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Hold Elder Pharma; target of Rs 245: Reliance Money
Reliance Money has recommended hold rating on Elder Pharmaceuticals. The company has recorded a 10.8% y-o-y growth in consolidated revenues to Rs.1537mn, which was below research firm expectations.
Reliance Money has recommended hold rating on Elder Pharmaceuticals in its February 11, 2009 report. "Elder Pharmaceuticals (Elder) recorded a 10.8% y-o-y growth in consolidated revenues to Rs.1537mn, which was below our expectations. Though near term growth and profitability looks subdued, the anticipated consolidation of Biomeda (Bulgarian subsidiary is expected to realize € 7 to 10mn for FY10E with PAT margins of about 3%) from Q1FY10 onwards, implication of launch of 4 branded formulations enlightens incremental revenue opportunity."
"Also, likely commissioning of two plants in excise free zones from Q2FY10 is likely to improve margins (as this would raise the supply from excise free facilities from current level of about 45% to about 75% of total domestic requirement). Thus, considering the earning down grades and medium term growth opportunities, we revise our rating from Buy to HOLD on Elder Pharma with a revised target price to Rs 245 (5x its FY10E) and 5x its FY10E EV/EBITDA)." according to Reliance Money research report.
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