Emcure Pharmaceuticals is one of the few Indian pharma majors with no direct US generics
exposure, thereby lending greater earnings stability, noted domestic brokerage Kotak Institutional Equities.
The brokerage initiated coverage on Emcure Pharma with an 'add' rating and a target price of Rs 1,655 per share. This implies an upside of around 11 percent from the previous session's closing price.
"Despite its industry-leading return ratios and no direct US exposure, we expect Emcure to trade at a discount to other domestic-focused companies, such as Mankind, Torrent and JB, owing to its relatively inconsistent domestic track record and risk (albeit very low) of
any further repercussions from the US drug price fixing case," said Kotak Institutional Equities.
At 10.10 am, shares of Emcure Pharma were quoting Rs 1,558, up 4.3 percent on the NSE compared to the previous session's closing price.
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Emcure is the 15th largest company by domestic sales, with the top position in gynecology. Backed by its R&D prowess, Emcure has built a complex portfolio across India, Canada, Europe and EMs. Led by healthy organic growth, in-licensing deal with Sanofi, consolidation of Mantra and with most of the legal challenges behind, Kotak expects Emcure to report a 14 percent overall sales CAGR over FY2024-27E.
"On a low base, aided by higher MR productivity, rising utilization of newly added capacities and lower interest costs, we expect Emcure to report a 30 percent EPS CAGR, over FY24-27E," added the report.
Certain key risks for the pharma player could be further repercussions due to the drug price-fixing cases in the US and Canada, any further litigations such as the now-resolved one with HDT Biocorp and inability to consistently outperform IPM growth.
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