Buy Unichem Laboratories; target of Rs 280: AnandRathi

AnandRathi Securities is bullish on Unichem Laboratories and has recommended buy rating on the stock with a target price of Rs 280 in its research report dated July 14, 2015.

July 16, 2015 / 13:33 IST

26 Aug, 2025 12:21

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AnandRathi's report on Unichem Laboratories

We are positive about Unichem Laboratories’ long-term growth story, and retain our Buy on the stock with a revised target of Rs 280. Its reported Q1 FY16 results beat our estimates, largely because of the strong recovery in its domestic formulations business. With the strong recovery now in place, we believe the domestic formulations business would improve. This would also lead to margin improvement, which would result in a 55.3% adj. PAT CAGR over FY15-17.

Unichem’s Q1 FY16 revenue grew 6.2% yoy, to Rs 3.09bn, above our expected Rs 2.96bn. Its EBITDA margin declined 120bps yoy, to 13.8% (above our estimated 11%) due to higher SG&A expenses, improving sequentially, however, by 800bps. Lower margins and a higher effective tax rate cut net profit 4.7% yoy, to Rs 288m, but was still well above our estimated Rs 215m.

Valuations: "The stock trades at 16.5x FY16e and 11x FY17e earnings. We maintain a Buy with a long-term perspective, and a revised price target of Rs 280 (earlier Rs 278) based on 14x FY17e earnings", says AnandRathi Securities research report.

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