Prabhudas Lilladher's research report on Indoco Remedies
We incorporate INDR’s guidance in our assumption and upgrade to Buy (earlier Hold) led by increase in earnings estimate by 14%/18%/8% for FY21/22/23E mainly due to EBITDAM expansion of 200-300bps.INDR guided for 1) increased MR productivity with same number of field force, 2) US launch of ophthalmic and oral ANDAs in partnerships and 3) lower remediation cost as regulatory issue are resolved. INDR earnings were in line with our estimate, led by growth in export formulation while India formulations suffered due to lockdown and lower demand for acute products (55% of India revenue). We believe, over the last few years INDR was in CAPEX mode and growth suffered due to regulatory issues. With guidance of limited CAPEX, regulatory issues resolved and restructured sales force, INDR is poised to grow on better contributions from two key markets, US and India.
Outlook
We roll over our valuation to FY23E (from FY22E) and derive at new TP of Rs352 (earlier Rs239) based on 18x (unchanged) PE of FY23E EPS of Rs20. We upgrade our rating to Buy (earlier Hold).
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