HDFC Securities has maintained a buy call on Divi’s Laboratories with a target price of Rs 735. On the back of an import alert by the US FDA, it has cut base case earnings estimate by 20-25 percent for FY18/19. The brokerage house has also lowered the base case multiple from 20 times to 16 times on FY19 earnings per share.
Motilal Oswal has maintained its neutral call on the stock and expects it to be rangebound till there is further clarity on Form 483s issued by US FDA. It has cut its EPS estimates for FY18/19 by 22-23 percent.
Motilal Oswal has initiated coverage with a buy rating and has set a target price at Rs 229. It cites the approval of a casino in Daman as a key upside trigger and sees gaming capacity to double. The brokerage house expects net profit CAGR of 62 percent, EBITDA CAGR of 45 percent over FY17-19. Furthermore, it expects this EBITDA to be driven by strong operating leverage.
CLSA has maintained its buy call on Dr’ Reddy’s Laboratories as it waits for US drug regulator’s action at its Srikakulam plant. The US Food and Drug Administration’s (FDA) inspection result at Srikakulam will be a major catalyst for the stock. It further adds that investors should not compare Duvvuda and Srikakulam inspections due to different compliance requirements. CLSA estimates Duvvuda to be 4-5 percent of the company’s US sales and 2-2.5 percent of total sales.
CLSA has maintained its buy call on the stock with an increased target price of Rs 340 from Rs 300. In fact, the company is its top pick in the sector. A completion its merger with Cairn and possible dividend are potential catalysts on the stock.
The brokerage house has highlighted the multiple growth projects on the company’s radar beyond FY19 and said that it is on track to completely ramp up new aluminium and power capacity over FY18-19. If all the projects materialise, it says, it would provide 25-30 percent boost to consolidated EBITDA. Furthermore, it feels that though the stock has risen, valuation still remains attractive.
Morgan Stanley has upgraded the stock to overweight call. It feels that the stock’s underperformance and mean valuation provide good entry opportunity. Furthermore, it finds the stock to be risk-reward attractive and the value traded in commodities is at multi-year low.
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