Recommendation From Pharmaceuticals & Diversified 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.

HESTER BIOSCIENCES

CMP - Rs.1885.85
BSE CODE 524669
Volume 2319
Face Value Rs.10
Target Rs.2,250
Stoploss Rs.1735(CLS)

Hester Biosciences Ltd is engaged in the manufacturing of poultry vaccines. The company is a 100% biotech company producing animal biologicals. The company is also in the business activities of poultry vaccines and large animal health products. On the consolidated financial front, the company posted revenues at Rs.44.75 crore in Q1FY20, up by 12.43 per cent as against Rs.39.80 crore posted in the same quarter of the previous year. The PBIDT for Q1FY20 stood at Rs.17.57 crore displaying a gain of 18.57 per cent as compared to Rs.14.82 crore posted in Q1FY19. The bottomline however fell by 2 per cent in Q1FY20 as it came in at Rs.8.08 crore from Rs.8.29 crore in Q1FY19. On the valuations front, the company is trading at a PE of 37.08x on its TTM earnings as against the industry PE of 23.59x. The ROE stood at 25.59 per cent while the ROCE was at 26.56 per cent, both on TTM basis. The adjusted EPS was Rs.48.86. Based on theconfluence of the above mentioned factors, we recommend a BUY.

RITES

CMP - Rs.265.85
BSE CODE 541556
Volume 139,565
Face Value Rs.10
Target Rs.284
Stoploss Rs.249(CLS)

RITES is an engineering consultancy company, specialising in the field of transport infrastructure. On the financial front on a consolidated basis, the company reported net sales of Rs.537.65 crore for Q1FY20 which increased by 61.79 per cent compared to the net sales of Rs.332.32 crore reported for Q1FY20. The PBDT for Q1FY20 stood at Rs.164.19 crore which is a significant increase by 13.15 per cent from Rs.145.11 crore for Q1FY19. The net profit rose by 10.88 per cent in Q1FY20 to Rs.101.18 crore from Rs.91.25 crore in Q1Y19. The company’s net sales increased by 36.73 per cent in FY19 to Rs.2,047.45 crore from Rs.1,497.45 crore in FY18. The PBDT stood at Rs.760.22 crore and Rs.557.04 crore for FY19 and FY18 respectively. In FY19 the net profit increased by 34.26 per cent to Rs.481.55 crore from Rs.358.66 crore in FY18. It recently received a major export contract worth Rs.160 crore from the Sri Lankan government for supply of two additional fully air-conditioned diesel multiple unit (DMU) train sets. Hence, we recommend a BUY.

(Closing price as of Sept 25, 2019)