Recomendation From Pharmaceuticals & Auto Sectors
The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
ALEMBIC PHARMACEUTICALS
CMP -Rs 539.35
BSE CODE- 533573
Volume 18412
Face Value Rs 2
Target Rs 588
Stoploss Rs 494
The company jointly promoted by Alembic Ltd, Shreno Ltd and Nirayu Pvt Ltd is engaged in developing formulations and active pharmaceutical ingredients (API). The company generated its FY18 revenue from international generics (38%), branded formulations (41%) and APIs (21%). 77% of the international generics revenue comes from the US. The company specialises in oral solids under generics, while cardiology, anti-diabetic, gastrology and dermatological therapies are under formulations. The company launched 13 products in FY18 and is likely to launch more than 10 in FY19, of which oncology OSD and injectables are set to be launched in the near term. The company lately received USFDA nods and EIRs on drug and formulation facility in June and the stock surged higher intra-day in single and double digits. The company is mulling capex ofRs720 crore to finish the ongoing projects by FY19. The company’s P/E of 23.3x indicates that it is attractively placed among peers and it has reduced its debt and stands virtually debt-free now. We recommend a BUY.
BAJAJ FINANCE
CMP -Rs 2332
BSE CODE -500034
Volume 57063
Face Value Rs 2
Target Rs 2525
Stoploss Rs 2145
The company promoted by Bajaj Finserv, which is promoted by Bajaj Holdings & Investment, is an asset finance NBFC with strong foothold in consumer durables (CD) financing, lifestyle product financing, two-wheeler financing and loan against property (LAP). The company holds consolidated AUM mix comprising of consumers (47%), SME (31%), commercial (15%) and rural (7%). In FY18, the company’s AUM growth stood at 40% with NII at 43% and PAT at 46%. Its subsidiary Bajaj Housing Finance became fully operational in Q3FY18 and held AUMs of `3589 crore by Q4FY18. During Q4FY18, the company’s customer franchise grew 30% YoY and new loans booked grew 51%. The total income and PAT grew at 33% and 61% YoY, respectively. The gross and net NPAs stood at 1.48% and 0.38%, respectively, while the provisioning coverage ratio was 75%. Going forward, the company expects AUM growth of nearly 33% CAGR in FY18-20E, majorly driven by consumer finance. We recommend a BUY.