Hot Chips - Stock Recommendations For Your Portfolio

DSIJ selects 2 aggressive stocks picks in every issue, with a 7-15 day horizon based upon the bullish trend during that period. For this issue, we are recommending companies from the Healthcare and Engineering sectors.

CIPLA
BSE CODE: 500087 | Volume: 278000 | CMP: Rs 391   

Enjoying a leadership position in various therapeutic segments, Cipla is likely to do well going forward. It leads the market in the respiratory, gynaecology, anti-virals and urology segments in the domestic market. The company has reported a good set of numbers for Q2FY13. Its topline witnessed a growth of about 23.86 per cent on a YoY basis, while the net profit grew by a handsome 61.83 per cent. The company targets revenue growth in excess of 15 per cent for the year 2012-13 and is planning to achieve a turnover of USD 5 billion by the year 2020.

The domestic formulations business is expected to grow by around 17-18 per cent in the coming year led by key therapeutic areas including the respiratory, CVS and antibiotics segments. The capex for the year 2012-13 will be around Rs 400-500 crore. It is setting up additional R&D facilities at Vikhroli and Patalganga in Maharashtra, which are likely to commence operations in the present fiscal. One can look at the scrip from a medium-term perspective.

COLGATE-PALMOLIVE (INDIA)
BSE CODE: 500830 | Volume: 62000 | CMP: Rs 1422

The Q2FY13 results for Colgate-Palmolive (India) have been good. Its topline witnessed a growth of 17.7 per cent to touch Rs 770 crore and the net profit came in at Rs 150 crore for the same period, witnessing a stupendous growth of 34 per cent. The EBITDA surged by 30.2 per cent, led primarily by lower employee costs (the lowest in the past 20 quarters) and ad spends, which are down by more than 500 basis points. Moreover, on a YTD basis till September 2012, the market share of the company in the toothpaste category has moved up by around 200 basis points. This increase in market shares and better results can be looked upon as positive triggers that would take the stock up. One can look at the scrip from a medium-term perspective.