Recommendation From Transport Related Services & Pharmaceuticals 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. 

CONTAINER CORPORATION 

CMP - Rs 656.50
BSE CODE 531344
Volume 13,747
Face Value Rs 5
Target Rs 712
Stoploss Rs 610 

This Government of India company is engaged in transportation and handling of containers for rail and road operations and also operates logistic facilities. The company earned nearly 79% revenue from its Exim operations and 11% from domestic operations in FY18. Segment-wise, the share of revenue generated in FY18 from rail freight was 71.5%, road freight 2.7%, handling 13.7% and storage and warehousing 3.8%. Concor has started 45-90 days free storage to importers and exporters at its Exim facilities to outsmart the private Inland Container Depot (ICD), which provide only 7 days free storage. Under the Exim segment, Concor extends partnership with JM Baxi Group to run trains between Kandla International Container Terminal and its ICDs. Financially, the company has posted 10.7% and 25.2% revenue and PAT growth, respectively, in FY18. It is virtually debt-free and holds a healthy dividend payout record. Further, it has a high P/E of 29, but it is better than many peers with net losses. We recommend a BUY. 

ALKEM LABORATORIES 

CMP - Rs 2134
BSE CODE 539523
Volume 5,475
Face Value Rs 2
Target Rs 2315
Stoploss Rs 1975 

The company is into the business of development, manufacturing and sale of pharmaceutical and nutraceutical products and stands first as anti-infective in India. The company generated revenue from domestic market (71.5%), US (21.3%), others (8.2%) in FY18. In Q1FY19, India and international business revenue grew 25.7% and 35.1% YoY, respectively, with the US business growing 43.1% on the back of product launches and market share gains in existing product portfolio. During the quarter, the company received 2 ANDA approvals and an EIR from USFDA for its Daman facility. Its annual numbers too posted revenue and PAT growth of 10.7% and 25.1%, respectively. Going ahead, the company is expected to post revenue and PAT CAGR of around and 13% and 37%, respectively, over FY18-20E amid robust growth from domestic business and major contribution from cash-rich chronic segments. The stock is trading at 25.9x and 20.2x P/E of FY19E and FY20E earnings, respectively, and is expected to hold at a premium as against its competitors. We recommend a BUY.