Sustainability missing .
· NIFTY (5495), Nifty after making fancy high of 6111(27 Month high) on 29th January2013 has corrected till 5487 almost 10% from recent high. Nifty has closed below 200DMA 5645 while 200 Weekly M.A 5329 would form next support.
· SENSEX (18226) has corrected till 18206 and strength is lacking and till Gap-down(19383-19378) is not crossed Month of April & May 2013 could see some pressure on overall market as we ahead towards result season and Budget session of parliament restarting 22nd April.
Pick Of the month - NATCO PHARMA
· Revenue distribution - Domestic formulations 40%, API's 28%, exports formulation 13% and others 19%.
· Recent Supreme Court ruling on Glivec case is favourable for Natco as Natco's sales from this product is ~`250m annually.
· Strong growth continues in API business and export formulation. Change in revenue mix (a higher proportion from high margin API business) is also contributing to the bottom line as well.
· API business growth is seen due to increased supply of niche category APIs to domestic & export markets and export formulation is led by recently-announced Lansoprazole approval (a prescription product).
· Successful monetization of para IV opportunities (Lansorazole OTC, Revlimid, Tamiflu, Copaxone etc) would provide substantial performance.
· This will further be reflected in improved ROCE to 16.6% by FY15 and drop in DE to 0.2 x in the same period.
· The stock trades at valuations of 15x FY14e and 12.7x FY15e earnings.
Picks of the Last month
|
Reco Price
|
High after Reco
|
% returns
|
Last month Pick
| |||
Rallis India (March 2013)
|
126
|
130.5
|
3.57
|
Cummins India (Feb 2013)
|
502
|
518.5
|
3.29
|
LIC Housing (Jan 2013)
|
289
|
290.45
|
0.50
|
Sun Pharmaceuticals Inds (Dec)
|
715
|
887
|
24.06
|
ING Vysysa Bank (Nov)
|
471
|
607
|
28.87
|
BASF (Oct)
|
665
|
781
|
17.44
|
Tata coffee (Sep)
|
993
|
1673.9
|
68.57
|
Bayer Cropscience (Aug)
|
922
|
1341
|
45.44
|
This month Pick
| |||
Natco Pharma (April 2013)
|
444
|
Thanks & Regards
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