Stock To Buy: Prabhudas Lilladher Bets On Indoco Remedies, Revenue Grew To Rs. 4.3bn

Stock To Buy: Target Price

The Current Market Price (CMP) of Indoco Remedies is around Rs. 368.60. Prabhudas Lilladher has estimated a Target Price for the stock at Rs. 430. This stock has the potential to give a 19.20% return, in the upcoming 12 months. This small-cap stock has a market capitalization of Rs. 3,377 crore.

Stock Outlook  
Current Market Price (CMP) Rs. 368.60
97Target Price Rs. 430
Potential Upside 19.20%
52-week high share price Rs. 459.25
52-week low share price Rs. 307.65

Quarterly earnings

Quarterly earnings

Domestic formulations declined by 2.4% YoY to Rs. 2.1bn. Key therapeutic segments Respiratory an Anti-infectives witnessed de-growth YoY, given COVID base. Regulated business grew by 33% YoY to Rs. 1.5bn, in-line with our estimates. US sales came in at Rs. 693mn (up 7% QoQ), while EU sales were down 4% QoQ. EM formulation grew by 10% YoY. API decreased 61% YoY.

Stock Valuation

Stock Valuation

According to Prabhudas Lilladher, “Indoco Remedies’ (INDR) H1FY23 performance was muted with +12% YoY decline in EBITDA. We expect margins to recover, led by softening of input prices and scale up of revenues. Domestic market (ex Covid) continues to grow. We remain structurally positive on INDR’s growth prospects given the MR productivity enhancement and higher penetration in North & East markets, new launches in US and, higher tender business in EU market. At Current Market Price (CMP), stock is trading at 15.5x FY24E EPS. We reiterate our ‘Buy’ rating with unchanged target price of Rs. 430.”

Fresh launches & strong order book

Fresh launches & strong order book

The management has guided for 4-5% YoY growth in FY23. New launches contributed 2.3% to total sales in Q2FY23 vs 0.8% in Q2FY22. Booked Rs. 500mn from chronic segment in H1 (which grew by 2%), while sub-chronic grew by 11.5% in H1. EU markets have strong order book of Rs. 1.5bn; currently doing margins of 9-10%. Guided for 14-15% OPM over next 3-4 quarters, Reiterated its guidance of Rs. 3bn US sales in FY23. Launched 3 new products in US with 1 in Opthal and 2 in injectable.

Disclaimer

Disclaimer

The above stock was picked from the brokerage report of Prabhudas Lilladher. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.





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