Expect 50% returns in Glenmark Pharma: Tater

Expect 50% returns in Glenmark Pharma from current levels in next 12 months time, says Aashish Tater, Head of Research, Fortunewizard.com.

Tater told CNBC-TV18, "If you recall we have been bullish on pharma as a space for quite sometime now and we have been picking stocks into the space with strong fundamentals and we feel the re-rating process that is going through will continue to happen for selected stocks even for current levels and Glenmark fits the model."
He further added, "This stock has moved into strong hands because the retail participation has gone very low in this particular stock. But what has happened is people are looking it from a short-term perspective and they feel the stock is fully priced in, but we are taking a longer term call on this particular stock where we feel a PAT of Rs 850 crore would be reported for next year which is roughly above estimate of any other investment house with almost 30 percent weightage. If that happens what will happen to the PE expansion? We feel market analysts are working with a PE multiple of 18-20 times and we have assigned a higher PE multiple of 23 times for current levels and we feel the stock would go and stabilize somewhere around at Rs 600 odd mark from next 12 months perspective."
"What has actually happened into the business model of this particular company, they have relatively transformed. If you see the history of Glenmark Pharma they were trying to do everything all alone, but now they are partnering with one of the best players, not one but many players and they are insourcing and outsourcing part of their products, which 
is actually resulting in the top-line and bottom-line growth."
"We feel the expansion is going to continue even for next 3-4 quarters, which will be very rewarding for these kinds of companies. We have been bullish on Cipla, Glenmark, Wockhardt and we continue to do so. But for something like Glenmark we feel markets are underpinning its potential and if someone has got longer term view it will be easily rewarding its shareholders by at least 50 percent even from current levels from next 12 months perspective." Disclosure: Safe to assume stock has been recommended to clients but no personal position in the above stock.