Fw: Investor's Eye: Update - Bajaj Corp , Viewpoint - Rupa & Co

 

 

Investor's Eye [September 30, 2011]  Sharekhan www.sharekhan.com

Summary of Content STOCK UPDATE Bajaj Corp Cluster: Ugly Duckling Recommendation: Buy Price target: Rs142 Current market price: Rs104 Price target revised to Rs142 Bajaj Corp Ltd (BCL) has acquired Uptown Properties and Leasing Pvt Ltd (Uptown) for Rs75 crore (including liabilities of Rs49.5 crore). Uptown owns a building in Worli (Mumbai) with a built-up area of 33,600 square feet. The sole reason behind the acquisition is to develop a corporate office on the acquired plot to bring in all the scattered divisions at various locations under one roof to improve the operational efficiencies.  Outlook and valuation: To factor in the deal, we have downgraded our earnings by 1.6% and 2.4% for FY2012 and FY2013 respectively. The BCL stock has already reacted negatively to the announcement of the property deal and factors in the negative implication of the same at the current market price. Going forward, any initiative on the company's part to expand its portfolio or strengthen its core business would be the key upside trigger for the stock.  At the current market price the stock trades at 13.4x its FY2012E EPS of Rs7.8 and 11.1x its FY2013E EPS of Rs9.5. We maintain our Buy recommendation on the stock with the price target of Rs142 (15x FY2013E earnings as against 16x earlier due to the not so judicious use of free cash on the books). VIEWPOINT Rupa & Co Good brands + strong distribution reach < Valuation   Rupa is the largest men's innerwear player by volume (in FY2011, it sold 168 million pieces). It has presence across the value chain with products in categories ranging from basic to mid premium, premium and super premium (entered into the last category recently). Its flagship brands Rupa, Frontline, Jon and Air are in the basic and mid premium categories while brands like Euro, Macro Man and Macro Man M Series target the premium and super premium categories. Click here to read report: Investor's Eye

Regards, The Sharekhan Research Team myaccount@sharekhan.com   www.sharekhan.com to manage your newsletter subscriptions