CMP = Rs 265
Price target: Rs 393
- From being a formulation player in the domestic market, NIPL has emerged as a leader in the custom manufacturing space. Through strategic acquisitions and expansions, the company has achieved a good growth.
- Simultaneously, it has also maintained its focus on building its innovative pipeline of molecules. The company's strength in the R&D field is vindicated through its recent drug development deal with global pharma major, Eli Lilly.
- Through steady growth in the branded formulation segment, ramp-up in the custom manufacturing contracts, the expansion of the path lab business and a ramp-up in the capacity utilisation at Morpeth and NPIL UK, NIPL is well-positioned to exhibit strong growth both in the domestic market and internationally.
- Further, with the operations of Avecia, turning profitable and the Rhodia business having been shifted to India, the margins of the company should show improvement.
- Considering the strong revenue flows and enhanced profitability picture for the coming years, we remain positive on the company. At the current market price of Rs 265, NIPL is quoting at 15.7x estimated FY2008 earnings.
- I maintain Buy recommendation on the stock with a price target of Rs 393.
