Sharon Bio Medicine may test Rs 74: Daljeet Kohli

Daljeet Singh Kohli of India Nivesh Securities told CNBC-TV18, ” Sharon Bio Medicine is under cusp of a very strong growth. In the last four-five years, they have done lot of investment in the Capex and increased their capacity which is now going to bear the results. Till now it is more of UPI dominated company and now they are changing their strategy towards formulation.”

He further added, “The company’s US formulation facility in Dehradun is yet not certified by US FDA, they are waiting for that approval but they are still certified by other UK Medicines and Healthcare Products Regulatory Agency (MHRA) and Latin American various authorities, so they are selling in those parts of the world. Its 30-40 percent of the total turnover is in the exports, rest is in India and that is the reason why the margins are also much lower.”

“Over the period in next 2-3 years if we see, the times are looking very good. Right now their margins at 11 percent. So, even if I take conservatively, 100 bps increases in margin over next two years, the swing factor is very big.”

“The net profit will become double over next two years just by taking 100bps increase in the margins and which is very much possible because if you increase the formulations business which is definitely double margin business than API you will get that. So, we have given a target of Rs 74 but it can definitely increase as company delivers the numbers.”

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