Buy Elder Pharma; target of Rs 454: KRChoksey

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Buy Elder Pharma; target of Rs 454: KRChoksey

KRChoksey is bullish on Elder Pharma and has recommended buy rating on the stock with a target of Rs 454 in its January 7, 2011 research report.

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KRChoksey is bullish on Elder Pharma and has recommended buy rating on the stock with a target of Rs 454 in its January 7, 2011 research report.

"Elder Pharma (EPL) is a strong domestic pharma player with strong brands (shelcal) in the market. EPL's major in-licensed brands include: Carnitor (FY10 sales Rs 14 crore, growth rate 22%), Hibor (Rs 4 crore, 52%), Tantum (Rs 4.3 crore, 15%). The company has a state-of-the art R & D facility at Nerul, Navi Mumbai. It has three formulation facilities are at Paonta Sahib, Uttaranchal and Nerul and two API facilities are at Pawane and Patalganga."

"Elder Pharma has entered into 24 strategic in-licensed agreements which accounts for around 10% of the total revenue. Biomeda group is the one in which company have 92.2% stake and it offers the Elder Pharma an opportunity to market Shelcal in the Europe. Biomeda is equipped with a formulation plant for manufacturing tablets in Bulgaria as well as a good distribution network in Bulgaria. The Company plans to capitalize by penetrating the European and CIS markets on a larger scale."

"EPL has dominant market share in niche therapeutic segments with 6 products having market share in excess of 30% in their respective therapeutic segments. We expect domestic formulations to grow at 18-19% in the future. Domestic formulations contributes around 90% of EPL's total sales. EPL's major products include Shelcal, Deviry and B-long (women's healthcare), Chymoral, Tantum and Hibor (wound care and pain management), Eldervit, Nephrocaps and Phytomeg (neutraceuticals), antiinfectives (Formic, Widcef, KefBactum), cardiac (Amifiru, Carnitor). EPL has a rich pipeline of new products in each of these categories."

"EPL enjoys its presence in niche therapeutic category such as women's healthcare, neutraceuticals and lifestyle disease. The revenue growth in this business (18-19%) outperforms the overall domestic formulation business. EPL also have presence in Nicotine Replacement Therapy (NRT) in pastille form for smokers/tobacco chewers. The stock trades at 14.8x FY11E EPS of Rs 25.7 and 9.2x FY12E EPS of Rs 41.3 We recommend Buy and assign it P/E of 11x FY12E earnings with a target price of Rs 454 with the potential upside of 19.5%," says KRChoksey research report.

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To read the full report click on the attachment