Cadila Healthcare target price pegged at Rs 600 by Sharekhan, says stock in sweet spot
Cadila Healthcare share price: Sharekhan says that Cadila Healthcare is in a sweet spot as the company’s business in its two key geographies is expected to gain traction. Cadila Healthcare has been outperforming Indian pharmaceutical markets (IPM) growth since the past two quarters, reporting strong double digit growth. US business growth is expected to be driven by a strong product pipeline and growth in the existing business
Cadila Healthcare share price: Sharekhan says that Cadila Healthcare is in a sweet spot as the company’s business in its two key geographies is expected to gain traction. Cadila Healthcare has been outperforming Indian pharmaceutical markets (IPM) growth since the past two quarters, reporting strong double digit growth. US business growth is expected to be driven by a strong product pipeline and growth in the existing business. Sharekhan retains Buy recommendation on Cadila with a revised price target of Rs 600. Cadila Healthcare share price today is Rs 555.3, up Rs 28 or 5.3%. Cadila Healthcare share price moved from Rs 500 to Rs 555 in the last 1 week.
Vishal Wagh, Research Head at Bonanza Portfolio says that Nifty pharma has shown consistent outperformance to the major indices and the current pandemic environment is creating a large demand for the sector.
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Vishal said that Cadila Healthcare had started the correction in 2017 from the top of Rs 560 and till the bottom of 2019 it has corrected more than 63% to Rs 206. From August 2019 a decent rally started and except for the sell-off in Feb and March 2020 it is consistently in a higher high higher low chart structure which is bullish. From Jan-2021 till the low of March, it has shown a healthy correction and now the market is witnessing a smart rally in this counter.
On the higher side, an all-time high of Rs 560 will be tested and a chance of stock moving in the uncharted territory is higher. On the lower side, major support is seen near Rs 478 levels. The strategy to utilize the trend is to buy on deep. For short-term traders, any deep till 510 should be utilized to accumulate. The stop loss should be below 474 levels, explain Wagh.
Sharekhan says Cadila Healthcare is also making concentrated efforts to build a strong presence in areas of complex generics, injectable, and specialty portfolio in the US, which offer strong growth potential which could unfold over the medium to long term. Recently, Cadila has acquired a development stage asset - CUTX-101, which is indicated for treatment of Menkes disease, a genetic pediatric disorder caused by gene mutations of copper transporter – ATP7A.
Sharekhan highlights that Cadila has approached the Drug Controller General of India (DGCI), seeking an emergency approval for its COVID-19 vaccine, after interim results showed improved efficacy levels. The approval of the vaccine is expected to open up substantial opportunities for Cadila across markets as the company has already received orders in excess of its capacity. Moreover, opening up of vaccination for everyone above 18 years of age by the Government of India points at strong demand for the vaccine ahead and Cadila could be one of the likely beneficiaries of this. Sharekhan expects sales and PAT to stage an 8.4% and 20.3% CAGR, respectively, over FY2020-FY2023E.
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