Sharon Bio-Medicine

Broker’s call: Sharon Bio-Medicine (Buy)

December 8, 2014:  

IndiaNivesh Sec

Sharon Bio-Medicine (Buy)

CMP: ₹50.60

Target: ₹140

USFDA approval — a key near term trigger: Sharon Bio-Medicine (SBML)

 has completed the capex of ₹90 crore at its Uttarakhand formulation 

facility. SBML received the UKMHRA approval for existing as well as 

expanded facility. The USFDA inspection is expected to happen anytime 

soon. The positive outcome would enable SBML to start selling in the US 

market on considerable scale. This would also enhance profitability of 

SBML. However, given the uncertain nature of review of USFDA 

inspection, we have not yet built any upside from business in US market

 from this facility.

The stock has corrected by 40 per cent in the past three months on absolute basis. Though the business continues to be normal and stock has become attractive in terms of valuation, we suggest investors to wait for the results of key near-term trigger — USFDA inspection and its subsequent assessment to review the investment decision. At CMP, the stock is trading at 5.2x FY15E EPS of ₹9.9 and 3.7x FY16E EPS of ₹13.9. Currently, we maintain our estimates and continue to value SBML at 10x FY16E earnings to arrive at the price target.(This article was published on December 8, 2014)http://www.thehindubusinessline.com/markets/stock-markets/brokers-call-sharon-biomedicine-buy/article6673433.ece

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THE STOCK IS SLIDING AND THE FINANCIALS ARE BLEEDING BUT DESERVES A WATCH, MAY SEE UPMOVE AFTER JUNE RESULTS-2016