Indoco Remedies Shares Hit A Record High On Q1 Profit Jump, Upbeat Analyst Calls
Shares of Indoco Remedies Ltd. jumped to a record high as analysts remained upbeat on the drugmaker, citing improving formulations sales and a strong pipeline of U.S. generics, among others.
Q1FY22 Highlights (Consolidated, QoQ)
Net income up 59% at Rs 39.6 crore.
Revenue up 29.2% at Rs 381.1 crore.
Aditi Panandikar, managing director at the Mumbai-based pharma company, said India and international businesses have shown robust growth this quarter. “We have optimised the opportunities presented by this very dynamic business environment as well as effectively adapted to the challenges thus presented,” she said.
The company continues to monitor the impact of Covid-19 and has been able to effectively manage its operations without any significant impact on the business, it said.
The stock jumped nearly 20% to a record high of Rs 529.5 apiece. It, however, pared some of the gains to trade 14.8% higher at 11:45 a.m. on Thursday. The scrip’s trading volume reached almost 600% of its three-month average.
Of the eight analysts tracking the company, seven maintained a ‘buy’ and one recommended a ‘sell’, according to Bloomberg data. The overall 12-month consensus price target implies a downside of 8.4%.
Shares of Indoco Remedies have rallied more than 66% in 2021 so far compared with a 15.4% advance in the Sensex.
Here’s what brokerages made of Indoco Remedies’ Q1:
Maintains ‘buy’, raises target price from Rs 401 to Rs 518, implying an upside of 17.2%.
Momentum in Indian formulations and guidance of strong pipeline in U.S. generics are key positive factors.
Improved traction in anti-infective segments aided Indian formulation sales. Formulation sales growth is likely to have a multiplier benefit on sales and headline margin.
Company poised to grow on better contributions from three key markets of U.S., Europe and India.
Maintains ‘accumulate’ rating, with a target price of Rs 432, implying a downside of 2%.
Domestic branded prescription formulations and export formulations segments aided June-quarter performance.
Growth in U.S. formulation sales should be led by Brinzolamide Ophthalmic Suspension and new launches.
Proposed capacity addition of 50% to existing base in API business to be a growth driver.
Systematix Institutional Equities
Maintains ‘buy’ rating, hikes target price from Rs 451 to Rs 569, implying a potential upside of 29%.
While Ebitda missed estimates, it was more on account of a timing issue as the Brinzolamide profit share from its partner Teva is deferred to Q2.
Underlying trends remain strong and Indoco is on track to deliver a 60% earnings-per-share CAGR over FY21-23.
The management’s guidance of achieving more than 30% revenue growth in India now seems more achievable with strong growth of 46% YoY in Q1 and the trend continuing in July.
Tweaks estimates to build in higher growth in India and lower taxes, which drives an upgrade of 36%/23% to FY22/23 earnings per share.