Siddharth SedaniAnand Rathi Shares and Stock Brokers
In August 2018, we witnessed strong rally in largecaps, blue-chip firms and a rebound in select mid-cap companies.
Rupee has been a dampener for Indian macros, however, it is an opportunity for export-oriented sectors like IT & pharma – which can benefit from a weak rupee. IT sector has witnessed share buy backs from various companies considering the attractive valuation and outlook.
Markets will await auto sales figures for the month of August, which will be released from September 1 onward.
Inflation remains to be a concern for the markets - rising petrol & diesel prices directly affect the business.
Jubilant Life Sciences | Rating: Buy | Target: Rs 1,040
Revenue from operations improved by 34% year-on-year to 2,078 crore. This was on account of enhanced performance in specialty pharmaceuticals, the US solid dosage formulation and higher volumes in Life Science Ingredients.
The company achieved the reported PAT of Rs 202 crore, a growth of 38% year-on-year with a net margin of 9.7%.
On a segment basis, revenue from pharmaceuticals improved by 46% year-on-year to Rs 1,181 crore. Within this, the Specialty Pharmaceuticals business displayed strong performance by growing 74% year-on-year.
Life Science Ingredients Segment revenue for the quarter stood at Rs 846 crore, improved by 21% year-on-year. This has been aided by strong growth in volume during the quarter.
JLS has planned to invest about Rs 550 crore in capital expenditure in FY19. In addition, JLS plan to invest Rs 300 crore in R&D during the year, including Rs 150 crore in product development expenditure.
With the planned IPO for its Singapore subsidiary, JLS will go onto further reduce its net debt while continuing additional capex.
Larsen & Toubro Technology Services | Rating: Buy | Target: Rs 1,940
With the rise of enabling technologies like 5G, IoT, Artificial Intelligence etc, the digital disruption now has expanded to almost each and every part of the global industrial complex including manufacturing and process industries. This has opened a new and bigger opportunity of more than $1.1 trillion market for engineering outsourcing market.
LTTS’ has multi-sectoral presence and domain expertise enables cross-pollination of ideas and best practices leading to differentiated engineering solutions.
During the latest quarterly results, the company has reported robust growth in revenues; it grew 33.2% in Q1-FY19 to $168.9 million as against $127.6 million in Q1-FY18 in constant currency terms.
We expect LTTS to grow its consolidated revenues at CAGR of 23% for the next two years and reach ₹4895 Cr in FY19 and ₹5696 Cr in FY-20 on back of large opportunity present across capex intensive business and sustained momentum of ramping up of existing clients.
At CMP the stock is trading at 2x times FY18E consolidated earnings and 16.9x times FY19E consolidated earnings.
Biocon | Rating: Buy | Target: Rs 823
Biocon has reported a growth of 21.2% in its consolidated revenues at Rs 1,123 crore in Q1-FY19 as against Rs 927 crore in Q1-FY18.
Profit after tax for the company grew by 47% and stood at ₹119 cr in Q1-FY19 against Rs 81 crore in Q1-FY18.
The Top 10 brands in its India portfolio reported a strong double digit growth.
The key developments during the quarter were approval of Fulphila (Pegfilgrastim) Biosimilar co-developed by Biocon and Mylan for launch in U.S.markets.
The company’s sterile Drug Product manufacturing facility in Bengaluru received EIR from U.S.FDA and EUGMP certification
Syngene extended its collaboration with Baxter upto 2024 and strengthens its growing client base amongst others.
Going ahead, we continue to expect company to get benefits of first wave of Biosimilar commercialization in the next two years which should drive higher revenues along with higher growth in formulation business on back of new launches and deeper penetration.
We expect company to grow at a CAGR of around 29% over next two years which should also improve better profit margins going ahead.
Disclaimer: The author is Vice President - Equity Advisory, Anand Rathi Shares and Stock Brokers. The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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