Leading brokerages have issued initiating coverage reports on six top quality stocks with the potential for heavy gains
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| Camson Bio Technologies Ltd – Unique Products backed by robust R&D; Execution is the key |
| CMP (Rs.) 102 |
| Target Price (Rs.): 189 |
| Potential Gain (%) : 86 |
| Research By: Karvy |
| Outlook & Valuation:We have valued CBTL by estimating a suitable PE multiple for FY17E EPS, by mapping it to RoE. We have valued the company at 14x of FY17E EPS and reached a per share valuation target of Rs. 189 for an investment horizon of 12 to 18 months. We initiate a coverage on CBTL with a BUY recommendation. |
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| KEI Industries |
| CMP (Rs.): 83 |
| Target Price (Rs.): 128 |
| Potential upside (%): 54 |
| Research By: Anand Rathi |
| Outlook & Valuation: Multiple growth levers kicking in; initiating, with a Buy We initiate coverage on KEI Industries with a Buy and a target price of `128. We are upbeat about the company given the greater demand for its products (reflected in its `17bn order-book). With its better product-mix (due to high-margin EHV), higher exports and retail sales, we expect robust 18%/82% revenue/PAT CAGRs over FY15-17. Operating leverage and the better product-mix could improve margins by 180bps, in our view. With no major capex until FY17, FCF generation would strengthen the balance sheet, resulting in higher return ratios. |
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| Ajanta Pharma – Consistent strong growth; initiating, with a Buy |
| CMP (Rs.): 1146 |
| Target Price (Rs.): 1454 |
| Potential upside (%): 26 |
| Research By: Anand Rathi |
| Outlook & Valuation: Consistent strong growth; initiating, with a Buy We initiate coverage on Ajanta Pharma, with a Buy rating and a target price of `1,454. We expect its strong revenue and profit growth to continue, driven by its focus on fast-growing domestic therapeutic segments and scaling up its brand-named generics in emerging markets. |
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| Shilpa Medicare Ltd |
| CMP (Rs.) 946 |
| Target Price (Rs.): 1065 |
| Potential Gain (%) : 13 |
| Research By: Karvy |
| Outlook & Valuation: At the current market price of Rs. 946, the company is traded at 22x FY17E EPS of Rs. 43. The company is at the early stages of foraying into the next phase of growth. The valuations have factored in the growth prospects fairly including formulations, US-API, ARV supplies and expanded custom synthesis. We are initiating the coverage on SLPA with a HOLD rating valuing it at average last 6 quarter PE of 25x (when the opportunities were in the visible range for the investors) for a target price of Rs.1,065 representing an upside of 12.6% from the CMP.. |
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| HSIL – Tapping growth, flushing debt; Initiate with BUY |
| CMP (Rs.) 439 |
| Target Price (Rs.): 530 |
| Potential Gain (%) : 20.9 |
| Research By: Emkay |
| Outlook & Valuation: Building Products segment remains the key growth driver for HSIL HSIL is the market leader in the Indian sanitary ware business with a dominant 40% market share. Strong brand creation, varied product portfolio, wide distribution network and rising acceptance of premium products have been the key drivers for HSIL’s sustained leadership. Given the strong revenue and earning drivers like government’s focus on sanitation (low sanitation penetration of 40%), increased housing & replacement demand, rising income level of the middle class coupled with company’s sustained efforts via new product launches, increasing share of premium products and expanding distribution network, we expect the building product segment to sustain market leadership and growth momentum. We expect this segment to report 17% CAGR over FY14-17E to Rs 14.2bn. Consequently, we expect the building product segment’s revenue share to rise from 47% of revenues in FY14 to 52% by FY17E. |
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| Merck Ltd – New Management Set To Ride Growth With Added Injectables Capacity, The Surge In Biosimilars And Deeper Market Penetration |
| CMP (Rs.) 839 |
| Target Price (Rs.): 930 |
| Potential Gain (%) : 11 |
| Research By: Karvy |
| Outlook & Valuation: At CMP of Rs.839, Merck is trading at 17.1x CY16E EPS, which is lower than the 4-year average TTM PE of 19. Considering the triggers – increased injectables capacity leading to possible new launches and deeper market penetration, we initiate a “HOLD” recommendation on Merck Ltd with a target of Rs.930 based on 19x CY16E EPS of Rs.48.9. The potential upside is 10.8%. |
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