Sharekhan research has maintained buy rating on Wockhardt with target price of Rs 552 in its February 25, 2008 research report. "Wockhardt's Q4CY2007 and CY2007 performance have been marginally above our expectations, with the topline growth of 44.8% and 53.5% in Q4CY2007 and CY2007 respectively and the profit growth of 22.7% and 27.9% in Q4CY2007 and CY2007 respectively. The robust growth was largely driven by the consolidation of Negma and Morton Grove acquisitions made during the year. On a like-to-like basis, the organic growth stood at 6% during Q4CY2007 and at 13% during CY2007. With three major acquisitions in the USA, France and Ireland over the past two years, Wockhardt has created a global footprint for itself and has become the largest Indian company in Europe."
"The company aims to consolidate its acquisitions and extract value from them over the next two years. Wockhardt's ability to create value from acquisitions is evident in the turnaround and operational improvements effected in Dumex, Pinewood and Morton Grove. Wockhardt's performance in Q4CY2007 and CY2007 has been marginally ahead of our expectations. Even though the super normal growth of 53% has been largely driven by the consolidation of Negma and Morton Grove, Wockhardt's base business also seems to be performing reasonably well."
" At the current market price of Rs 344, the stock is available at 8.7x its CY2008E and 7.5x its CY2009E earnings on a fully diluted basis. We believe such low valuations are not justified in light of the strong value creation potential from acquisitions and the potential upsides from the biopharmaceutical opportunity, inspite of the limited organic growth potential. We maintain our Buy recommendation on the stock with a price target of Rs 552." says Sharekhan research report.
Link to the article: http://www.moneycontrol.com/india/news/recommendations/buy-wockhardt,-tgt-rs-552:-sharekhan/328203
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