Buy Aarti Drugs; target Rs 260: Sunidhi Securities
Sunidhi Securities is bullish on Aarti Drugs (ADL) and has recommended buy rating on the stock with a price target of Rs 260 in its June 26, 2013 research report.
June 26, 2013 / 16:00 IST
Sunidhi Securities' report on Aarti Drugs (ADL)
"Aarti Drugs (ADL) continues to enjoy economies of scale due to its large production capacities in Anti Diarrhea, Anti Inflammatory, Anti Fungal and Anti Biotic segment. Bigger market share will automatically help it to remain competitive in market due to lower overheads and better bargaining power. ADL is constantly gearing up to cater the demand with a diversified product basket of Anti-diabetic, Anti-inflammatory, Anti-hypertensive and Cardio vascular therapeutic drugs. ADL increased market share of its existing molecules in the Antibiotic and Anti-fungal segment in the year 2012-13. To cope up with the demand ADL has already expanded its existing products’ capacities. There is also a shift in demand from, drugs treating hygiene related diseases to drugs treating lifestyle related diseases in the urban sector. With growing exports of finished dosage formulations to regulated countries, even API facilities must have cGMP certifications. ADL facilities meet high-standards and are approved to supply API to many such ready-formulations exported to regulated markets.""With regard to the affected manufacturing units in Tarapur, ADL had clarified that these plants contribute about 13 percent of the total sales of the company on an annualised basis and assets of the affected plant are adequately insured. ADL has taken efforts to procure the affected intermediate from outside and the supplies would be restored within a month approximately. Timeframe to rebuild the affected intermediate plant is being worked out. ADL said in a statement. At the current market price of Rs 190, the share is trading at a P/E of 5.1x on FY13E and 4.0x on FY14E. We recommend buy with an increased target price of Rs 260 in the medium term at which it will trade at a P/E of 5.5 on FY14E," says Sunidhi Securities research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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