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L&T bags orders worth `1,181cr
Larsen & Toubro (L&T) has bagged three orders in the buildings and factories division
aggregating to `1,181cr. The first order of `558cr is for construction of residential
buildings bagged from leading developers. Another order worth `298cr is for construction
of factories. The third is a turnkey project worth `325cr for designing and constructing a
specialised support building facility. At the CMP of `1,878, on a standalone basis, the
stock is trading at P/E of 26.8x and P/BV of 4.5x based on FY2012 estimates. We have
used the SOTP methodology to value L&T to capture all its ventures and investments/stakes
in the different businesses. We recommend an Accumulate on the stock, with a Target Price
of `2,024.
Merck, Ranbaxy drug development deal called off
The US drug maker Merck & Co terminated its nearly two-year old alliance with Ranbaxy
Laboratories to develop anti-infective medicines, which could have fetched Ranbaxy US
$100mn over a period of five years. The agreement between Merck and Ranbaxy was
signed in May 2008. As per the agreement, Ranbaxy and Merck were to collaborate and
develop clinically validated anti-bacterial and anti-fungal drug candidates. We had not
factored in any upsides from the same in our Target Price and remain Neutral on the
stock.
JSW - 3QFY2011 crude steel production up 11% yoy
JSW Steel’s total crude steel production grew 11% yoy to 1.64mn tonnes in 3QFY2011 on
the back of improvement in demand. While production of flat steel products increased 33%
yoy to 1.25mn tonnes, production of long products stood at 0.28mn tonnes during the
period. At the CMP, the stock is trading at 8.4x FY2011E and 5.9x FY2012E EV/EBITDA.
We recommend a Buy on the stock, with a Target Price of Rs1,310, valuing it at 6.5x
FY2012E EV/EBITDA.
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