Buy Neuland Labs; target of Rs 1065: HDFC Securities

HDFC Securities' research report on Neuland Labs

Although NCE drug research remains a distant dream for Indian pharma companies, they are making strong inroads into API CRAMS which is at the core of innovation for pharma MNCs. Neuland Labs (NLL) is one among these Indian companies. NLL has made great strides in API CRAMS over the past few years and has managed to win clients from key regulated markets like the US, Europe and Japan.

Outlook

We believe that the CMP (down 60% from peak in Apr-17) offers an attractive opportunity for investors to time an entry. We foresee 19% revenue CAGR, 800bps margin expansion and 7x earnings over FY18-20E (favourable base). Initiate coverage with a BUY rating and target price of Rs 1,065 (16x FY20E). For all recommendations report, click here

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