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Sunday, July 13, 2008
US FDA moves to court against Ranbaxy
American health regulator USFDA has filed a motion in a US court seeking 'certain' documents from Ranbaxy, amid reports of systematic fraudulent conduct, which the company denied.
"No legal proceeding has been initiated against us and we continue to co-operate with the department of justice," a company spokesperson told a news agency.
The spokesperson, however, admitted that USFDA had filed a motion in a US court seeking certain documents.
The spokesperson refused to disclose as to what the USFDA was seeking clarifications on from the company.
A section of the media has reported that USFDA has taken Ranbaxy to the court for systematic fraudulent conduct and has asked the court to force Ranbaxy to internally review the manufacturing operations.
The spokesperson said Ranbaxy will remain committed to supply high quality generic medicine at affordable prices the to US customers , the spokesperson added.
Bartronics
Mid- and small-cap stocks often bear the brunt of a steep market correction such as the present one. These stocks also face higher challenges in terms of making a comeback. Stocks (in this segment) with strong business prospects, sustainable growth and minimal risks of blip in earnings are the ones that would hold renewed return potential for investors.
The triple-digit growth experienced by Bartronics in revenues and profits over the last couple of years has come on the back of a rapid scale-up of operations and expanding geographic presence.
Its automatic information and data capture (AIDC) business and, more recently, its smart-card business which has seen an increasing pipeline of orders from government initiatives provide a sustainable revenue stream for the company. Importantly, many of these deals may provide scope for improving margins over the next couple of years.
In this light, investors with a one-two year perspective can buy the shares of Bartronics, considering its strong business prospects and reasonable valuations. At the current share price of Rs 157, the stock trades at about 10 times its trailing earnings and 6-7 times its likely earnings for FY 2009.
Bartronics primarily sells products and solutions for data capture in the areas of logistics and inventory management, time and attendance management and asset tracking operations. It has now broad-based its AIDC offering to services such as bar coding, biometrics, radio frequency identification and radio frequency data communications and electronic article surveillance. This has not only signalled a move up the value chain but also enabled the company to have a stronger client penetration in India, South-East Asian countries and the US. The company derives 50 per cent of its revenues from India, 30 per cent from the US and the rest from countries such as Singapore and Malaysia, providing reasonable geographic diversification.
Smart Cards drive growth
The smart card business, for which the company has its own manufacturing facility, holds considerable promise with opportunities in areas such as SIM cards, identity cards, credit cards and social security. Bartronics appears well-placed to capture a reasonable slice of the SIM cards market. It is also doing pilot studies in this field with a few banks and is eyeing the opportunity of the government rolling out national social security cards. With a production capacity of 80 million smart cards, the company has ramped up utilisation levels to 90 per cent from a production of 40 million cards in March 2008. Bartronics has subsidiaries in Singapore and the US to cater to the local markets in South-East Asia. The Singapore facility has already started to contribute to profits. This segment is expected to contribute to over 50 per cent of total revenues in the next couple of years.
Strong Deal Pipeline
Bartronics continues to benefit from government technology initiatives. For example, the Bhamashah Financial Empowerment Scheme of the Government of Rajasthan intends to cover about 50 lakh families through biometrically identifiable smart cards. The project, valued at about Rs 150 crores, commenced operations earlier this month. A similar project involving issuance of 39 lakh smartcards envisaged by the Bihar Government has also commenced last month. There is also a national identification card project on the anvil to be introduced across the country and Bartronics would look at tapping this opportunity.
Promise in AIDC
In AIDC, the company is well-placed to capture a significant share of manufacturing clients, both in India and abroad. The boom in organised retail in the country also offers opportunities for scaling up revenues. With strong client base in the manufacturing space — in the areas of inventory control and material tracking — this segment continues to be the main contributor to revenues (over 50 per cent) as of now.
With the Railways also looking at RFID (radio frequency identification) enablement across trains in the country and increased spends therein, Bartronics with its prominent presence in this segment appears well-qualified to capitalise on investments made by the Railways in IT enhancement.
Risks
Competition from players such as CMC in the RFID space is a risk. Direct entry by the company’s overseas principals (from which Bartronics sources some products), into the Indian market, is also a risk if there is an absence of non-compete agreements.
Technicals - Infosys Technologies
This stock recorded a sharp reversal on Friday forming a bearish engulfing candle in the daily chart. This move has also made the stock close below both the 200 and 50-day moving averages and also below the key medium-term support at Rs 1,700.
Both the daily and the weekly momentum oscillators are in the sell mode now implying the reversal in both the short and the medium-term trend.
However, the medium term view will turn overtly negative only on a close below Rs 1,528. Subsequent target is Rs 1,300.
The stock could move lower towards Rs 1564 in the near-term. A reversal from here would mean that a move towards Rs 2,000 is again possible. Resistances would be at Rs 1,876 and then Rs 1,937.
via BL
Saturday, July 12, 2008
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