Buy Strides Pharma; target of Rs 590: Motilal Oswal
Motilal Oswal is bullish on Strides Pharma has recommended buy rating on the stock with a target price of Rs 590 in its research report dated January 29, 2019.
January 31, 2019 / 05:40 PM IST
Motilal Oswal's research report on Strides Pharma
Strides Pharma (STR) has decided to sell its entire stake in Arrow (Australian business) to Apotex for a consideration of AUD394m (US282m). The stake sale – which implies an attractive valuation of 19x EV/EBITDA – would enable STR to reduce its debt by at least USD160m. Separately, STR announced that it would acquire 100% stake in Vensun Pharma and the remaining 50% stake in the JV with Vivimed for ~USD29m. This would enhance its control on partnered ANDAs and manufacturing facility for the US market. For 3QFY19, STR delivered sales/EBITDA of INR8b/INR1.3b (in-line). Adj. PAT of INR240m came in lower than our estimate of INR333m owing to lower other income and a higher tax rate.
We remain positive on STR on the back of its improved focus on the US market, reduced financial leverage and superior execution in other regulated market. Reiterate Buy.
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