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Jan 21, 2013, 06.00 PM IST | Source: Moneycontrol.com

Hold Unichem Laboratories; target Rs 192: Emkay

Emkay Global Financial Services has recommended hold rating on Unichem Laboratories with a target price of Rs 192, in its January 21, 2013 research report.

Emkay Global Financial Services has recommended hold rating on Unichem Laboratories with a target price of Rs 192, in its January 21, 2013 research report.

Unichem’s Q3FY13 Results - a) Revenues at Rs2.3bn (up 4.5% YoY) b) EBITDA at Rs 404mn (up 10% YoY) and c) APAT at Rs279mn (up 14% YoY). Domestic business grew by 9% on back weak market conditions and Exports were flat on back of delay in the shipment. Going ahead Pain in India formulation business will continue however traction in US & Emerging Markets will lead to 18% revenue CAGR over FY12-14. Current valuations factor-in the future developments.

In the domestic market, we believe pain due to weak market conditions will prevail. Co. has started a new division for gynaec and dermatology with addition of 150 MRs. It also plans to add 200 MRs in Acute therapy for extra urban market in Q4’13.

In the exports market, growth will be led by CRAMS supplies to MNC customer in US, emerging markets and US market. One new contract in CRAMS is expected in FY14. US business (contributes 5% to sales) to grow at 14% CAGR over FY12-14E. Unichem has filed 27 ANDAs of which 11 are approved & 8 are commercialized. Company has guided for 1-2 filing per quarter in the US market going ahead.

Management has reiterated that domestic business to out-perform industry growth rate. Margins are expected to grow by 250 bps in FY13 and 120 bps in FY14.

We expect Unichem to report 22% revenue growth in FY13E and 15% in FY14E. We expect EBIDTA margins to move from 13.7% in FY12 to 16.4% in FY13E and 17.6% in FY14E. Earnings will grow by 42% CAGR over FY12-14E. However, current valuations factor in the future developments. Maintain Hold with a target price of Rs 192. At current price, the stock trades at 14x FY13E EPS and 11x FY14E," says Emkay Global Financial Services research report.

Quarterly Shifts by Morgan Stanley

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