Broker alert: Buy Phoenix Mills, Exide, Dr Reddy's Lab

Given the current market gyrations with so many factors at work, it’s quite natural to feel a little dis-orientated. But help is at hand. Firstpost tries to cut down the clutter for you by laying out a set of recommendations to help firm up your decision.

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Edelweiss is bullish on Phoenix Mills and has reiterated its ‘buy’ rating with a target price of Rs 246 per share compared to its current market price of Rs 217. The company’s revenues are expected to surge 85 percent for the year ended March 2012 due to the completion of its various projects. While its ‘Pune Market City’ project was completed during the June 2011 quarter, its Kurla and Bengaluru project are expected to be completed in the second half of financial year 2012. Also, its 5-star hotel, Shangri-La Hotel, is expected to have a soft launch in the quarter ending March 2012. This is expected to lead to a sharp increase in the company’s total operational area to 4.5 million square feet compared to 0.9 million square feet as of March 2011. Earnings per share (EPS) are projected to firm up by 65.7 percent to Rs 9.6 per share compared to Rs 5.8 per share in the previous year.

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While Bank of America Merrill Lynch reduced its price target for Exide Industries by 12 percent to Rs 158 per share - its current market price is Rs 131 - it is still bullish on the stock. Exide, India’s largest automotive and industrial battery company, is expected to be a key beneficiary of the rising demand for branded lead acid batteries. While its decision to reduce prices of car batteries will help it increase market share in the automotive battery segment, dealers are also pleased with this decision as the company is losing sales of around 900 batteries in Mumbai per month. The company has a 72 percent and 45 percent market share in the branded automotive batteries and industrial batteries market, respectively. It also has a 50 percent stake in ING Vysya Life Insurance Co.

HSBC Research is overweight on Dr Reddy’s Lab and has a target price of Rs 2,000 per share against its current market price of Rs 1,457. This is mainly on account of the court’s decision to revoke the ban on the manufacture and sale of certain paediatric formulations, including nimesulide. While the company’s lawyers had been claiming the ban had no proper basis, many manufacturers had stopped promoting the brand due to its side-effects among children. Also, concerns about the ban being extended to adults aggravated market worries. However, with the removal of the ban on the drug for paediatric use, the brand is expected to revive. Nimesulide belongs to the class of non-steroidal anti-inflammatory drugs that include ibuprofen, diclofenac and paracetmol.

Motilal Oswal is ’neutral’ on Thermax with a price target of Rs 591 per share compared with the current market price of Rs 504.95 per share. Thermax operates in the capital goods segment and derives a larger chunk of its revenues from the power business. However, there are concerns about these sectors as decision making at various levels of the government and the constant hike in interest rates have dampened capital expenditure plans of large corporates. This was visible in the order-book position, which has declined 7 percent to Rs 1,620 crore for the three months to June.

Sushil Finance is bullish on Bank of Baroda and has a price target of Rs 1,078 per share compared to its current market price of Rs745.8 per share, reflecting an upside of almost 45 percent. Branch expansion by the bank continued at a steady pace as it opened 45 new branches during the quarter ended June. It also plans to open more than 500 branches in 2011-12. While the bank expects to maintain its net interest income (NIM), the difference between the interest earned and interest paid, at around 3 percent levels, the brokerage expects it to fall by 26 basis points during the year ended March 2012.