Axis Direct is bullish on Natco Pharma has recommended buy rating on the stock with a target price of Rs 1240 in its research report dated October 12, 2017.
Axis Direct's research report on Natco Pharma
Natco’s (partner Mylan) 1st generic approval for gCopaxone 40mg (USD 2.9 bn market; possibility of 180 day exclusivity) and 2nd generic approval for gCopaxone 20mg (USD 700 mn market) demonstrate its R&D ability to execute on complex generics with intricate chemistry and complex processes (also demonstrated by 2nd generic approval for gDoxil Liposomal injection in May'17).
In our recent note gCopaxone – Delayed, not Derailed, we had assumed 20mg/40mg launch in Apr’18/ Oct’18. With earlier than anticipated approvals, we now build in immediate launch for 20mg; expect 40mg launch in end-CY17 (given on-going litigation). Our base case scenario analysis suggests 20 mg sales of ~USD 20 mn in H2FY18/USD 32 mn in FY19 and 40mg sales of ~USD 32 mn in Q4FY18/ USD 107 mn in FY19. Raise FY18/19 EPS est. by 56%/37% with revised SOTP of Rs 1,240 (20x FY19E EPS + Rs 117 for R&D pipeline) vs Rs 940 earlier. Maintain BUY. At CMP, the stock trades at 27x FY18E EPS of Rs 35 and 17x FY19E EPS of Rs 56.
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