Buy Merck; target Rs 713: Firstcall Research
Firstcall Research is bullish on Merck and has recommended buy rating on the stock with a target price of Rs 713 in its February 19, 2013 research report.
February 20, 2013 / 11:08 IST
Firstcall Research is bullish on Merck and has recommended buy rating on the stock with a target price of Rs 713 in its February 19, 2013 research report.
"Merck Limited was set up in India as Merck’s first Asian subsidiary in 1967. The Company operates both its pharmaceuticals & chemicals businesses in the country. Merck is a global pharmaceutical & chemical enterprise in 59 countries. Merck has entered into an agreement with Opexa Therapeutics, Inc. for the development and commercialization of Tcelna™, for patients suffering from multiple sclerosis. During the quarter ended, the robust growth of Net Profit is increased by 58.35% to Rs. 200.53 million. Merck has recommended a final dividend of Rs. 2.50 per share of face value Rs. 10/- each. Merck has now ranks eighth in the Access to Medicine Index published by the Access to Medicine Foundation. Standard & Poor’s has raised Merck’s longterm corporate credit and issue ratings to ‘A-‘ from ‘BBB+’ with stable outlook. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 19% over 2011 to 2014E respectively.The company’s net profit jumps to Rs. 200.53 million against Rs.126.64 million in the corresponding quarter ending of previous year, an increase of 58.35%. Revenue for the quarter rose 31.81% to Rs.1675.66 million from Rs.1271.23 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.12.08 a share during the quarter, registering 58.35% increase over previous year period. Profit before interest, depreciation and tax is Rs.312.25 millions as against Rs.222.20 millions in the corresponding period of the previous year.At the current market price of Rs.631.00, the stock P/E ratio is at 11.29 x CY13E and 9.88 x CY14E respectively. Earning per share (EPS) of the company for the earnings for CY13E and CY14E is seen at Rs.55.91 and Rs.63.85 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 19% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 5.30 x for CY13E and 4.14 x for CY14E. Price to Book Value of the stock is expected to be at 1.82 x and 1.53 x respectively for CY13E and CY14E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 713 for Medium term investment," says Firstcall Research report.Institutional holding more than 40% 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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