Recommendations from Pharmaceuticals & Chemicals 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.
HIKAL LIMITED
CMP - Rs 176.50
BSE CODE 524735
Volume 1,64,103
Face Value Rs 2
Target Rs 195
Stoploss Rs 160 (CLS)
Hikal Ltd. offers solutions across the life sciences value chain. It provides active ingredients, intermediates and research and development services to global pharmaceuticals, animal health, biotech, crop protection and specialty chemicals companies. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs 347.13 crore, a decrease of 12.62 per cent, as against net sales of Rs 397.25 crore for Q1FY20. For Q1FY21, the company gained operating profit of Rs 53.12 crore, a contraction by 23.23 per cent compared to the operating profit of Rs 69.19 crore gained in Q1FY20. Hikal gained a net profit of Rs 15 crore in Q1FY21, which is a contraction by 40.55 per cent compared to the net profit of Rs 25.23 crore gained in Q1FY20. The stock is showing good momentum and is trading above its key short-term moving averages. The company is also expected to show recovery in earnings in the coming quarters. Hence, we recommend BUY.
DEEPAK NITRITE LIMITED
CMP - Rs 848.50
BSE CODE 506401
Volume 3,28,140
Face Value Rs 2
Target Rs 915
Stoploss Rs 735 (CLS)
Deepak Nitrite Limited is a chemical manufacturing company. The company offers Sodium Nitrite, 2 Ethyl Hexyl Nitrate and Optical Brightening Agent (OBA). Its products cater to several industries, such as colorants, petrochemicals, agrochemicals, rubber, pharmaceuticals, paper, textile and detergents. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs 674.49 crore, a decrease of 35.82 per cent as against net sales of Rs 1,050.98 crore for Q1FY20. For Q1FY21, the company gained operating profit of Rs 188.38 crore, a contraction by 29.02 per cent compared to the operating profit of Rs 265.41 crore gained in Q1FY20. Deepak Nitrite gained a net profit of Rs 98.95 crore in Q1FY21, which is a contraction by 24.82 per cent compared to the net profit of Rs 131.61 crore gained in Q1FY20. FIIs and FPIs are increasing their shareholding in the company and the stock is showing strong growth momentum. Hence, we recommend BUY.
(Closing price as of Sept 22, 2020)