Centrum's research report on Aarti Drugs
We maintain our Buy rating on Aarti Drugs (ADL) and retain the TP to Rs910 based on 16x March’20 EPS of Rs56.8. ADL is the market leader in 9 out of 10 APIs manufactured by the company. That said, the company is likely to benefit from vertical integration which is likely to drive future growth. We expect margins to improve post the launch of new products and additional capacities of Ciprofloxacin and Metformin APIs in place. Key risks to our assumptions include slowdown in the domestic pharma market and regulatory risks for its manufacturing facilities.
Outlook
We maintain our Buy rating on ADL with a TP of Rs910 based on 16x March’20E EPS of Rs56.8. ADL is likely to benefit from depreciation of rupee against the dollar.
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