CIPLA
Reco price: Rs 346
Target price: Rs 400
Cipla has tied up with the Stempeutics Research to market stem cell-based products. Cipla becomes the first domestic drug player to diversify into stem cell therapy and will fund Rs 50 crore in the next two years to conduct clinical trials. With this funding, Cipla will get marketing rights of Stempeutics’ eight products in the pipeline. The first of the products, Stempeucel-CLI (Critical Leg Ischemia), is now poised for Phase-III trials on a wider set of 110 patients and could be launched in 2013. The stem cell therapy market in India is estimated at about Rs 2,400 crore, growing at around 15 per cent. Stem cell therapies are gaining prominence world over and are considered a major branch of medical treatment in the future with a potential of revolutionising medicine. The stock is trading at 20x its FY12 earnings per share (EPS) estimates. Maintain buy.
— Ambit Research
SUN TV
Reco price: Rs 413
Target price: Rs 491
Sun Network will be one of the major beneficiaries of the recent growth in the DTH space. South India accounts for 47 per cent of cable and satellite (C&S) homes in India – which account for 21 per cent of the population of the country – with no demand for Hindi bouquet there. Sun has not entered into any fixed subscription revenue model with broadcasters, which ensures it incremental revenue from every additional subscriber. There are strong growth in advertising spends to augment revenues and Sun TV has been the first one to undertake an ad rate hike across the regions it operates in (average 12-15 per cent). At Rs 413, the stock is trading at 25x its FY11 earnings estimates. Maintain buy.
— ULJK Research
UNION BANK OF INDIA
Reco price: Rs 295
Target price: Rs 318 For Q4FY2010 (fourth quarter of financial year 2009-2010), Union Bank of India (UBI) reported better-than-expected net profit growth of 27.6 per cent year-on-year (y-o-y) on account of higher-than-expected net interest income (NII) and non-interest income. Strong improvement in NII and reasonable asset quality were the key positives of the results. Structurally, UBI is among the more profitable and competitive public sector banks, with robust traction in current account-savings account (Casa) deposits and relatively faster branch expansion. Moreover, given traction in the bank’s retail deposit franchise, expect its performance on the NII front to be better than its peers in FY2011E (estimated) as well. The stock is trading at 5.6x FY2012E EPS and 1.2x FY2012E adjusted book. Maintain accumulate.
— Angel Securities
ZYLOG SYSTEMS
Current price: Rs 462.60
Fair price: Rs 530
Zylog derives 40 per cent of revenues from information technology (IT) products and related implementation, and the balance from IT services. In FY10, the company forayed into the Wi-Fi internet services and e-governance space. Zylog’s IT solutions segment is set to expand at a three-year compounded annual growth rate (CAGR) of 18 per cent with a revival in global IT spends and continued synergies playing out from its past acquisitions. CRISIL Equities expects Zylog’s consolidated revenues to grow to Rs 2,330 crore in FY13 at a three-year CAGR of 37 per cent, driven by the integration of Brainhunter. Despite robust revenue growth, EPS is set to grow at a relatively slow pace of 21 per cent CAGR to Rs 95 in FY13. The stock is trading at 6.6 times 2010-11 EPS.
— Crisil Equities
