HDFC Securities Sees 36% Upside To Strides Shasun
HDFC Securities initiated ‘Buy’ rating, with a target price of Rs 1,200.
Brokerage house HDFC Securities initiated coverage on Strides Shasun Ltd. with a ‘Buy’ rating, with a target price of Rs 1,200, implying a potential upside of 36 percent from yesterday’s close
The drug maker possesses the potent combination of a diversified business mix, strong regulatory record, high growth potential and comfortable valuation, the brokerage house said in a note to clients.
HDFC Securities expects that the company’s filing/approval momentum to pick-up over the next 15-18 months.
With more than 20 launches expected over next two years, we believe the U.S. business will scale up to $230 million by FY20 from $95 million sales in FY17.HDFC Securities Research Report
The brokerage expects sales and profit to grow at a compound annual growth rate of 18 percent and 34 percent, respectively over FY17-20. It said Australia, which contributes 23 percent towards revenue, may grow at a CAGR of 13 percent during the period.
Other Key Highlights
- With no major capital expenditure and operating leverage to aid margins, expect return ratios to reach high-teens (18-19 percent) by FY20
- Return on invested capital to expand by 500 basis points to 17 percent by FY20
- Strong free cash flow generation of $250 million over FY18-20