According to the modified Agila deal, Strides has received US$1.5 billion
from Mylan Inc while the latter has opted to hold back the remaining
US$250 million subject to fulfilment of certain conditions in the backdrop
of the warning letter to Agila’s Bangalore facility. The company has
announced a special dividend of | 500/share. The detailed financials
incorporating the remaining pharma business and Mylan receipts will be
made available post December quarter numbers. Our valuation is based
on deal numbers and earlier pharma guidance.
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from Mylan Inc while the latter has opted to hold back the remaining
US$250 million subject to fulfilment of certain conditions in the backdrop
of the warning letter to Agila’s Bangalore facility. The company has
announced a special dividend of | 500/share. The detailed financials
incorporating the remaining pharma business and Mylan receipts will be
made available post December quarter numbers. Our valuation is based
on deal numbers and earlier pharma guidance.
Still left with value post dividend; recommend BUY
The management has proposed a dividend of | 500/share, which is
slightly more muted than earlier expectations when the deal was
announced in March. However, after considering the potential inflow of
~US$250 million, which the management expects almost with certainty in
2014, we get an intrinsic value of | 449 as per calculation shown below.
We advocate buying at current levels to be eligible for special dividend
with the potential upside from the remaining business and Mylan money.
Risks- Any delay or further modification in the potential Mylan receipts
(US$250 million) remains the only risk in our assumption for valuation.
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