Centrum puts 'buy' on Elder Pharmaceuticals
Centrum initiates coverage on Elder Pharmaceuticals with a `Buy’ rating and a target price of Rs 487, valuing the stock at 9x FY12E earnings.
By ET Bureau |
RESEARCH: CENTRUM
RATING: BUY
CMP: RS 371
Centrum initiates coverage on Elder Pharmaceuticals with a `Buy’ rating and a target price of Rs 487, valuing the stock at 9x FY12E earnings. Elder Pharmaceuticals has created a strong portfolio of brands - Shelcal, Eldervit and Chymoral, among others - that are leaders in their respective therapeutic segments.
It has also successfully adapted the in-licensing model, making it a preferred partner for pharma MNCs, and expanded its product portfolio. Centrum believes current valuations are attractive given the strong growth potential . Elder has successfully adapted the in-licensing model and expanded its product portfolio. It strictly abides by non-infringement of patent rights, making it a preferred partner for pharma MNCs. At present, the company has over 30 in-licensing agreements in place.
The company recently commissioned its new Rs 190-crore manufacturing facility at Langa Road, Dehradun in Uttaranchal, an excisefree zone. It plans to shift all syrup-based product manufacturing to this facility. Centrum expects Elder to clock 15% revenue and 27.9% PAT CAGR over FY09-12 E along with improvement in EBITDA margin . This would lead to RoE and RoCE improving to 18.7% in FY11E and 13.9% in FY12E. It also expects its debt-equity ratio to decline to 0.7x in FY12E from 1.2x at present.
RATING: BUY
CMP: RS 371
Centrum initiates coverage on Elder Pharmaceuticals with a `Buy’ rating and a target price of Rs 487, valuing the stock at 9x FY12E earnings. Elder Pharmaceuticals has created a strong portfolio of brands - Shelcal, Eldervit and Chymoral, among others - that are leaders in their respective therapeutic segments.
It has also successfully adapted the in-licensing model, making it a preferred partner for pharma MNCs, and expanded its product portfolio. Centrum believes current valuations are attractive given the strong growth potential . Elder has successfully adapted the in-licensing model and expanded its product portfolio. It strictly abides by non-infringement of patent rights, making it a preferred partner for pharma MNCs. At present, the company has over 30 in-licensing agreements in place.
The company recently commissioned its new Rs 190-crore manufacturing facility at Langa Road, Dehradun in Uttaranchal, an excisefree zone. It plans to shift all syrup-based product manufacturing to this facility. Centrum expects Elder to clock 15% revenue and 27.9% PAT CAGR over FY09-12 E along with improvement in EBITDA margin . This would lead to RoE and RoCE improving to 18.7% in FY11E and 13.9% in FY12E. It also expects its debt-equity ratio to decline to 0.7x in FY12E from 1.2x at present.
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