Buy Alkem Laboratories; target of Rs 2150: HDFC Securities
HDFC Securities is bullish on Alkem Laboratories has recommended buy rating on the stock with a target price of Rs 2150 in its research report dated February 11, 2017.
HDFC Securities' research report on Alkem Laboratories
Alkem (ALKEM) reported strong numbers in 3QFY17 as the top-line grew by 16% YoY, helped by a 13.5% growth in India (highest among peers) and 30% YoY growth in the US (8% beat). EBITDA margins at 18.1% and earnings growth of 24%YoY were a positive surprise. We maintain our view that ALKEM’s business model has the potent combination of both growth and sustainability, well supported by the businesses in India and the US.
This is the 3rd consecutive quarter in which ALKEM has beaten market estimates and grown substantially in both segments. We expect it to maintain this growth momentum going ahead. This is expected to flow through to the bottom line, driving 19% earnings CAGR over FY17-19E. At CMP, the stock trades at 21.4x FY18E and 17x FY19E, a 5-10% discount to the sector. Reiterate BUY with a revised TP of Rs 2,150 (21x on Dec-18E).
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