Buy Aarti Drugs; target of Rs 960: Centrum

Centrum's research report on Aarti Drugs

The pharma major’s revenue grew 3% YoY, margin improved 260bps to 17.1% and net profit grew 10% YoY. 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 coming on stream.

Outlook

We maintain our Buy rating on ADL with a TP of Rs960 based on 16x March’20E EPS of Rs60.1.  We have revised FY19E and FY20E EPS upwards by 6% and 5% respectively. We expect ADL to perform well due to capacity expansion, new product launches and presence in the high-margin formulations. For all recommendations report, click here

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