Sharekhan's investor eye dated june 19 2007

Cadila Healthcare
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs425
Current market price: Rs369

Plans to raise $100 million for financing acquisitions

Key points

• The board of directors of Cadila Healthcare has decided to issue foreign currency convertible bonds (FCCBs)/American depository receipts (ADRs)/global depository receipts (GDRs) or such other foreign currency instrument of up to USD100 million.
• The funds are being raised to finance the company's forthcoming inorganic activities. Cadilla Healthcare is looking to make an acquisition in Brazil to make a foray into the high-margin branded formulation market and to participate in Brazil's growth story. Further, it is also looking to exploit the opportunities in the generic markets of Spain and Italy through the acquisition of some small to mid-sized companies.
• Cadila Healthcare has a vision of becoming a $1-billion company by December 2010 (ie FY2011). Of the billion, $800 million will come through organic growth whereas the balance $200 million will come from inorganic initiatives. Hence, in line with its strategy to hit the $1-billion revenue mark, the company is moving ahead with its acquisition plan.
• At the current market price of Rs369, Cadila Healthcare is trading at 13.8x its estimated FY2009E earnings. We maintain our Buy recommendation on the stock with a price target of Rs425.

---

VIEWPOINT

Greenply Industries

PAT up 60% in FY2007
Greenply Industries is an integrated interior infrastructure company with leadership in the branded plywood and laminate industry in India. The company has a market share of 25% in the plywood segment and a 15% share in the laminate segment. It is a one-stop manufacturer of all products related to interior infrastructure, from plywood and boards, decorative veneers to laminates and particleboard.

The company has a pan-India network with 24 marketing offices and 7,100 authorised dealers/distributors. It is developing the Greenlam brand internationally and has recently formed an exclusive marketing and distribution alliance with Dekodur, a high-end German metal laminate brand, to cater to premium consumers. Its clients include Godrej, Blowplast and Featherlite.

ABG Shipyard

Sitting on strong order book
We attended the conference call of ABG Shipyard to discuss the company's Q4FY2007 and FY2007 results. We present the key takeaways from the call.