2 Pharma Stocks To Buy According To Sharekhan For Upside Of 20% To 31%

Sharekhan is betting on the stocks of Laurus Labs and Gland Pharma for good returns. However, though brokerages are recommending stocks, we are suggesting some caution, given the way the markets have rallied in the last few weeks.

Buy Laurus Labs, long-term drivers in place

Sharekhan sees a good upside in the stock to Rs 800, as against the current market price of Rs 607, which implies an upside potential of 31%.

According to Sharekhan, Laurus is fortifying its position in the FD and synthesis segments, strengthening its presence in non- ARV space and growing in new area of biologics.

The company is building new capacities that would support the robust demand and also propel growth in the coming years. Emerging opportunities from patent expiry of drugs in areas of anti-diabetes and cardiology offer significant potential for Laurus.

"The sturdy growth prospects that are well supported by capacity expansion plans, the management has targeted for a $1bn revenues by FY2023, thus translating in to a strong growth trajectory. Diversification of revenue base and plans to enter new therapeutic areas of cardiology and anti-diabetes would also be the key growth drivers. At the current market price, the stock trades at 24.8 times and 19 times its FY22E and FY23E EPS respectively. Further the stock price has corrected by 16% from its highs and this provides a good entry point for investors. As the concerns are overdone, we re-iterate Buy recommendation on the stock of Laurus with an unchanged price target of Rs. 800," Sharekhan has said.

Buy Gland Pharma, says Sharekhan

Sharekhan has set a price target of Rs 4,400 on the stock of Gland Pharma, as against the current market price of Rs 3,700.

According to Sharekhan, Gland Pharma has a well diversified product portfolio, strong product pipeline would drive the Core markets performance, while expanding geographic footprint with plans to enter China bodes well from growth perspective.

"A confluence of multiple growth drivers is expected to boost Gland Pharma's overall performance. A well-diversified and sturdy product portfolio, expansion of geographic footprint with a focus on entering the high potential China markets (leveraging parent company's strength), sustained opportunities from Sputnik vaccine, and foray in to the biosimilar CDMO space would be the key growth drivers for Gland. A sturdy Rs. 770 crore capex plan spread across FY2022-FY2023E and a strong compliance track record coupled with established customer relations are the key positives and provide ample growth visibility," the brokerage has said. 

Good growth in core markets for Gland

According to Sharekhan, Gland's core markets consist of the US, Europe, Australia and Canada and account for 68% of FY2021 revenue. A well-diversified product portfolio, strong product pipeline and focus to expand geographic footprint are the growth levers for Gland. After a positive response from new markets entered in such as Singapore, Israel, Saudi Arabia, and CIS countries, Gland aims to enter the high-potential China markets by leveraging its parent company's strengths.

"Structurally being an established player in injectables, Gland Pharma is set to benefit from the rising preference for injectables. At the current market price, the stock is of Gland trading at a P/E multiple of 46.2x/30x, its FY2022E/FY2023E EPS, thus pointing towards room for expansion. The stock price has corrected 14% from its highs and this provides a good entry point for investors. We reiterate our Buy recommendation on the stock with unchanged price target of Rs. 4,400," the brokerage has said.

Disclaimer

The investment ideas are picked from the brokerage report of Sharekhan. Investors should note that investing in stocks is risky and neither the author, nor Greynium nor the brokerage would be responsible for losses based on a decision from the above article.