Sharekhan Top 3 Picks From Pharma Sector: 2 Stocks Get Buy Call, 1 Gets Hold Rating

Sharekhan has selected 3 stocks and given buy rating to 2 stocks and hold rating to one. Sharekhan has recommended investors to buy Biocon with a target price of Rs 340 apiece and Abbott India Ltd with a target price of Rs 22,780 apiece, respectively. The analyst has assigned "Hold" rating to the shares of Aarti Industries Ltd with a target price of Rs 730 apiece. Check key takeaways below:

1. Biocon Ltd

The current market price of the stock is Rs 287 apiece with market capitalisation at Rs 34,499.24 crore. The stock has given a return of 46% in last 5-years, 10% in last 3-years, and declined 22% in last 1-year.

The large cap company was incorporated in 1978 and operates in Pharmaceuticals sector. Sharekhan has assigned buy call to Biocon with a target price of Rs 340 apiece. Buy Bioncon shares at current market price to get potential return of 18%.

According to Sharekhan, "Biocon has laid a strong platform for growth of biosimilars in the insulin and oncology franchise across its key markets. Commercialisation of new products/tapping new geographies with existing products could strengthen its presence in the insulin and oncology space. This coupled with the efforts to increase penetration in existing markets and tap new areas of vaccines and the recent acquisition of biosimilars portfolio from a partner company could drive growth of biosimilars over the long term. Though in the near term, cost pressures are expected to overweigh. At the CMP, the stock is trading at P/E multiples of 32.9x/21.6x its FY2023E/FY2024E earnings. We retain our Buy rating on the stock with a revised price target (PT) of Rs. 340."

2. Abbott India Ltd

The current market price of the stock is Rs 19,747 apiece with intraday surge of 1.32%. The company has a market capitalisation of Rs 41,962 crore. The large cap company operates in Pharmaceuticals sector and came into existence 1944.

The analyst has assigned a target price of Rs 22,780 apiece. Buy Abbott India today to get potential return of 15%.

According to Sharekhan, "Abbott's revenues and earnings are expected to stage a strong 12% and 16% CAGR over FY2022-FY2025E. At CMP, the stock trades at 44.9x/38.7x its FY23E/FY24E, respectively. Healthy growth prospects, a strong, debt-free balance sheet and strong dividend payout are key positives. We maintain a Buy on the stock with an unchanged PT of Rs. 22,780."

3. Aarti Industries Ltd

The current market price of the stock is Rs 653 apiece with intraday decline of 0.29% on BSE. The company has a market capitalisation of Rs 23,700 crore. The stock has given a return 192% in last 5-years and 56% in last 3-years. The shares have declined 33% in last 1-year.

The mid cap company was incorporated in 1984 and operates in Pharmaceuticals sector. The analyst has maintained hold rating to the stock with a target price of Rs 730 apiece.

According to Sharekhan, "Downgrade Aarti Industries to Hold with a revised PT of Rs. 730: Uncertainties in global economic growth outlook and near-term subdued demand from the dyes/pigment industry would keep Aarti's earnings under pressure in FY2023 (expect PAT to decline by 20%), given high exposure to exports/discretionary. Moreover, valuation of 32x/28x its FY2024E/FY2025E EPS largely factors in potential strong earnings recovery with our expectation of 24%/29% EBITDA/PAT CAGR over FY2023E-FY2025E (led by commissioning of new capacities) and ignores near term weak return profile, and likely increase in debt, given aggressive capex plans. Hence, we downgrade Aarti to Hold (from Buy) with a revised price target (PT) of Rs. 730."

Disclaimer

The stocks have been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.