5 stocks where brokerages retained buy post Q2 results can give up to 30% upside

Moneycontrol News

Benchmark indices are inching toward the record high made earlier this month. Sensex could get past 34,000 by December end on the back stable earnings and the sovereign ratings upgrade by Moody's, which will turn FIIs positive on the Indian markets.

On Friday, the index started on a bullish note after a surprise move by ratings agency Moody’s, which upgraded Indian government bond rating to Baa2 from Baa3 with outlook revised to stable from positive.

Pharma companies posted mix earnings in the quarter ended September 2017 on the back pricing pressure and increased competition.

In the week ended November 17, the Nifty Pharma index was down 0.83 percent and in last 1-year it was slipped 14.8 percent closed at 9,161.80.

There are top five pharma stocks where brokerages have maintain positive stance post Q2 results which can give up to 30 percent upside in the next one year time.

Sun Pharma | Brokerage: Credit Suisse | Rating: Outperform | Target: Rs 595 | Return: 15%

According to Credit Suisse the results during the previous quarter were weak impacted by deferred US sales. It believes that the margins is likely to improve in the second half, expecting the company to beat margin guidance of 20- 22 percent.

The company does not yet received the Halol inspection dates but expects it to be in the current quarter, it added.

The firm has but earnings per share by 3 percent for the current financial year, which is driven by weak US sales. The demerger of part of Global FZE could sustain lower tax rate, it added.

Cadila Healthcare | Brokerage: Prabhudas Lilladher | Rating: Accumulate | Target: Rs 519 | Return: 16%

Prabhudas Lilladher said the US and India traction lead to previous quarter surpassing estimates, while sustainability is going to drive the valuation of the company.

It believes that the key launches to drive the US generic growth in the second half and the next financial year. Also expecting benefits of exclusive launches to significantly improve headline margins.

Marksans Pharma | Brokerage: IDFC Securities | Rating: Outperformer | Target: Rs 51| Return: 25%

In the second quarter the weak gross margins offset strong revenue growth, while there are higher revenues in Europe/US, said IDFC Securities.

The pace of recovery to be muted on account of pricing pressures in the US market.

The key triggers include continues improvement in UK, ability to increase client penetration in the US and securing new softgel ANDA approvals, said IDFC Securities.

Dr Lal PathLabs | Brokerage: Citi | Rating: Buy | Target: Raised to Rs 1,110 from Rs 1,020 | Return: 23%

According to the research house the September quarter was a solid quarter with margins holding up despite Goods and Services Tax.

The growth and margin outlook is encouraging and expecting strong, multiyear growth in revenues and profits over the long term, it added.

Torrent Pharmaceuticals | Brokerage: CLSA | Rating: Buy | Target: Cut to Rs 1,640 from Rs 1,660 | Return: 30%

According to CLSA the acquisition valuation of Unichem’s domestic business is in-line with past deals. The said acquisition to be earnings per share accretive by March 2021 which hinges on its ability to accelerate the sales growth of key Unichem brands