Buy Claris Lifesciences; target Rs 412: Sunidhi Securities

Sunidhi Securities' report on Claris Lifesciences "Founded in 1999, CLSL is a multi-business enterprise and the Holding Company of Claris Injectables, a wholly-owned subsidiary dealing in Specialty Injectables business, collectively “Claris”; and ‘Claris Otsuka’, a Joint Venture with Japanese Otsuka Pharmaceutical Factory, Inc. & Mitsui & Co. Ltd. for Infusion business in India & emerging markets. Claris has identified itself as a company specialising in sterile injectables technology. Its array of therapies includes anesthesia, blood products, anti-infectives, and plasma volume expanders. The plant is located at Vasna, Ahmedabad in Gujarat.  During Q4CY14, net profit has jumped 404% to 89.8 crore on 24% higher sales of Rs 183 crore. Q4CY14 EPS is Rs 16.4. During CY14, net profit rose 65% to Rs 139 crore on 4% lower sales of Rs 642 crore. EPS stands at Rs 25.4. Results for the current year will be for 15 months ended 31 March 2015. Currently, only 20% of sales are from USA though it is expected to be the biggest growth driver going ahead. Over the next 3 years, CLSL expects 5-10 launches and 12-15 ANDA filings every year. By 2017, it expects to file 100 ANDAs and many EU dossiers targeting US$4.6 billion market. With the Propofol (US$650 million, limited competition opportunity) settlement, the product could be a vital growth driver in FY17.

Intensifying growth in international markets, especially the regulated markets through launch of a high-value product pipeline,  organic growth through capacity expansion and introduction of new delivery systems, increasing focus on bag products and other niche ‘difficult to manufacture’ products,  acquisition of ANDAs and additional products for inorganic growth coupled with focus on enhancing market share of certain key and high-potential products give strong visibility to revenue going forward. At the CMP of Rs 260, CLSL share is trading at a P/E of 9.2x on FY16E and 7.6x on FY17E. We recommend BUY with a target price of Rs 412 at a P/E of 12.0x on FY17E", says Sunidhi Securities research report.

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