[T.S.R:14668] Fwd: Strides Arcolab

Strides Arcolab: Good buy

 

HDFC Sec

21 June 2010

Decent Q1CY10 performance
Strides has delivered strong Q1CY10results, thereby marking a continuous improvement on the operational front. The topline grew by 30.8% y-o-y to Rs381.5 cr. The company has given guidance of 35-37% y-o-y growth to $390 – 400 mn for CY10 with EBIDTA margins of 20-21%.

Conclusion
Strides appears to have emerged from a major restructuring exercise with a renewed focus on its various segments. We believe that CY10 could be a year of high growth for the company. High quality products, state-of-the-art manufacturing capabilities across therapeutic categories and dosage forms, regulatory approvals, product accreditations, research edge, manufacturing facilities across geographies and intellectual capital are few of Strides strengths.

Strides is quoting at 11.6x its CY10(E) Bloomberg median estimate of Rs34. We feel that Strides is a good buy at the current levels (add on falls to the Rs370-379 price band for price targets of Rs437 and Rs477 (13-14x CY10 (E) EPS).

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NIRAV SHAH
CELL  - 9820276322.

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