Buy Indoco Remedies; target of Rs 86: AnandRathi
AnandRathi Securities is bullish on Indoco Remedies and has recommended buy rating on the stock with a target price of Rs 86 in its October 07, 2013 research report.
October 08, 2013 / 18:37 IST
AnandRathi's report on Indoco Remedies
Indoco Remedies, partnership with Watson for the US market would be a key growth driver, going forward. Trial batches of two sterile ophthalmic products to Watson have already started in FY13, and we expect commercial supplies to start from 4QFY14, followed by product approvals from the USFDA. Partnership with Aspen would also add to growth momentum. Supplies to Aspen began in FY12 and would scale up gradually. We expect these alliances to generate revenues of Rs 0.6bn and Rs 1bn in FY14 and FY15, respectively.We expect growth momentum to pick up from 4QFY14 with the start of supplies to Watson for the US and higher sales from Aspen contract for emerging markets. Domestic formulations are likely to grow steadily at ~14-15 percent. However, there had been delay in approvals for the US market, which are now expected to start from 3QFY14 versus our earlier expectation of 1QFY14. Supply of sterile ophthalmic products to the US would be a key growth trigger for the company.Management continues to guide to higher-than-industry growth in domestic formulations, led by product launches and greater focus on chronic segments. We, however, estimate only 12.4 percent CAGR in revenue over FY13-15 in domestic formulations, considering its reliance on acute categories currently and also the impact of new pricing policy.Our take. "We expect revenue and adjusted PAT to post 15.8 percent and 20 percent CAGR, respectively, over FY13-15, with EBITDA margin expansion of 120bps. USFDA approval for sterile ophthalmic products would be a key trigger to watch. We reiterate Buy with price target of Rs 86. Risks. Implementation of the new pharma policy and currency fluctuations," says AnandRathi Securities research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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