Buy NATCO Pharma; target Rs 265: Firstcall Research

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Buy NATCO Pharma; target Rs 265: Firstcall Research

Firstcall Research is bullish on NATCO Pharma and has recommended buy rating on the stock with a target price of Rs 265 in its December 5, 2011 research report.

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Firstcall Research is bullish on NATCO Pharma and has recommended buy rating on the stock with a target price of Rs 265 in its December 5, 2011 research report.

"NATCO Pharma Limited engages in the manufacture and sale of active pharmaceuticals ingredients (APIs) and finished dosage formulations. During the quarter ended, the robust growth of revenue is increased by 19.79% Rs. 1129.30 million. Net Sales and PAT of the company are expected to grow at a CAGR of 19% and 13% over 2010 to 2013E respectively. NATCO has entered into an agreement with Mabxience to buy 4 mAb drug substances from Chemo for manufacturing finished dosage pharmaceutical formulations. NATCO and Levomed LLC, USA formed a Joint Venture Company named, NATCOFARMA DO BRASIL, to distribute & sell pharmaceutical products in Brazil."

"NATCO Pharma has posted standalone net profit of Rs 160.30 million for the quarter ended Sept. 30, 2011 as compared to Rs 147.20 million for the quarter ended Sept. 30, 2010, representing an increase of 7.56%. Net sales are increased by 19.79% to Rs. 1129.30 million from Rs. 942.70 million in the same quarter previous year. Total standalone income has increased from Rs 945.50 million for the quarter ended September 30, 2010 to Rs 1144.90 million for the quarter ended September 30, 2011, representing an increase of 21.09%. Company EPS is stood at Rs. 5.69 for the quarter ended September 2011."

"At the current market price of Rs.235.00, the stock is trading at 10.90 x FY12E and 9.66 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs. 21.56 and Rs.24.33 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 19% and 13% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 5.91 x for FY12E and 5.24 x for FY13E. Price to Book Value of the stock is expected to be at 1.62 x and 1.39 x respectively for FY12E and FY13E. 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 265 for Medium to Long term investment," says Firstcall Research report.

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To read the full report click on the attachment