Kotak Securities re-initiates buy on Suven Life Sciences, target price Rs 445

Kotak Securities has re-initiated its coverage on Suven Life Sciences in the long term with a buy rating and set target price of Rs 445. Suven shares gained 5.77% on Friday to close at Rs 311 even as BSE Sensex closed 215.76 points at 40,359.41.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 274.31 crore, up 37.86% from last quarter aales of Rs 198.99 crore.The company has reported net profit after tax of Rs 63.31 crore in the latest quarter.


Investment Rationale

Kotak said it like Suven for its high margin profile with operating margin before tax of over 30% and net margin of 20%. After a soft FY19, earnings to grow by CAGR of over 40% in the next three years. The brokerage has valued the stock at 19x FY22E EPS of Rs 19.4 arriving at price of Rs 369 and has added the value of upfront payment from SUVN 502 and other 3 molecules put together at Rs 76.