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Apr 02, 2012, 12.17 PM IST | Source: Moneycontrol.com

CARE maintains fundamental grade of 3/5 on Elder Pharma

CARE Equity Research has come out with its report on Elder Pharmaceuticals Limited (EPL). The research firm has maintained the fundamental grade of 3/5 on the company, which indicates ‘Good Fundamentals’.

CARE Equity Research has come out with its report on Elder Pharmaceuticals Limited (EPL). The research firm has maintained the fundamental grade of 3/5 on the company, which indicates ‘Good Fundamentals’.

Healthy growth in revenue: EPL posted consolidated revenue of Rs.343 crore in Q3FY12 (refers to period October, 1 – December, 31) – a y-o-y growth of 36.4 per cent. On a standalone basis the company reported revenue of Rs.256.8 crore - up 23 per cent, y-o-y. All therapeutic segments witnessed healthy growth in the quarter.

New product launches: EPL continued its strategy to enhance its product portfolio through new launches in Q3FY12. The company launched six new products, four in anti-infectives and one each in women healthcare and pain management segment in Q3FY12. The company is further planning to add more new products to its portfolio in Q4FY12. New product launches would be a critical monitorable for sustaining the growth in EPL’s top-line going forward.

Margins witness some pressure: EPL’s margins witnessed some pressure in Q3FY12 when compared with Q3FY11. The same was primarily on account of higher materials cost due to increase in input prices and depreciation in Rupee against USD. Consequently, net margins too witnessed a decline y-o-y and stood at 5.3 per cent in Q3FY12. However, on a standalone basis the margins have witnessed improvement.

Valuation: CARE Equity Research maintains the CIV of Rs.434 for the shares of EPL. At the Current Market Price (CMP) of Rs.339 per share, CARE assigns a valuation grade of 5/5, indicating that shares of EPL have ‘Considerable Upside Potential’ at the CMP.

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