Buy Indoco Remedies; target of Rs 82: Angel Broking

Angel Broking is bullish on Indoco Remedies and has recommended buy rating on the stock with a target of Rs 82 in its July 30, 2012 research report.

“For 1QFY2013, Indoco Remedies (Indoco) declared lower than expected both on revenue and net profit front. On the sales front, the company posted sales growth of 20.2% yoy, while the net profit front, growth came in lower than expected, degrowing by 11.8% yoy. This was mainly on account of lower than expected sales and lower than expected OPM. The salient feature of the quarter was domestic formulation segment grew by 20.2% yoy during the quarter, whereas formulations exports increased by 22.7% yoy. We recommend Buy on the stock.”
“Indoco reported net sales of Rs151cr (Rs124cr), up 20.2% yoy, lower than our expectation of Rs171cr for 1QFY2013. The growth for the quarter came in mainly on back of domestic and exports, which grew by 19.0% yoy and 22.7% yoy respectively. The domestic formulations, which accounted by 62.5%, grew by 20.2% yoy. Gross margin came in at 56.3%, higher than our expectations of 53.3%. Also, the OPM came in at 13.7%, just in line with the last year OPM’s of 13.9%, but below our expectations of 15%. Net profit for the quarter came in at Rs10.4cr, 27.5% below our estimate of Rs14cr.”
“We expect net sales to post a 21.3% CAGR to Rs837cr and EPS to post a 32.8% CAGR to Rs8.9 over FY2012-14E. At Rs54, the stock is trading at 7.3x and 6.1x FY2013E and FY2014E earnings, respectively. We recommend Buy on the stock with a revised target price of Rs82,” says Angel Broking research report.  Non-Institutions holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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