Summary
of Contents
PULSE TRACK
-
Inflation above market estimates
STOCK UPDATE
Orchid Chemicals &
Pharmaceuticals Cluster:
Emerging Star Recommendation: Buy Price target:
Rs390 Current market price: Rs265
Orchid enters Canada
Key points
-
Orchid Chemicals & Pharmaceuticals (Orchid)
has received the approval from the Canadian Therapeutic Product
Directorate for two of its abbreviated new drug submission
(ANDS)—Cefoxitin and Ceftriaxone.
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These approvals mark Orchid's foray into the
Canadian formulation market.
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Both Cefoxitin and Ceftriaxone are niche
injectable products and have been generic for a couple of years.
The size of the Canadian market for Cefoxitin is $5 million and
that for Ceftriaxone is $30 million.
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As per company sources, Ceftriaxone has five
competitors (Roche, Mayne Pharma, Sandoz, Nova Pharma and
Pharmaceutical Partners of Canada Inc) while there is no generic
competition for Cefoxitin.
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As per our back-of-the-envelop calculation, the
product approval would add Rs0.4 per share to the FY2008 earnings.
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At the current market price of Rs265, Orchid is
trading at 10.2x its FY2008E earnings. In view of the company's
strong fundamentals and an improving balance sheet we remain
positive on the stock and maintain our Buy call with a price
target of Rs390.
Bharat
Electronics Cluster: Apple
Green Recommendation: Buy Price target: Rs1,715 Current
market price: Rs1,650
Exceeding expectations
Bharat Electronics (BEL) has announced its
provisional results for FY2007. The gross sales have grown by 12% to
Rs3,960.4 crore in FY2007, lower than our estimates of Rs4,191
crore. However, the improvement in its margins and a surge in the
other income component have resulted in a relatively much higher
growth of 21.8% in the profit before tax (PBT) to Rs1,041.6 crore
(ahead of our estimates of Rs996 crore) during FY2007. This
essentially implies that the PBT has shown a robust growth of 27.8%
during the fourth
quarter. |