Recommendations From Pharmaceuticals & Electric Utilities Sectors

Sagar Bhosale

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.

PIRAMAL ENTERPRISES 

CMP - Rs.3102
BSE CODE 500302
Volume- 90593
Face Value Rs.2
TGT-Rs.3440
SL - Rs.2790 



Piramal Enterprises Ltd (PEL) is a diversified company which has presence in financial services (53.7% of Q1FY19 revenue), pharmaceuticals (36.7%) and healthcare insights & analytics (9.6%). In Q1FY19, PEL had sold its imaging business to the Alliance Media Group for which it had to bear non-recurring and non-cash accounting charge of Rs 452 crore leading to a net loss. However, excluding this charge, the company has not just reported profits, but has also reported growth of 27% as compared to Q1FY18. During the quarter, the company posted revenue growth of 29% YoY, while its financial services posted growth of 44%. The financial segment loan book grew by 64% to Rs 46,995 crore, of which realty comprised of Rs34,814 crore, up from Rs24,924 crore, and housing Rs 1604 crore. Corporate financing and emerging corporate lending grew by 163% and 713% to Rs 9414 crore and Rs 1163 crore, respectively. The company's ROE came in at 19%, while NPAs remained stable at 0.3%. The company posted revenue and PAT growth of 25% and 309%, respectively, in FY18. Considering this, we recommend a BUY

TORRENT POWER 

CMP - Rs.263
BSE CODE 532779
Volume- 164,638
Face Value Rs.10
TGT-Rs.289
SL - Rs.238



Torrent's electric utility arm Torrent Power is engaged in electricity generation, transmission and distribution with operations spread across Gujarat, Maharashtra and UP. The company's power generation capacity has hit nearly 1500 MW mark. Its total power sales in FY19 stood at 15957 MUs, registering 10.4% growth in FY19, of which residential, comprising of 29% of sales, registered 7.26% growth, commercial with 16% share, posted 3.95% growth, LTP/LTMD with 30% share, grew by 5.2% and HT with 23% share registered 17.6% growth. On an annual basis, the company reported a growth of 15.5% and 120% in revenue and PAT, respectively, in FY18. During FY18, SUGEN plant has achieved Plant Load Factor (PLF) of 65.26% against 47.50% amid imports of LNG and sale of power through short term contracts. The company dispatched 6396 MUs at SUGEN. Further, the company has retired C station from April 2018 at AMGEN plant. On the cables front, 3-core aerial bunched cables and 1-core cable with aluminium corrugation were developed and supplied. The company's Q1FY19 revenue and PAT growth stood at 15.9% and 11.8% YoY, respectively. We recommend a BUY.

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