Author: root

1. Syngene Internatioal:

ICICI Direct has suggested to buy Syngene for a price target of Rs. 780, implying an 25% upside from the last traded price of Rs. 628.15. The price at the time of recommendation of the innovation-led contract research, development and manufacturing organization was Rs. 627.7.

Company profile: The company offer integrated scientific services from early discovery to commercial supply. It is one of the largest listed contract research organisations (CRO) in India

Financials: Revenue breakup: Discovery services (35%), dedicated services (32%),development and manufacturing (33%)

Q1FY22 Results: Syngene reported mixed Q1FY22 results. Revenues grew 41% YoY to Rs. 658.5 crore amid lower base, normalisation of all verticals and manufacturing of Remdesivir. EBITDA margins contracted 178 bps YoY to 27.8%, owing to change in product mix. Consequent PAT was at Rs. 77.3 crore (up 33.3% YoY)

Here’s advice on the Syngene International for investors

ICICI Direct report says Syngene’s share price has grown by ~2.9x over the past five years (from Rs.| 201 in June 2016 to Rs. 583 levels in June 2021). Due to the structural story of outsourcing, we remain positive and retain our BUY rating

Target Price and Valuation: We value Syngene at Rs. 780 i.e. 50x P/E on FY23E EPS.

Tailwinds for the company

-Guidance of double digit revenues growth for FY22

– Elite clientele including the likes of Amgen, Zoetis, Herbalife, GSK, etc, and• multiple year extension of BMS, Baxter contracts, the company remains well poised to capture opportunities in the global CRO space

– Eight of the top 10 global pharma companies have been availing services

for the last five years The client base has grown from 256 to more than 400 over FY16-21

2. Hindustan Unilever:

After the earning results of HUL have been out for the Q1Fy 22 period, ICICI Direct has placed the buy call on the stock for a price target of Rs. 2750, from the last ended price of Rs. 2358, implying an upside of 16.62%.

The company is the leading fast moving consumer goods company of the country with as many as 40 brands across segments in its kitty. The company is the market leader in fabric wash, personal wash, cosmetics, shampoos and many other categories. The company has a distribution reach of ~8.0 million (mn) outlets with a direct network of more than 3.5 mn.

Acquisition of GSK Consumer

HUL acquired GSK Consumer Healthcare’s business in 2019 and integrated•Horlicks and Boost brands with the foods & refreshment segment

Q1FY22 Results: HUL reported dismal Q1FY22 results. Sales were up 12.8% YoY with muted 9% volumes growth on a low base. EBITDA was at Rs. 2847 crore, up 7.7% YoY, with margins at 23.9%. Consequent PAT was at Rs. 2061 crore (up 9.6% YoY).

ICICI Direct take on HUL Scrip

HUL’s share price has gone up by ~1.5x over the past five years (from Rs. 922 in July 2016 to Rs.| 2388 levels in July 2021). We roll over FY24 numbers givenCovid-19 related disruptions have temporarily impacted financials & FY23-FY4 would be a normalised year. We continue to remain positive and retain our BUY rating on the stock.

Target Price and Valuation: We value HUL at Rs. 2750 i.e. 55x P/E on FY24E, said the brokerage firm in its report.

Integration of Nutrition business, Visible prospects in Fabric wash-Good Triggers

– Synergistic benefits of integration of nutrition business (Horlicks & Boost) to drive margin expansion.

– Strong visible premiumisation trend, specifically in fabric wash

– Direct distribution reach to get further enhanced, going forward

– Strengthen manufacturing capacity (1.3x of pre-Covid) to tap demand recovery

– Digital initiatives are capturing more than 10% of the business

Disclaimer:

Stock market investment is risky and it is iterated time and again that to reap significant gains you need to remain invested in them and also be prepared for the losses if any. So be mindful the stocks listed here are taken from brokerage report and need not be construed as investment advice.

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