis. Profits will peak out, but on a steady state basis, they will still grow by about 10-15% on a regular basis even if you were to take out one off kind of profits that have flown in, in the current year. Dr Reddy's will still continue to be a pick as far as we are concerned. We still feel that it has better cash flows and reasonably good outlook. Q: What kind of a target do you think Dr Reddy's could set out from here on? A: We are still seeing a price of Rs 1,900-2,000 over the next 8-12 months. It is largely because we think even though a lot of people are factoring in that this year is going to be peak in terms of profit and sales, we still feel that domestic push has become a lot more aggressive for them and that will play out. Q: What do you think are HeroMoto Corp numbers disappointing or are they largely in line? A: I think they are little disappointing on the bottom-line, but by and large I don’t think that it’s a disappointing number at all. Hero Honda still continues to be one of those stocks where you must decide when you must try to buy because the fundamentals remain pretty strong. The volume numbers though are sober and muted; they continue to be pretty good. I would still look to buy Hero Moto may be not at these levels, may be slightly at lower levels. If you were to take their EPS, RoE and free cash flow it is very difficult to ignore this stock, it should be a part of your core portfolio. Q: Kotak Mahindra Bank has reacted negatively to its numbers, what would you do with that, are you really that disappointed with the numbers? A: If you see the way Kotak Mahindra Bank has out performed most of the other banks particularly the private banks, some correction is probably not out of context. I would not be very keen to buy the stock even at current levels. The stock has done pretty well and compared to the core NIM numbers and RoEs that I has, I don’t think it merits this kind of price at the current levels. I would still wait for Kotak Bank to correct, it at all it corrects then I will have a look at that.