February 09, 2017 / 16:53 IST
The company has two main revenue segments - generics and custom synthesis (CRAMS). The segmental division is normally equal as per the management’s assertion. The custom synthesis (CS) business is a margin accretive business but at times lumpy as it depends on offtake from customers (global top 20 big pharma). This business faced a difficult time in FY10, FY11 as most customers resorted to de-stocking due to the global slowdown.
OutlookTo factor in the company-specific apprehensions and overall cautious stance on US exposed pharma companies we have slashed the multiple from 22x to 16x. Overall, we expect revenues, EBITDA and PAT to grow at a CAGR of 13%, 13% and 12%, respectively, in FY16-19E. We have valued the stock at Rs 925 based on 16x FY19E EPS of Rs 57.9.
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