Pharma sector has underperformed indian benchmark indices in the last 3 years. the export market took a hit due to lack of raw materials from china and the disruptions in supply chains. A niche pharma company in this sector is available at attractive valuations. The Company is focused on high-barrier-to-entry products that are typically characterized by one or more of the following: Intricate Chemistry, Challenging delivery systems, Difficult or complex manufacturing process.
On a relative basis this is the Cheapest stock available at a p/e of 18x against industry p/e of 29x. In the last 3 years it has increased its top line & bottom line profits by over 50% enjoying healthy margins. The company is Continuously de-leveraging the balance sheet and decreasing the cash conversion cycle. The company is also looking to develop Specialty chemicals for agro products and is heavily investing in the same to develop bio-products and pesticides.
Analysis breakdown
- Cheapest stock on P/E Basis in the pharma sector , At this P/E the stock is undervalued by 21%
- Improved Growth of over 100% in Cash from operations
- Improved Growth of over 100% in EBIDTA
- Highest growth in sales recorded across all pharma sector ( 22% Growth )
- Strong and sticky share holding pattern of Promoters / FII and DII
- We expect continuous growth in EBIDTA and increased traction in the agro business.
Technically the stock has created a pause candle on monthly charts after its stellar 50% run from lows. In shorter time frame the charts are indicating sideways movement and accumulation phase for until next 1 Quarter.
- Stock Name : NATCO Pharma
- Current Price : 837
- Target : 1280
- Time Frame – 7 to 12 months