Concord Biotech is a good buy after 30% correction. Jhunjhunwala holds stock in portfolio

Concord Biotech is one of the stocks in the portfolio of Rakesh Jhunjhunwala.

Rekha Rakesh Jhunjhunwala holds 25,199,240 equity shares, or 24.09 per cent stake in the company as of September 30, 2024. Her stake in the company as of November 14, 2024 is worth Rs 4,675 crore.

Concord Biotech has a market capitalization of Rs 19,800 crore. It reported a net profit of Rs 98.70 crore in September 2024 quarter, rising 16.81 per cent on a year-on-year basis. The company's revenue from operations rose 18.23 per cent to Rs 310.2 crore, while Ebitda came in at Rs 146.70 crore, increasing 15.22 per cent, in the reported quarter.

Choice Broking has recommended a buy of Concord Biotech. The management remains committed to launching 8-10 new products in 3-4 years in oncology, anti-infectives, and anti-fungal, which are complex in nature and achieve a long-term revenue CAGR guidance of 25 per cent, it said .

"We are optimistic on Concord because of its top-line growth at a CAGR of 25 per cent over the next 3-5 years driven by a robust pipeline; addition of new injectable facility; backward integration and low utilization levels; and ongoing encouraging momentum with the increasing queries in the CDMO segment," it added with a 'buy' rating on the stock with a target price of Rs 2,208.

The growth in formulation business was driven by new product introduction, new customer additions, and increasing market share in both the domestic and emerging markets, said Antique Stock Broking It reiterated its high-teen revenue growth guidance and expects the API segment to deliver higher growth from H2FY25 onwards, the brokerage said.

"In FY26, Concord is likely to see a scale-up in revenue in its formulations business driven by its new injectable facility catering to India and RoW markets. We keep our estimate for FY27 largely unchanged and maintain 'buy' rating on the stock with a revised target price of Rs 2,187 valuing the company at a P/E multiple of 35 times on FY27 EPS (earlier 1HFY27)," it added.

Kotak Institutional Equities is also bullish about Concord. The Company reported a strong beat in Q2FY25 led by formulations, with API growth being muted at 1 per cent YoY, owing to higher captive sales, as well as, a high base. Nevertheless, with steady pricing as well as market shares across all key molecules, Concord has reiterated its guidance of achieving 25 per cent sales CAGR over the next five years, Kotak said.

"Aided by healthy underlying demand trends, market share growth in existing molecules, driven by recent capacity expansions after a few years of capacity constraints and new launches, we expect Concord to report a robust 27 per cent EPS CAGR, over FY2024-27E. Post the recent correction, we upgrade the stock to 'add' with fair value of Rs 2,050," Kotak elaborated.