Buy Pancea Biotech – Kotak and DSP Merill Lynch

Kotak Securities and DSP Merill Lynch have put a BUY recommendation on Panacea Bio tech with a price target of Rs 513.

Panacea’s net sales rose 55.4% driven by 64% growth in vaccine sales and 32% growth in formulation sales. The Novartis-Pancea joint venture has registred a 100% growth in sales. Net Profit after tax rose sharply 149% to Rs 1.48 bn against Rs 529 mn. EBITDA margins expanded to 27.8% against 22.1% in FY06. The company reported fully diluted EPS of Rs 22.4

For FY08 and FOY09, Kotak expects Panacea to report EPS of Rs 31 and Rs 35 respectively. Kotak and Merill Lynch both maintain a BUY with a price target of Rs 513.