Morning India (1/August/17): 1. Shilpa Medicare (IC) 2. Financials 3. Pidilite Inds 4. Godrej Consumer 5. Shree Cement 6. Siemens 7. InterGlobe Aviation 8. Tech Mahindra
​MOrning India (1/August/17): 1. Shilpa Medicare (Initiating Coverage); 2. Financials; 3. Pidilite Inds; 4. Godrej Consumer; 5. Shree Cement; 6. Siemens; 7. InterGlobe Aviation; 8. Tech Mahindra
Today’s top research idea
Shilpa Medicare (Initiating Coverage): Injecting growth; Product approvals, superior execution to drive earnings; Buy with TP of 805
We believe that Shilpa Medicare (SLPA) is on cusp of strong growth in earnings led by product approvals in US market. From just an API player, it has forward integrated and transformed itself into formulator with revenue rising from from nil till 9MFY17 to Rs3.3b in FY19E. The products are majorly in oncology space with 23 ANDAs pending for approval.
We expect its base business (CRAMS), which currently forms 52% of total sales, to remain stable and sustainable with 13% CAGR over FY17-20. We value SLPA at a premium valuation of 25x 12M forward earnings due to strong growth visibility from US market, backed by healthy product pipeline, which would also support margins improvement. We initiate with Buy rating and target price of INR805.
Piping hot news
SBI reduces savings rate, sets stage for RBI rate cut
State Bank of India (SBI) cut the interest rate on savings accounts with balance of up to Rs1 crore by 50 basis points to 3.5%—the first time the key rate has been cut since being deregulated in 2011
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