Radha Madhav:Buoyed by expansion plans

ANALYSTS' CORNER

Brics PCG has recommended a 'buy' on Radha Madhav Corporation(RMCL). The company is planning to set up a state-of-the-art manufacturing facility at Uttaranchal for Rs 60 crore.

Funds for the project have already been readied and the State Industrial Development Corporation of Uttaranchal has allotted land to the company at IIE Pantnagar for setting up the unit.

The building plan and layouts are at an advanced stage to enable commencement of commercial production before 31 March 2007.

RMCL plans to install a calendaring machine at the unit to manufacture PVC calendared sheets for blister packaging used in the pharmaceutical industry, besides four station coating machines to coat PVdC over the PVC blister, with one of the largest installed production capacities in the country.

The company would sell pharmaceutical packaging material to approximately 800 pharmaceutical companies based in Uttaranchal and Himachal Pradesh. Brics PCG has set a target price of Rs 70 and the P/E ratio is close to 14x.

HDFC Bank: Positive results

Motilal Oswal has recommended a 'buy' on HDFC Bank. The bank has maintained its traditional 30-32 per cent earnings growth.

In Q4FY06, its net earnings grew 30 per cent y-o-y, on the back of strong business momentum and sequential margin expansion while its fee income grew 90 per cent y-o-y.

Its NPAs stand at 0.4 per cent of its total advances. The bank's network expansion is to regain pace from Q2FY07. HDFC is expected to report earnings CAGR of 31 per cent over FY06-08. Implementation of Basel-2 could be positive for the bank, as it would release additional capital.

The bank is also benefiting from rising rates due to high proportion of low cost funds, minimum risk on its bond portfolio and its ability to increase lending rates. EPS is expected to be Rs 36.3 in FY07 and Rs 47.5 in FY08. The stock trades at 17.2x FY08E earnings and 3.4x FY08E book value.

Paramount Comm: Future bright

Prabhudas Liladhar has recommended a 'buy' on Paramount Communications. When compared with the last quarter, the company's revenue for Q4FY06 has increased by 41.2 per cent to touch Rs 76.9 crores while its profit is up by 39.9 per cent at Rs 9.1 crores. Its operating margins stood at 20.1 per cent due to improved volumes.

The company's revenue is expected to double to Rs 3,95.7 crores in FY07 and further grow by around 55 per cent in FY08. Currently the stock trades at 8.7x FY07E earnings of Rs 25.8 and 5.5x FY08 earnings of Rs 41.