Broker's call on Tata Motors, Cipla and GSK Consumers

Morgan Stanley upgrades Tata Motors to ‘Overweight’

Morgan Stanley upgraded Tata Motors to ‘Overweight’ on hopes of a cyclical recovery in profitability of Indian auto industry. Increasing the target price for the stock to Rs 334 from Rs 240 earlier, the analysts said they they feel a competitive environment in China (where Tata Motors sells cars under the Jaguar Land Rover brand) has stabilised.

“JLR’s product pipeline is strong and volume should revive sharply over the next six months as sales of the new Range Rover and XF/XJ variants commence,” the broker said. Premium demand in China could continue to grow, and JLR should gain more market share due to strong product plans despite a limited dealer presence. Valuations also look attractive at six times estimated earnings per share in 2013-14. Weak September quarter earnings should be an opportunity to accumulate the shares, the broker added.

Nomura upgrades Cipla's target price to Rs 400

Nomura analysts have upgraded Cipla’s target price to Rs 400 from Rs 380 earlier and maintained ‘Neutral’ rating after the pharmaceutical company announced September quarter results. The results were ahead of Nomura’s expectations on greater realisation from Lexapro, the analysts said, increasing their 2012-13 earnings estimated by 12%. However, the analysts said they prefer Dr Reddy’s Laboratories over Cipla as the former is “yet to realise the benefits of rupee depreciation and has stronger operating leverage.”

GSK Consumers remains a Buy

PhillipCapital has maintained a ‘Buy’ rating and upgraded the target price to Rs 3,430 on Glaxo Smithlkine Consumer after the company reported “healthy” earnings for September quarter despite a slowdown in revenue growth from canteen stores department (CSD) sales. PhillipCapital has maintained 2012-13 and 2013-14 earnings estimates for the company but has upgraded the price-earnings multiple to 27 times the 2013-14 expected earnings due to “consistent earnings growth.”