After Daljeet Kohli’s stock pick, Sharon Bio-Medicine, delighted investors with a quick-fire 40% gain (in less than 30 days), it is now the turn of Dharmesh Kant to promise similar gains from Hester Biosciences.
Let’s straightaway note Dharmesh’s core reasoning on why Hester is such a compelling buy at present:
“Hester Biosciences Limited (HESTERBIO) is country’s leading diversified play on veterinary business. Through its state- of- the-art manufacturing facility at Mehsana district, Gujarat, it offers wide range of products and services. Products include vaccines for avian, swine and large animals, vitamin supplements and scientific diagnostic aides for disease diagnosis while services focus on seroprofiling for poultry flocks and mastitis control program for cattle (which help improve milk quality and quantity in buffaloes and cows).
Hesterbio stands on firm financials. Its revenue and net profit has grown at a CAGR of around 10% in last 5 years. Last two quarters has seen a remarkable turnaround. Q1FY15 saw sales rise by 45.62% y-o-y and PAT by 119% y-o-y along with improvement in profitability margins. PAT margin has been consistently improving sequentially over last four quarters from 10.78% in
Q3FY14 to 18.63% in Q1FY15
9) The stock is currently available at P/BV of2.17x (ttm basis) and P/E of 13.60x (ttm basis) at cmp of Rs. 199.20. The company stands on a strong balance sheet having minimal long term debt at 0.25x of shareholder’s fund. Historically, it has funded its capacity expansion primarily through internal accruals.
10) Assuming the company is able to sustain its growth momentum picked up in last two quarters, we expect Hesterbio to deliver over 30% revenue growth in FY’15. Based on annualized PAT margin of 17%; its FY’15 EPS works out to be Rs 15. Historically, the stock price has traded in the range of 17x to 21x of P/E multiple (ttm basis). Valuing the company at near higher band of historical P/E multiple of 20x for FY’15 based on aforesaid assumption of high growth and stable profitability margins the target stock price comes at Rs 300.
We recommend buy and accumulate on ‘Hesterbio’ for a target price of Rs 300.”
As you can see, Dharmesh’s recommendation is based on solid logic. He has foreseen a target price of Rs. 300 for Hester, which means a whopping 50% gain from the CMP of Rs. 200.
Interestingly, IndiaNivesh Securities, which employs Daljeet Kohli & Dharmesh Kant, holds a massive chunk of 88,972 shares of Hester. I expect that the top brass of IndiaNivesh would also be holding the stock in their personal capacity. So, if the analysts are trusting their recommendation with their own money, then, is there any reason for you to not do the same, is what you have to consider.