Stock Idea: Jubilant Organosys

Karvy Stock Broking has recommended a buy rating on Jubilant Organosys with a target price of Rs 428 in its july 18, 2008 research report. "The net revenues for the quarter reported at Rs 8.27 billion exhibiting 53.1% y-o-y and 20% q-o-q growth against our estimates at Rs 7.46 billion mainly driven by strong growth witnessed from the Pharmaceutical Life Science Products & Services (PLSPS) segment. As expected, the Contract Research and Manufacturing Services (CRAMS) segment acted as the major and primary growth driver for the company contributing 54% to total net revenues and 86% to the PLSPS segment."
"The reported net profit shown de-growth of 91.1% to Rs 127.6 million in Q1FY09. As a result of higher revenue guidance of 50% vis-a-vis 35% we upgrade our earnings by 31.7 % to Rs 24.1 in FY09E & by 18.8 % to Rs 28.5 in FY10E. We revise our price target by 19 % to Rs 428 based on 15x on FY10E earnings and rate the stock as a BUY," says Karvy's research report.

Stock Idea: Pennar Industries

Karvy Stock Broking has maintained its buy rating on Pennar Industries with a target price of Rs 40 in its July 18, 2008 research report. "For Q1FY09, we expect Pennar Industries Ltd (PIL) to report a mixed result with strong sales growth but with margin contraction. In Q1 FY09, net sales is expected to exhibit a growth of 32% (YoY) and 6% (QoQ) at Rs 1707 million. We estimate net profit to be Rs 97 million, translating into EPS of Rs 0.76 for Q1 FY09."
"At the current price of Rs 28, PIL is trading at 8.4x FY09 and 7x FY10 earnings. Based on earnings, we value PIL at Rs 32/share (8x of FY10 EPS). This is backed by EPS growth of 30% (CAGR) for FY08-FY10. To add that, PIL is likely to unlock value from real estate holding, that is estimated to be around Rs 8/ share ( refer our report published on 14th March, 2008). Hence, we reiterate our BUY rating on PIL with a price target of Rs 40/share (against previous target of Rs41/ share). Currently, PIL is trading at EBITDA multiple of 6xFY09 and 5x FY10. Our target price also reflects an EBITDA multiple of 6x on FY10," says Karvy's research report.