Buy Dishman Carbogen Amcis; target of Rs 405: HDFC Securities
HDFC Securities is bullish on Dishman Carbogen Amcis has recommended buy rating on the stock with a target price of Rs 405 in its research report dated September 14, 2017.
HDFC Securities' research report on Dishman Carbogen Amcis
With strong visibility on commercial launches and future orders, Dishman Carbogen Amcis (DISH) will finally see its efforts culminating in sustainable growth starting FY18. Seeds that were sown six to seven years ago are now yielding results. Apart from Niraparib, there are three to four potential launches in FY18, which will not only accelerate growth, but also de-risk earnings from blockbuster products. Altogether, there are 25 candidates in Phase III, and we expect four to five products to be commercialised every year. This provides great comfort that momentum will be maintained even after FY20. In our estimates, we have built in only six commercial launches (five in FY18 and one in FY19) and 5 to 6% growth in the base business, leading to ~14% revenue CAGR, ~18% EBITDA CAGR and ~38% earnings CAGR over FY17-20E. Initiate coverage with a BUY rating and a TP of Rs 405 (20x on Sep-19E EPS), implying ~35%+ upside.
After the recent run-up, the stock is trading at 24x FY18E and 18x FY19E, a premium to its mid-cap peers. We believe that the stock is likely to trade at premium multiples owing to high potential of earning upgrades on the back of surprise launches.
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