3M India
Recommendation: Buy
- A unique company selling branded industrial goods. It operates in many segments like display and graphics, home and leisure, office, healthcare among others. Its growth is thus linked to the broad industrial growth in India.
- With urban India getting more quality conscious, 3M is seeing strong products’ demand growth. A strong pipeline of innovative products to be launched will give it continued growth over the next decade. It will report an EPS of Rs 60 in CY08.
- It has quite strong cash flows and growth rates upwards of 20%. I would recommend Buy call on this stock with a price target of Rs 1,800 over long term (24-25 months).
Ranbaxy Labs
Recommendation: Buy
- Ranbaxy has dropped sharply post the open offer from Daiichi Sankyo. It is now quoting at Rs 188 versus an open offer price of Rs 737. The recent spate of negative news from the US FDA has contributed to the negative sentiment. FDA is probing past practices at one of its plants - operational parameters which were not adhered to. This should limit the downside and any fine from a conviction, if any.
- While the negatives remain, they are short-term in nature and Ranbaxy should be able to return to the normal growth trajectory next year. Over the next four years, Ranbaxy will access international markets for Lipitor as a part of its settlement with Pfizer. Also, Daiichi will be able to give the company access to the Japanese markets.
- I would recommend a strong Buy call on this stock with a price target of Rs 400 over long term.
