Scripscan:Unichem Laboratories Ltd
cmp:250
Code:506690
Story:The company's biggest business the domestic formulations business is in a restructuring mode since the last six months and is expected to continue for another quarter. The new head of formulations business has been liquidating stocks. The company is in the process of de -risking its domestic formulations business which comprise around 67 % of the company's revenues. CVS accounts for 43 % of its revenues and is by far the most profitable segment of the company's business. The company is in the process of focusing on brand building. Unichem is in the processwhereby it would not allow any therapeutic segment to have more than 25 % of its revenues. The company is achieving this by filling in the gaps in segments where it has presence but does not cover the entire spectrum of products. A classic case is Ampoxin which dominates their Anti-infective basket. On account of restructuring of its business taking longer time we downgrade our domestic formulations growth to 11 %as against 13 % previously.The company's export formulations business will grow solely on back of US business which would be the fulcrum of growth. Unichem hasalready received approval of 5 ANDAs and the latest being Bisoprolol which is a USD 50 mn product in US markets. We have factored USD 5 mn revenues in the current year and USD 12 mn in FY 11E. The rest of the formulations business is under pressure on account of contract manufacturing. The API business is also under pressure on account of the slowdown in the Europe and US. On account of lower traction indomestic formulations business we downgrade our FY 10E EPS estimates by 6.5 % to Rs 31.7 and we introduce our FY 11E EPS at Rs 42.8. The EPS growth of 36 % is mainly driven by strong growth in domestic formulations business and scale up in US business coupled with better performance of subsidiaries. Currently the stock is quoting at 5.9x FY 2011E. We roll over our price target to FY 11E with a price target of Rs 300 based on 7x FY 2011E. We maintain BUY rating on the stock.
Search This Blog(Over 800 companies covered in the blog).
Please note
Archives : Old artciles
Thursday, October 29, 2009
Important Disclaimer&Privacy policy
This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: arunsharemarket@gmail.com
Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
