Balaji Tele, Shasun top picks

STREET CUES

Ankur Drugs & Pharmaceuticals, Balaji Telefilms, Tata Elxsi and Shasun Chemicals are the top picks of brokerage houses UTI Securities, Anand Rathi, Emkay Share and Stock Brokers and Angel Broking.

Ankur Drugs and Pharmaceuticals is a leading contract manufacturer of tablets, capsules, dry syrup and liquid formulation.

"The key growth drivers will be increased volumes, strong order book and higher margin sterlite products. Sales are expected to grow at a CAGR of 59 per cent during FY06-FY09E, led by rising volumes, optimum capacity utilisation and better efficiency. Their foray into manufacturing injectables will result in higher margins and widening of the product portfolio. The company has adopted international quality standards in its new plants to improve export prospects. Two of Ankur's three manufacturing facilities are located in Baddi. The overall growth in the domestic market and fiscal benefits from new facilities will improve the company's fully diluted EPS to Rs 25.5 and Rs 32.1 in FY08E and FY09E respectively." UTI Securities said in its research report.

Balaji Telefilms is the favourite stock pick of Anand Rathi from the media space.

Balaji Telefilms (BT) is India's leading television content provider. The company derives 96 per cent of its revenues from commissioned programming and sponsored programmes for television channels and the remaining is derived from other activities like feature films.

"The majority of Balaji's revenues come from Star. Star has 26 per cent stake in BT, which further deepens the relationship and can act as a cushion for Balaji Telefilms in case some of its programmes slip down on the TRP ratings.The company has ventured into film production, mostly small and medium sized films. It plans to release 5-6 films in the current year, which will bring in additional revenues and profits. BT is also focussing on increasing the share of regional languages in the overall content pie. Additionally, the company is setting up a subsidiary to produce serials for the middle east markets.The company is likely to perform well in the coming years. At a PE of around 10x for FY07E earnings, this media stock looks very attractive." the report by Anand Rathi said.

Mumbai-based Emkay Share and Stock Brokers has recommended a 'BUY' on Tata Elxsi Limited (TEL) as it expects TEL to be a key beneficiary of a robust engineering services outsourcing market.

TEL is a specialist Engineering Services (ES) outsourcing player with a niche focus on product design services.

"Over the years, it has transformed itself from being a low margin system integration and support centric player to a high margin full lifecycle product design service provider. With its focus on embedded systems based product design services and continuing strong client relationships,we believe that TEL is well positioned to capitalize on the robust market opportunity. We expect the engineering services to post a CAGR of 36 per cent over FY06-09E. Similarly, the visual computing lab is likely to grow at 35-40 per cent over the next couple of years. We expect the company to post a CAGR of 31 per cent in revenues and 39 per cent in profits for FY06-09E." their report by Emkay said.

Sarabjit Kour Nangra of Angel Broking sees a good upside for Chennai based Shasun Chemicals. Incorporated as a bulk and intermediaries manufacturer of Ibuprofen (an anti-inflammatory drug), the company has undergone a successful transformation. Apart from reducing its dependence on Ibuprofen, it has leveraged its relationships with the innovator companies to strengthen its CRAMS (Contract Research And Manufacturing Services) segment.

"The company has significantly scaled up its nascent CRAMS business through the acquisition of Rhodia's custom synthesis business. For FY2006-09E, the company is expected to register a CAGR of 45.1 per cent and 24.3 per cent on sales and net profit respectively. At CMP, the stock trades at 8.8x FY2008E and 7.0x FY2009E earnings." Sarabjit said.