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HDFC Sec Bullish on Wockhardt

August 6, 2007

HDFC Securities in a Research Report has put a BUY recommendation on Wockhardt with a price target of Rs 570. Last week, we had reported that Citigroup also had a BUY recommendation on Wockhardt with a Price Target of Rs 530.

HDFC Securities is bullish on Wockahrdt’s prospects, especially in the European market where it is the largest Indian company. Currently, the company derives more than 50% of its revenue from the European market. It has also ramped up its US business by introducing a number of generic products here. Last year, its US business grew by more than 50% and is expected to perform extremely well in the next two years on the back of strong New Drug Applications which are in pipeline.

Wockhardt is also active in New Chemical Entity research. Its proprietary molecule, WCK 771 is currently in phase II. The company has started capitalizing on the opportunity offered by CRAMS (Contract Research And Manufacturing).

Wockhardt is expected to report an EPS of Rs. 35.1 for CY07 and Rs 43.9 for CY08. The stock currently trades at a forward PE of 10.6x and 8.5x respectively. The stock is trading at a steep discount to its peers. HDFC Securities recommends a BUY, with a price target of Rs 570 based on a PE of 13x on the CY08 expected EPS of Rs 43.9

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