Alembic
Reco price: Rs 55
Target price: NA
Alembic is demerging its core pharma business into Alembic Pharma (APL), which will be listed separately. After demerger, Alembic will hold 29.2 per cent and the balance by shareholders of Alembic.
APL retains the core pharma business, with Rs 1,030 crore revenue and 6.6 per cent pre-tax profit margin. Alembic retains the loss-making PenG manufacturing facility (revenues of Rs 115 crore, loss of Rs 24 crore in 2009-10), 115 acres of land in Vadodra (including plant area of 45 acres) and power plant (11 Mw).
At Rs 55, Alembic’s stock is trading 10 times 2009-10 EPS for the pharma business (adjusting for gross fixed assets transferred to Alembic at book value).
— Edelweiss Securities
Amara Raja Batteries
Reco Price: Rs 220
Target Price: Rs 325
More From This Section
Amara Raja Batteries (ARBL) is a leading manufacturer of Standby Valve Regulated Lead Acid (VRLA) batteries having presence in both industrial and automotive segments. ARBL has planned capacity expansion on the back of strong growth seen in the automotive segment.
Further, the company is also in negotiations with two-wheeler original equipment manufacturer for the supply of batteries, which would improve its market share.
Given the strong growth in the automotive segment and steady growth in the industrial segment, the company is likely to see good volume growth. At Rs 175, ARBL trades at a price earnings of 10.3x FY11E EPS of Rs 16.9 and 9.1x FY12E EPS of Rs 19. Maintain buy at declines.
— Asit C Mehta
Cadila Healthcare
Reco price: Rs 663
Target price: Rs 780
Cadila’s recent Para IV filing of Lialda (patent expiry in 2020) along with approval of Anastrazole (breast cancer drug with shared exclusivity) could add Rs 8-10 to its EPS. The market is yet to factor in Cadila’s potential ANDA pipeline (95 filed, 50 approved and 27 launched).
The company has received a nod from DCGI for conducting Phase I clinical trials for its oral anti-diabetic molecule and, the approval to market its H1N1 vaccine in India (market opportunity of Rs 1,800 crore). The licensing deal with Abbott for a portfolio of 24 products in 15 emerging markets paves way to achieve its sales target of $3 billion by 2015. Maintain buy.
— Sharekhan
Core Projects and Technologies
Reco price: Rs 220
Target Price: Rs 325
Core Projects and Technologies’ US subsidiary, Core K12, bags a $24 million order (a five-year deal) for 375 schools covering 700,000 students from the Los Angeles Unified School District (LAUSD).
The order is to design and implement a comprehensive formative assessment program. The on-boarding of the software would begin from July 2010 and revenue of $7 million (licence and customisation fees) would be booked in FY11. The balance $17 million would be spread evenly over the next four years. CPTL’s Rs 695 crore order book is around 61 per cent of estimated FY11 sales.
At Rs 325, the stock is trading at 16x FY11E earnings. At this valuation, it would trade at 20 per cent discount to Educomp and the industry average. Maintain buy.
— Anand Rathi Research