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Buy Aventis Pharma, target of Rs 1205: Karvy Stock Broking

Posted on: May 4th, 2009 and is filed under Brokerage Recommendations.

Karvy Stock Broking has recommended buy rating on Aventis Pharma with a target price of Rs 1205 in its May 04, 2009 research report.

“The company has launched Combiflam cream and Cetapin P (combination of Metformin and Pioglitazone). The management is looking at measures to compensate for the loss of turnover /profits due to termination of Rabipur agreement. This has been amply demonstrated in Q1 CY 09 due to better gross margins than our expectation. We maintain our current revenue estimates with 10 % growth in domestic formulations and 5 % growth in exports for CY 2009. We however increase our gross margins by 170 bps for CY 2009 and by 150 bps for CY 2010. We increase our EPS estimates by 6.3 % to Rs 62.8 for CY 2009E and by 6.8 % to Rs 73.7 for CY 2010E. We rate the core business of the company at 12x at Rs 885 and add Rs 320 cash per share to the company’s core price and arrive at a price target of Rs 1205. We upgrade our price target by 5 % on account of the above and upgrade the stock to BUY,” says Karvy’s research report.

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