HDFC Securities has buy call on Neuland Laboratories Ltd.
with a target price of Rs 1000.0 .
The current market price of Neuland Laboratories Ltd.
is Rs 713.1 Time period given by analyst is year when Neuland Laboratories Ltd.
price can reach defined target.
Neuland Laboratories Ltd., incorporated in the year 1984, is a small-cap pharma company with a market cap of Rs 789.32 crore.Investment rational by HDFC SecuritiesAhead of expectations, Neuland Labs (NLL) ended the year with improved business performance.
Top line grew 13.2% YoY/31.5% QoQ to Rs 1.6bn, with significant jump seen in Ciprofloxacin and Levetiracetam revenues during this quarter.
EBITDA declined 34%YoY to Rs 188mn.
However, sequential growth of 105% was encouraging.
EBITDA margin stood at 11.7% (down 838bps YoY, up 420bps QoQ and 170bps ahead of expectation).
Reported PAT after merging with NHSPL and NPRPL, came in at Rs 81mn in 4QFY18.With washout FY18 nearly over, NLL is likely to report a strong recovery in FY19.
This will largely be driven by returning volumes in the Niche API and CMS business segments, with all eyes on the launch of gAdvair in the US.
Foresee 19% revenue CAGR, 820bps margin expansion and 5.5x earnings over FY18-20E (favorable base).
At peak demand, API supply for Salmeterol, Deutetrabenazine and Trulance are likely to add Rs 43, Rs 18 and Rs 20 EPS respectively.
Re-iterate BUY with a TP of Rs 1,000 (16x on FY20E EPS).