Dr Reddy's, 3i, KS Oils are favourites

Street Cues

Dr Reddy's Laboratories, 3i Infotech, KS Oils and Bartronics India are the favourite picks of brokerage houses SSKI Securities, Emkay Research, Angel Broking and ICICI Securities.

SSKI Securities has rated Dr Reddy's Laboratories as an 'Outperformer'. "Dr Reddy's Q4 FY07 results are significantly ahead of estimates largely driven by contribution from high margin one-offs like higher ondansetron sales and unanticipated rabeparazole API sales to Teva along with strong performance in all core business segments (except betapharm)." The management has provided guidance of 50-52 per cent gross margins, with incremental growth in APIs on a much higher base, continued growth in formulations, and improved performance in Germany, according to the report. "We reiterate that with its well balanced generics and discovery portfolio, DRL is one of our top picks in the space.We maintain outperformer rating on it with a price target of Rs 835, said the report. The current price is Rs 640.

Emkay Research has recommended a 'buy' on 3i Infotech
3i Infotech's revenue grew by 57 per cent to Rs 655 crore led by 70 per cent growth in products and revenues and 45 per cent growth in services revenues during FY07. Products' gross margin improved by 200 basis points to 54.3 per cent while services gross margin improved by 180 basis points to 38 per cent. EBIDTA increased by 85 per cent to Rs 159 crore and net profit grew by 81 per cent to Rs 104 crore. "We believe 3i Infotech is an attractive investment option. We maintain a BUY on this stock with a target price of Rs 377", said their report on 3i Infotech.

Angel Broking has recommended a 'buy' on KS Oils. "KS Oils is slated to grow at a CAGR of 47 per cent in topline and 59 per cent in bottom line over FY07-09," estimates Angel Broking. KS Oils has been fast gaining market share with the introduction of VAT. For FY07, KS Oils clocked record revenues of Rs 1,037 crore registering a healthy growth of 76 per cent over FY06. "We initiate the coverage on stock with a buy recommendation and 12 month target price of Rs 480,"said the report on KS Oils. The stock trades at around Rs 440.

ICICI Direct recommends Bartronics, which will reap the benefits of its smart card facility in FY08 as the capacity utilisation increases and with opportunities opening in the new sector. "We expect net sales to nearly triple from Rs 63.5 crore in FY07 to Rs 175.5 crore in FY08 while bottomline is expected to grow from 13.47 crore in FY07 to Rs 36.38 crore in FY08. We rate the stock 'outperformer' with a price target of Rs 146 in the next six months" said the report.