Sell Thyrocare Technologies; target of Rs 307: Prabhudas Lilladher
Prabhudas Lilladher is bearish on Thyrocare Technologies has recommended sell rating on the stock with a target price of Rs 307 in its research report dated May 27, 2020.
May 27, 2020 / 11:30 AM IST
Prabhudas Lilladher's research report on Thyrocare Technologies
We believe THYROCARE earnings to be significantly impacted due to 1) loss of core business due to COVID lockdown and low footfall till 1HFY21E 2) post lockdown to struggle for competitive market share 3) high operating expenses (to comply with COVID guidelines).Despite having a track record on asset optimization, EBITDA margin would be 32% for FY21E (40.3% FY20) due to high fixed operating costs (employee cost 13% and SG&A 29% of sales) while COVID test may hold up revenues but contribution at the operating level would be minimal/ break-even. With the assumption of 15% decline in 1-month revenue and 2 months of complete washout in Q1FY20 led by 20% YoY decline in Q2FY21E, we estimate revenue/EBITDA negative CAGR of 5% and 6% over FY20-22E.
We reduce our earnings estimate by 56% and 42% for FY21-22E and downgrade THYROCARE to SELL (earlier HOLD) with a new TP of Rs307 (earlier Rs523) 18x PE on FY22E.
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