Hold Unichem Laboratories; target of Rs 214: ICICIdirect

"Domestic formulations struggled during FY15 as the company initiated a portfolio realignment exercise. According to the management’s own admission, ~50% of the domestic portfolio is mature and declining. Similarly, close to 20% of the domestic portfolio is under NLEM. The management expects better prospects post realignment in FY16 and has guided for ~9-10% growth in domestic formulations in FY16. Export formulations, on the other hand, are likely to maintain the growth tempo on the back of incremental US filings and subsequent launches even as the UK subsidiary Niche generic struggles to hold the ground. However the performance of domestic formulations will determine the overall growth and margin improvement. This will also be watched for multiple upgradation as the company has remained a laggard due to a series of poor quarters. We expect revenues, EBITDA and profit to grow at a CAGR of 16.9%, 56.7% and 72.1%, respectively, in FY15-17E. Our revised target price is Rs 214, based on 10x FY17E EPS of Rs 21.4", says ICICIdirect.com research report.

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