Religare puts 'buy' on Piramal Healthcare; target Rs 412
Religare Research has maintained ‘buy’ on Piramal Healthcare for a target price of Rs 412, which is based on 16x FY10E earnings, in line with its CRAMS peers.
By ET Online |
MUMBAI: Religare Research has maintained ���buy��� on Piramal Healthcare for a target price of Rs 412, which is based on 16x FY10E earnings, in line with its CRAMS peers. The company���s April-June 2008-09 results were in line with the brokerage estimates. Domestic formulations growth of 20 per cent year on year and increasing traction in Indian CRAMS (up 115%) were key revenue contributors for the quarter.
Despite rupee depreciation of 7 per cent during the quarter, UK facilities reported a 2 per cent decline in sales which was disappointing. EBITDA was hit by mark-to-market loss of Rs 20.8 crore.
Key growth drivers for 2008-09 would be domestic formulations, CRAMS from Indian assets where ongoing contracts will deliver growth, and Pathlabs, where the management is looking at more inorganic opportunities. Revenue from Piramal's UK facilities is unlikely to see significant growth for 2008-09 and benefits from the ongoing restructuring initiatives will be visible only in 2009-10. Consequently, margins will be driven by the performance of Indian assets.
Religare expects Piramal to record 18 per cent revenue CAGR over FY08-FY10 to Rs 3,950 crore. Contribution from domestic formulations will remain above 40 per cent till UK facilities start generating double-digit growth. The brokerage estimates a 330bps expansion in EBITDA margins over the next two years largely led by Indian assets.
The stock is trading at 13.9x FY09E EPS of Rs 21.4 and 11.5x FY10E EPS of Rs 25.8.
Despite rupee depreciation of 7 per cent during the quarter, UK facilities reported a 2 per cent decline in sales which was disappointing. EBITDA was hit by mark-to-market loss of Rs 20.8 crore.
Key growth drivers for 2008-09 would be domestic formulations, CRAMS from Indian assets where ongoing contracts will deliver growth, and Pathlabs, where the management is looking at more inorganic opportunities. Revenue from Piramal's UK facilities is unlikely to see significant growth for 2008-09 and benefits from the ongoing restructuring initiatives will be visible only in 2009-10. Consequently, margins will be driven by the performance of Indian assets.
Religare expects Piramal to record 18 per cent revenue CAGR over FY08-FY10 to Rs 3,950 crore. Contribution from domestic formulations will remain above 40 per cent till UK facilities start generating double-digit growth. The brokerage estimates a 330bps expansion in EBITDA margins over the next two years largely led by Indian assets.
The stock is trading at 13.9x FY09E EPS of Rs 21.4 and 11.5x FY10E EPS of Rs 25.8.
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