Express Idea - GCPL, Asian Paints; Q3 FY15 Updates - Motherson Sumi, Cadila, Nalco, Radico Khaitan

Express Idea: Godrej Consumer Products – BUY CMP Rs1,064, Target Rs1,225, Upside 15.1% Impressive growth in domestic as well as international biz Strong leadership position in international business Lower crude, PFAD prices, cost saving initiatives to fuel OPM Strong earnings visibility, maintain BUY

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Express Idea: Asian Paints – BUY CMP Rs822, Target Rs938, Upside 14.1% After making double top in last week of January 2015, the stock went through a phase of sharp correction, eventually retracing 50% of its previous upmove. The same level also coincides with the support of its 50-DMA, suggesting that the current selling pressure has come to an end. We advise buying Asian Paints with stop loss of Rs763 for target of Rs938.

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Motherson Sumi (Q3 FY15) – BUY CMP Rs461, Target Rs615, Upside 33.4% Revenues at Rs91.5bn came in higher than our estimates, wherein the growth in SMP revenues were substantially higher than our estimates Standalone OPM was lower better than expectations at 17.2%, SMP margins came in at 6.9% v/s our expectations of 6.2%, SMR margins were at 10.2% in line with our estimates While margins for the SMP were higher on a yoy basis, standalone and SMR margins were lower by 183bps yoy and 20bps respectively causing consolidated OPM to fall by 29bps yoy We maintain BUY with a revised 2-year price target of Rs615

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Cadila Healthcare (Q3 FY15) – BUY CMP Rs1,514, Target Rs1,920, Upside 26.8% Cadila revenues up a strong 17.4% yoy driven by robust growth in US and emerging markets EBIDTA margin improved 108bps qoq on operating leverage tailwind while higher tax rate led to lower than estimated PAT at +6% qoq Company expects 20% growth in US business subject to approvals; pending approvals in transdermals, nasals and topicals would drive growth over next 2-3 years Retain BUY on best in class EPS cagr of 30.4% over FY15-17 with unchanged 9-12mth target of Rs1,920

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National Aluminium Co Ltd (Q3 FY15) – BUY CMP Rs49.5, Target Rs62, Upside 25.2% NALCO continued to report strong numbers for the second consecutive quarter led by higher premiums and increase in alumina prices Operating performance remained strong even though operations were impacted by cyclone Hudhud Alumina production declined by 1.3% yoy, whereas aluminium production improved by 3.8% yoy due to improving coal supply Operating profit of Rs5.3bn was higher than our estimate due to a decline in raw material and power costs; OPM at 27.7% was the highest in the last three years Strong performance to continue going ahead; Maintain BUY with a price target of Rs62

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Radico Khaitan (Q3 FY15) – Accumulate CMP Rs86, Target Rs92, Upside 7.6% Persistent input cost pressures drive 265bps yoy decline in margin while net sales growth remains tepid at +5.5% yoy Prestige and above brands share at 21.4%, up ~200bps yoy but higher ENA costs eat into benefits of improved revenue mix Elevated ENA prices and lack of revenue traction to restrict stock upside; retain accumulate with unchanged 9-12mth target of Rs92

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Warm Regards, Amar Ambani Head of Research, IIFL