Recommendation From Paints & Pharma Sector

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.

BERGER PAINTS INDIA

CMP - Rs 524.25
BSE CODE- 509480
Volume- 42,183
Face Value- Rs 1
Target- Rs 565
Stoploss- Rs 490 (CLS)

Berger Paints India Limited is engaged in the manufacture of paints and varnishes, enamels or lacquer and offers products in categories such as interior wall coatings, exterior wall coatings, metal and wood paints, protective coating, undercoats and construction chemicals. For Q3FY20, net sales reported by the company amounted to Rs 1,695.87 crore which have grown by 4.9 per cent compared to the revenue of Rs 1,616.70 crore for Q3FY19. The PBDT increased by 18.88 per cent to Rs 297.88 crore in Q3FY20 as against Rs  250.58 crore for Q3FY19. Compared to the net profit of Rs 134.14 crore in Q3FY19, it is 38.57 per cent more as compared to Rs 185.88 crore for Q3FY19. A sharp reduction in crude oil price that directly affects the raw material cost is likely to provide a gross margin cushion for the paint sector. Post-lockdown the company is expected to gradually recover its demand and post healthy growth. Hence, we recommend a BUY.

CADILA HEALTHCARE 

CMP - Rs 344
BSE CODE -532321
Volume - 4,95,666
Face Value- Rs 1
Target - Rs 380
Stoploss - Rs 310 (CLS)

Cadila Healthcare is a global pharmaceutical company based out in India and is also one of India’s leading pharmaceutical companies. Primarily a manufacturer of generic drugs, it is also engaged in the discovery, development, manufacturing and marketing of a broad range of healthcare therapies. On the consolidated quarterly front, net sales were reported at Rs 3,534.50 crore in Q3FY20, increasing by 0.52 per cent from Rs 3,516.10 crore in Q3FY19. The PBDT contracted by 23.53 per cent to Rs 631.20 crore in Q3FY20 from Rs 825.40 crore in Q3FY19. Its net profit decreased to Rs 364.40 crore in Q3FY20, thus clocking de-growth of 28.98 per cent as compared to Rs 513.10 crore in Q3FY19. The company has joined the race in search of a treatment for the current pandemic by announcing that its biological therapy, Pegylated Interferon Alpha 2B, may be effective in treatment. Thus, we recommend BUY.

(Closing price as of Apr 21, 2020)