Daljeet has issued a note today on Sharon Bio-Medicine which reads as follows:
“Delay in key trigger to play out….downgrade to HOLD
We cut our EPS estimates of Sharon Bio-Medicine Ltd. (SBML) for FY15E and FY16E by 38.3% and 40.6% to factor delay in getting the regulatory approval and dilution of earnings due to issue of warrants. We also reduce the PE multiple from 10x to 8x to factor lower growth in sales and profitability. Accordingly, we reduce our price target to Rs66 (based on 8x FY16E earnings) from Rs140 earlier. We conclude from our meeting with management during annual general meeting (AGM) held on 17th December 2014 that current business is progressing on track. However, the major future growth driver for SBML in terms of USFDA approval is yet to occur. Though the upside from current levels is about 66%, we downgrade the stock to HOLD from BUY and suggest waiting till further clarity emerges on growth drivers as well as regulatory approval for its new facility.”
Fortunately, it was not a day of all gloom for Daljeet and his followers. Meghmani Organics put up a spirited performance by surging 20% and tripping the UC.
Shilpa Medicare also took everyone by surprise by sprinting nearly 14%. Is the FDA approval around the corner? The stock has been called a potential 100-bagger in Motilal Oswal’s 19th Wealth Creation Study and that will keep the interest in the stock at high levels for some time.