Angel Broking has maintained its buy rating on Wockhardt with a revised target price of Rs 480 in its April 30, 2008 research report. "For 1QCY2008, while Wockhardt’s Sales at Rs 786 crore was in line with our expectations, Net Profit at Rs 50.9 crore was a disappointment. The key factors impacting the same have been the substantial jump in Interest expenditure along with the Rs 27.3 crore MTM losses booked by the company during the period. Thus, in spite of a yoy growth of 50.3% on the Sales front, the company posted a 23.2% decline in Net Profit during the period"
"At the CMP, the stock is trading at 6.6x CY2008E and 5.8x CY2009E EPS, which is at a significant discount to its peers. A substantial part of the discount is on account of the high competitive pressures in the Generic space and dependence of the company on its M&A strategy to scale up its Generic business. A part of the discount is also due to the accounting polices followed by the company (deferment of R&D expenditure). On the Earnings front, we have pruned our Net Profit estimates by 9% for CY2008E and CY2009E, respectively. Overall, owing to the concerns, we have downgraded our Target P/E multiple to 10x. We maintain a Buy on the stock, with a revised Target Price of Rs 480, over an 18-month period, says Angel's research report.
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Link to the article: http://www.moneycontrol.com/india/news/recommendations/buy-wockhardt-targetrs-480-angel/11/45/336612
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