Broking house, Karvy Stock Broking has recommended an outperformer rating on Wockhardt with a target of Rs 405.
Karvy Stock Broking report on Wockhardt:
The company clocked strong revenue growth of 44 % to Rs 5.3 billion. The key growth drivers for Wockhardt has been Domestic formulations and formulations exports. Operating margins have been maintained at 23.2% on back of savings in R & D and other expenses. Profits for the quarter are up from Rs 729 million to Rs 871 million after Mat credit entitlement of Rs 84 million.
We believe the company's profits for the year were up by 17% to Rs 3017 million. This has been on the back of capitalization of ANDA filing expenses to the tune of Rs 570 million. If one were to deduct these expenses the company's profitability would have been lower compared to last year. The company has been very upbeat on its revenue targets and has set the target at USD 1 billion by CY 2009. We have maintained our earnings forecasts on better revenue traction in domestic and US exports on back of lower margins. We believe the company is undergoing a PE contraction, but even on a reduced PE multiple of 13.5 x we rate the stock as Outperformer with a price target of Rs 405.
