Dec 20, 2010, 10.53 AM IST | Source: Moneycontrol.com

Buy Elder Pharma; target of Rs 427: Firstcall Research

Firstcall Research is bullish on Elder Pharmaceuticals and has recommended buy rating on the stock with a target of Rs 427 in its December 16, 2010 research report.

Firstcall Research is bullish on Elder Pharmaceuticals and has recommended buy rating on the stock with a target of Rs 427 in its December 16, 2010 research report.

Elder Pharmaceuticals is one the leading companies in the pharmaceutical formulation market in India. Company is engaged in manufacturing and marketing of prescription pharmaceutical brands, surgical and medical devices. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 18% over 2009 to 2012E respectively. During the quarter ended, the robust growth of revenue is increased by 20.51% Rs 2042.50 million. The board has approved for authorizing to increase the borrow upto Rs 1250 crore Elder Pharmaceuticals Ltd has declared of dividend at 30% for the year ended March 31, 2010. Companys arm has further stake has been increased to 92.2%.

Elder Pharmaceuticals reported a substantial rise in standalone net profit for the quarter ended September 2010. During the quarter, the profit of the company rose 39.20% to Rs 161.35 million from Rs 115.91 million in the same quarter last year. Net sales for the quarter for the quarter rose 20.51% to Rs 2,042.50 million, while total income for the quarter rose 19.94% to Rs 2,054.38 million, when compared with the prior year period. It posted earnings of Rs 7.86 a share during the quarter ended Sept.

At the current market price of Rs 371, the stock is trading at 10.16 x FY11E and 9.19 x FY12E respectively. Price to Book Value of the stock is expected to be at 1.55 x and 1.33 x respectively for FY11E and FY12E. Earning per share (EPS) of the company for the earnings for FY11E and FY12E is seen at Rs 36.52 and Rs 40.36 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 18% over 2009 to 2012E respectively. On the basis of EV/EBITDA, the stock trades at 4.45 x for FY11E and 3.99 x for FY12E. We expect that the company will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs 427 for Medium to Long term investment, says Firstcall Research Report.

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