Buy Shilpa Medicare; target of Rs 620: Motilal Oswal

Motilal Oswal's research report on Shilpa Medicare

Shilpa Medicare (SLPA) has received the USFDA’s final approval for Imatinib Mesylate (g-Gleevec) used in Leukemia in the form of tablets (100mg and 400mg). g-Gleevec (Imatinib Mesylate) is expected to open business opportunity of USD10-12m for SLPA in the US generics segment. With four ANDA approvals (3-final and 1-tentative) in place, SLPA’s ANDA pipeline is strong with 34 ANDAs pending for approval. This implies strong growth for SLPA over the next 2-3 years. We expect SLPA to deliver revenue CAGR of 16% and earnings CAGR of 28% for FY18-21. We remain positive on SLPA on the back of strong growth in earnings led by forward integration to formulations and increased business from the regulated markets.

Outlook

We continue to value SLPA at 23x 12M forward earnings and arrive at a price target of INR620. Re-iterate BUY.