Recommendation: Buy
CMP = Rs 187
Price target: Rs 245
- New Delhi Television Ltd's (NDTV) revenues grew strongly by 30.3% year on year (yoy) and by 62.0% quarter on quarter (qoq) to Rs68.3 crore during Q3FY2006.
- The net profit adjusted for the employee stock options (ESOPs) declined by 31% yoy to Rs10.5 crore.
- I believe that NDTV is evolving as a complete media play with multiple revenue triggers in place. NDTV Profit, its business news channel, has started gaining ground in terms of revenues. NDTV now has global tie-ups for broadcast of its channels in the USA, the UK and Canada.
- The stake sale of the new to-be-launched general entertainment channel would also provide substantial upside from here. What's more, its Internet vehicle, www.ndtv.com, has been rated the sixth best news site globally.
- At the current market price of Rs 187, the stock is quoting at 23.4x its FY2007E earnings per share (EPS) and 12.2x its FY2007E enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA). I maintain Buy recommendation on the stock.
Nicholas Piramal India
Recommendation: BuyCMP = Rs 240
Price target: Rs 325
- Nicholas Piramal's consolidated net sales for Q3FY2006 were up 17.3% year on year (yoy) to Rs402.6 crore due to additional revenues from the acquisition of Avecia and Rhodia.
- The R&D expense increased by 10.3%, causing the earnings before interest, tax, depreciation and amortisation (EBITDA) margin to decline from 17.1% in Q2FY2006 to 11.8%. The profit before tax saw a decline of 30.9% yoy to Rs28.7 crore from Rs41.6 crore in Q3FY2005 aided by increased depreciation costs.
- At the current market price of Rs 240, the stock is trading at 18.9x FY2007 earnings estimate. I maintain Buy recommendation on Nicholas Piramal with the revised price target of Rs 325.
Orchid Chemicals & Pharmaceuticals
Recommendation: BuyCMP = Rs 260
Price target: Rs 355
- Orchid Chemicals and Pharmaceuticals has received the USFDA's approval for 1 gm/vial and 2 gm/vial of Cefoxitin, a second-generation cephalosporin having a market size of US$45.million. Orchid is launching this product in the USA exclusively through Apotex from January28, 2006.
- Limited competition due to technology barrier and a good marketing network through Apotex are expected to prevent price erosion and result in large Orchid's share in the Cefoxitin market.
- At the current market price of Rs260, Orchid is trading at 7.7x its FY2007E cash EPS. I reiterate Buy recommendation on Orchid with the price target of Rs355.
ORG Informatics
Recommendation: BuyCMP = Rs 160
Price target: Rs 194
- The consolidated net revenues of ORG Informatics declined by 40% quarter on quarter (qoq) and by 3.7% year on year (yoy) to Rs29 crore in Q3FY2006. The sequential drop was largely due to the higher base effect resulting from the completion of a large system integration project in the previous quarter.
- However, the operating profit margin (OPM) zoomed up to 10.3% from 4.5% in Q2FY2006 and 3.9% in the corresponding quarter of the previous year. The higher contribution from the high-margin telecom business boosted the overall profitability.
- For the nine-month period, the earnings have grown at 619% to Rs 4.3 crore. The performance is in line with our full-year estimates of Rs7.1 crore.
- I maintain Buy call on the stock with a one-year price target of Rs194.
