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SHASUN PHARMA
Shasun Pharma (Shasun) is engaged in manufacturing active pharmaceutical
ingredients (APIs), their intermediates and enteric coating excipients with a
significant presence in some key generics. Shasun has created a strong product
portfolio, building on its R & D Expertise, regulatory capabilities and multi scale
production capacities. Today, Shasun is one of the largest producers of Ibuprofen
worldwide. The company offers derivatives of Ibuprofen like Ibuprofen Sodium,
Ibuprofen Lysinate and S+Ibuprofen. It is also one of the major producers of
Ranitidine and Nizatidine in the world. Its products are exported to countries
across North America, Europe, Asia and Latin America.
Investment Rationale
We expect that Rhodias performance will improve significantly on back of
incremental supplies to Vertex over the next few quarters as the volume ramp up
starts for Incivek and batch supplies get replaced with bulk orders.
Incivek commands more than 70% market share with one of the strongest
launches within Pharma industry. Shasun Pharma stands to gain significantly as it
has an assured contract from Vertex (Marketing rights for North America) for
70% of its global requirement of API. We think the strong set of revenue of drug
would reflect in subsequent quarter earnings for Shasun UK.
Management has recently highlights strong growth prospects with 40-50%
revenue growth and profitability to triple in FY12. The company plans to reduce
its debt from 330 Cr to 220 Cr with majority of it being repaid through internal
accruals by the end of this financial year.Further the improvement in business
fundamentals led by series of initiatives like expansion of capacities and launch of
new products augur well for the future.
We maintain a positive outlook on the stock due to supplies for telaprevir to
vertex, increased focus on high margin APIs and various expansion drives.
Valuations
The stock has come under pressure due to steep rupee depreciation which would
lead to Market to market losses on company’s forward contract We believe going
forward the company is a candidate for re-rating due to high potential growth with
majority of earning accruing from UK subsidiary. At the CMP the stock is trading
at 8.4x for FY11P/E. We recommend BUY with a target price of Rs 90.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
SHASUN PHARMA
Shasun Pharma (Shasun) is engaged in manufacturing active pharmaceutical
ingredients (APIs), their intermediates and enteric coating excipients with a
significant presence in some key generics. Shasun has created a strong product
portfolio, building on its R & D Expertise, regulatory capabilities and multi scale
production capacities. Today, Shasun is one of the largest producers of Ibuprofen
worldwide. The company offers derivatives of Ibuprofen like Ibuprofen Sodium,
Ibuprofen Lysinate and S+Ibuprofen. It is also one of the major producers of
Ranitidine and Nizatidine in the world. Its products are exported to countries
across North America, Europe, Asia and Latin America.
Investment Rationale
We expect that Rhodias performance will improve significantly on back of
incremental supplies to Vertex over the next few quarters as the volume ramp up
starts for Incivek and batch supplies get replaced with bulk orders.
Incivek commands more than 70% market share with one of the strongest
launches within Pharma industry. Shasun Pharma stands to gain significantly as it
has an assured contract from Vertex (Marketing rights for North America) for
70% of its global requirement of API. We think the strong set of revenue of drug
would reflect in subsequent quarter earnings for Shasun UK.
Management has recently highlights strong growth prospects with 40-50%
revenue growth and profitability to triple in FY12. The company plans to reduce
its debt from 330 Cr to 220 Cr with majority of it being repaid through internal
accruals by the end of this financial year.Further the improvement in business
fundamentals led by series of initiatives like expansion of capacities and launch of
new products augur well for the future.
We maintain a positive outlook on the stock due to supplies for telaprevir to
vertex, increased focus on high margin APIs and various expansion drives.
Valuations
The stock has come under pressure due to steep rupee depreciation which would
lead to Market to market losses on company’s forward contract We believe going
forward the company is a candidate for re-rating due to high potential growth with
majority of earning accruing from UK subsidiary. At the CMP the stock is trading
at 8.4x for FY11P/E. We recommend BUY with a target price of Rs 90.
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