MUMBAI: Emkay Share and Stock Brokers has initiated 'buy' on Elder Pharma for target price of Rs 535. Unlike its peers, Elder chose the in-licencing model over manufacturing of generic versions of patented molecules, which has helped it build high credibility in the international space.
The company expects more in-licensing deals going ahead to enhance product portfolio and drive growth. The recent acquisitions of NeutraHealth and Biomeda are strategic decisions to increase its global reach and the benefits of these initiatives will be seen over the next two to three years.
Emkay expects total exports to grow at CAGR 69.4 per cent over FY07-FY10E. Moreover, these acquisitions have created additional CRAMs opportunity for the company. Also, Elder is on its way to generating substantial cost savings by shifting its manufacturing activities to tax-free zones of Uttaranchal and Himachal Pradesh.
Emkay expects operating margins to improve by 200 basis points from 17.4 per cent in 2006-07 to 19.4 per cent in FY10E. It expects Elder to report strong growth in revenues at CAGR 27 per cent during FY07-FY10E. The brokerage expects the company to record net profit growth at CAGR 34 per cent during FY07-FY10E.
At the market price of Rs 375, the scrip discounts FY09E EPS of Rs 44.6 by 8.8x and looks attractive for long term investment.
Sintex Industries
Emkay has initiated ‘buy’ on the stocks for target of Rs 860. Having pioneered the "Plastic Water Tanks" in India, Sintex Industries has moved ahead to providing turnkey solutions like prefabricated structures, monolithic construction, custom molding for the auto & power sectors.
The major thrust of the government on rural housing, health & sanitation infrastructure coupled with increasing investment in telecom infrastructure holds good for the company.
Sintex is also benefited by the increasing use of plastic moldings for automobiles. The company also has a textiles division focused on premium segment which continues to provide steady cash flows to the company.
Emkay is positive on the company's strategy of innovating products in order to meet its market demand. Sintex is also undertaking growth through organic & inorganic route which will lead to increase in market share & entry into new markets.
The brokerage expects Sintex’s revenues and profit after tax for the period FY07- FY10E to grow at a CAGR of 55 per cent & 66 per cent respectively.
Kalindee Rail Nirman
Emkay has initiated ‘buy’ on Kalindee Rail for a price target of Rs 592, an upside of 48 per cent from current levels. Kalindee Rail Nirman, whose fortunes are closely linked to the infrastructure spends of the Indian railways, is on the fast track to growth. The ambitious capital expenditure plans of the Indian Railways have presented the company with a huge Rs 300 billion opportunity.
The upgradation of existing rail network, dedicated freight corridor, plans to set up metro rails and orders from private players to provide linkages are likely to ensure a fat order book for Kalindee Rail Nirman in the years to come, says Emkay.
At present, the company has an order book of Rs 500 crore with new orders worth Rs 300 crore to flow in over the next six months. Emkay expects the company to post 63 per cent and 88 per cent CAGR in revenues and profits respectively during FY07-10E period. The brokerage expects fully diluted EPS of Rs 10.1, Rs 23.6 and Rs 49.3 in FY08-10E.
The company expects more in-licensing deals going ahead to enhance product portfolio and drive growth. The recent acquisitions of NeutraHealth and Biomeda are strategic decisions to increase its global reach and the benefits of these initiatives will be seen over the next two to three years.
Emkay expects total exports to grow at CAGR 69.4 per cent over FY07-FY10E. Moreover, these acquisitions have created additional CRAMs opportunity for the company. Also, Elder is on its way to generating substantial cost savings by shifting its manufacturing activities to tax-free zones of Uttaranchal and Himachal Pradesh.
Emkay expects operating margins to improve by 200 basis points from 17.4 per cent in 2006-07 to 19.4 per cent in FY10E. It expects Elder to report strong growth in revenues at CAGR 27 per cent during FY07-FY10E. The brokerage expects the company to record net profit growth at CAGR 34 per cent during FY07-FY10E.
At the market price of Rs 375, the scrip discounts FY09E EPS of Rs 44.6 by 8.8x and looks attractive for long term investment.
Sintex Industries
Emkay has initiated ‘buy’ on the stocks for target of Rs 860. Having pioneered the "Plastic Water Tanks" in India, Sintex Industries has moved ahead to providing turnkey solutions like prefabricated structures, monolithic construction, custom molding for the auto & power sectors.
The major thrust of the government on rural housing, health & sanitation infrastructure coupled with increasing investment in telecom infrastructure holds good for the company.
Sintex is also benefited by the increasing use of plastic moldings for automobiles. The company also has a textiles division focused on premium segment which continues to provide steady cash flows to the company.
Emkay is positive on the company's strategy of innovating products in order to meet its market demand. Sintex is also undertaking growth through organic & inorganic route which will lead to increase in market share & entry into new markets.
The brokerage expects Sintex’s revenues and profit after tax for the period FY07- FY10E to grow at a CAGR of 55 per cent & 66 per cent respectively.
Kalindee Rail Nirman
Emkay has initiated ‘buy’ on Kalindee Rail for a price target of Rs 592, an upside of 48 per cent from current levels. Kalindee Rail Nirman, whose fortunes are closely linked to the infrastructure spends of the Indian railways, is on the fast track to growth. The ambitious capital expenditure plans of the Indian Railways have presented the company with a huge Rs 300 billion opportunity.
The upgradation of existing rail network, dedicated freight corridor, plans to set up metro rails and orders from private players to provide linkages are likely to ensure a fat order book for Kalindee Rail Nirman in the years to come, says Emkay.
At present, the company has an order book of Rs 500 crore with new orders worth Rs 300 crore to flow in over the next six months. Emkay expects the company to post 63 per cent and 88 per cent CAGR in revenues and profits respectively during FY07-10E period. The brokerage expects fully diluted EPS of Rs 10.1, Rs 23.6 and Rs 49.3 in FY08-10E.
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