Femcare and Rel Com - ET

Fem Care Pharma
Research: HDFC Securities
Recommendation: Buy
CMP: Rs 325.80 (Face Value Rs 10)
12-Month Price Target: NA

Fem Care Pharma (FCPL) is the market leader in bleaching cream, hair removing cream and liquid soap. FCPL manufactures and sells all its products under the brand names 'Fem' and 'Bambi'. It operates in a niche segment in the FMCG sector, mostly targeting the young female population.

FCPL sees liquid soap as a major emerging product, which could have a large positive impact on its overall turnover. FCPL's vision is to become a major player in the skin and hair care segment by introducing unique molecules in the market, while its mission is to provide innovative and quality products at affordable prices.

For FY07, FCPL could get the advantage of higher capacity and larger topline. Hence, it could report sales of Rs 82.8 crore and PAT of Rs 10.5 crore, translating into an EPS of Rs 34.9 (Rs 24.2 in FY06). At current market price, FCPL is available at FY06 P/E of 12.4 and FY07 P/E of 8.6. Investors could look at buying FCPL in the Rs 274-295 price band to ride on the uptrend, based on expected EPS expansion.

Reliance Communications
Research: Merrill Lynch
Recommendation: Buy
CMP: Rs 353.75 (Face Value Rs 5)
12-Month Price Target: Rs 385

At this point, Reliance Communications expects to keep its CDMA network, and will further build on CDMA only where it is most cost-effective. The company expects its capex on GSM to be similar to what it may have been on CDMA for supporting growth.

The company expects to receive requisite GSM spectrum by early '07. Given that both BSNL and Reliance Communications have no tenants on their sites, there could be significant opportunity for infrastructure-sharing between them. Merrill Lynch thinks the execution of Reliance Communications' GSM expansion will become visible 4-5 quarters from now.

In the non-wireless segment, Reliance Communications commissioned its Falcon sub-sea cable in September '06 and positive contribution from the same should fully kick in from Q3 FY07. In the broadband business, Reliance Communications continues to focus on enterprise services. While execution risks remain, visibility on the company's capex strategy is relatively better (unambiguously focused on GSM).