Posts in category All News
Honda sacrificing margins to gain market share in two-wheelers (26-08-2015)
Ferrari launches California T convertible at Rs 3.45 crore (26-08-2015)
M&M to invest Rs 700 cr in its truck, bus business (26-08-2015)
Poor demand, finances of state utilities to hit NTPC and IPPs (26-08-2015)
Indian tablet market revives with 22% growth (26-08-2015)
Is cellphone tower radiation damaging your health? (26-08-2015)
Seventh pay panel’s term extended till December (26-08-2015)
Political risks might foil China economic reforms (26-08-2015)
September rate increase less compelling: Fed’s Dudley (26-08-2015)
Strides Arcolab looks good ahead: IDFC Institutional Securities (26-08-2015)
Strides Arcolab’s second innings, post the divestment of Agila steriles business to Mylan in 2013, has been catalyzed by its two proposed transactions – the Shasun merger and an opportunistic acquisition of Aspen’s Australian generics (Arrow).
The transactions create a strong platform for sustained medium-term growth. We expect the ~$200m formulations-focused Strides to transform into a geographically diversified and vertically integrated $700m entity by FY17 without over-reliance on US generics (unlike most peers). With 135% CAGR in consolidated PAT (excluding one-offs) over FY15-17E and a reasonably healthy balance sheet (~2x Net Debt/ EBITDA), the stock is a re-rating candidate. At 16.5x FY17E proforma earnings, we maintain Outperformer on Strides with a price target of 1,577. Post Shasun/ Arrow consolidation, Strides would have multiple growth drivers comprising the US, Australia and EU generics, branded formulations across Africa and India, institutional supplies (HIV / Malaria) and CRAMS/ APIs. Except Australia and API, all other segments are scaling up on a low base and we expect 15-20% CAGR across businesses over FY15-17E.
Shasun merger (expected to close by 3QFY16) is set to transform Strides’ formulations-only business model as it adds significant FDA-approved manufacturing (API as well as formulations) capacities and makes it a vertically integrated player.