Indoco Remedies has posted better-than-expected revenue growth of 34% year-on-year. This was highlighted in a note by brokerage Yes Securities, further aided by a strong performance in domestic trading on a lower basis. Management expects growth on this higher basis in fiscal 2013 led by a rebound in Stomatologicals.
“Unless there is a decline in key starting material prices from China (managing for flatlining prices recently), 4Q or at worst 1Q margins are expected to mark down,” the note said.
The brokerage has given buy rating on pharma stock with a target price of 500, indicating a potential increase of over 35% from its current stock level. With a strong growth forecast, Indoco is one of its top stock picks in Remedies Pharma.
“We have raised revenue projections for fiscal 2012 based on strong US guidance, which is expected to offset the impact of gross margin reductions; Margin reduction and unchanged growth outlook will support rerating – maintain target 19x at FY24 EPS,” Yes Securities said.
In addition, Indoco is guided for strong 40% growth in the US business as brinzolamide market share accelerates and Combigen launch in July drives H2 revenue growth.
“We believe the US business is dependent on these two key products with about 6 new launches in the current fiscal year. Indoco will also be protected from price drop due to the ophthalmic nature of the launch,” the brokerage said.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.