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Analysts' corner

Source : BUSINESS_STANDARD
Last Updated: Sat, Dec 17, 2011 18:00 hrs

SUN TV NETWORK
Reco price: Rs 270;
Target price: Rs 280
Given Sun's dependence on consumer companies (55-60 per cent of ad pie) that have lowered brand-building spends to protect margins, coupled with the past two years' high base, ad revenue growth remains muted. There were concerns on the sustenance of Sun's ratings, given the new Tamil Nadu (TN) government's revival of its cable business, Arasu, that didn't carry Sun channels. TAM data says Sun's share is stable in recent weeks after some slippage post the Arasu launch. Shares of all Sun channels are stable now at 50 per cent. The management is negotiating with Arasu and expects to be on its network in the near future. The stock has been impacted by political uncertainties around the promoter family, with many issues in group companies. These issues may take some time to resolve, which will prevent a meaningful stockre-rating. Neutral.

—Citigroup

DIVI'S LABORATORIES
Reco price: Rs 326;
Target price: Rs 299
Divi's lab is likely to benefit the most from the rupee fall in the pharma sector. It is expected to post a 37 per cent upside in earnings in the second half of FY12 and 21 per cent in FY12. Positive is the impact due to high exports and there are no forward covers. Around 91 per cent of revenues come from global sales, which will have a positive impact on revenues of 12 per cent in the second half of FY12 and seven per cent in FY12. Maintain hold.

—Emkay Global

APOLLO HOSPITALS
Reco price: Rs 623;
Target price: Rs 650
According to the management, Apollo Hospitals (APHS) is looking at various measures to improve efficiency. These include improving occupancy in Hyderabad from 64 to 70 per cent by FY12, converting 30 general ward beds in the Chennai main hospital to speciality beds by next quarter, continuing to close non-viable pharmacy stores and targeting a four per cent Ebitda margin by FY13. As a result, the management estimates a 100-basis points improvement in Ebitda margins in FY13. It is looking to increase volumes of overseas patients and has started to augment marketing activities/referral programs in locations abroad. APHS is looking at the induction of a strategic partner or a complete sell-off of the BPO business in a six-to-nine-month period. It will also consider a strategic partner for its retail pharmacy once FDI in retail is cleared. Overweight.

-JP Morgan

INFOTECH ENTERPRISES
Reco price: Rs 120;
Target price: Rs 166
Infotech Enterprises' (Infotech) management says the weak macro environment has not impacted demand. While seasonal and one-off event may cause the second half FY12 volume growth to be in the three-four per cent range, analysts expect the company to grow 20 per cent (in dollar terms) in FY13. Further, they expect operating margins to continue to expand from 15.7 to 19.0 per cent, driven by right-sizing the employee pyramid, the turnaround in Daxcon (acquired company) and the major benefit from the weak rupee. Edelweiss has revised its Ebitda margin assumption to 16.8 per cent for FY12 and 16 per cent for FY13, leading to a six per cent EPS upgrade for FY13. Maintain buy.

—Edelweiss Securities




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