The stock has corrected by 40% in past three months on absolute basis. Though the business continues to be normal and stock has become attractive in terms of valuation, we suggest investors to wait for the results of key near term trigger – USFDA inspection and its subsequent assessment to review the investment decision. At CMP of Rs51, the stock is trading at 5.2x FY15E EPS of Rs9.9 and 3.7x FY16E EPS of Rs13.9. Currently, we maintain our estimates and continue to value SBML at 10x FY16E earnings to arrive at price target of Rs140. We maintain BUY rating on the stock.
Valuation: At CMP of Rs51, the stock is trading attractive valuation of 5.2x FY15E EPS of Rs9.9 and 3.7x FY16E EPS of Rs13.9. With capex in place and probable shift to superior product mix, we expect SBML to deliver 20% and 39% CAGR in sales and profitability, respectively, over FY14-16. We maintain our estimates and price target of Rs140, based on 10x FY16E earnings. We have not yet factored dilution in earnings due to issue of warrants to promoter group. Despite stock correction of 40% over past three months, we suggest investors to wait for outcome of USFDA to accumulate further.