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Equity99
IOL Chem (Buy)
CMP: ₹123.55
Target: ₹150
The shares of IOL Chemicals & Pharmaceuticals (IOLCP) are trading at around a PE of 18x on its EPS (TTM) of ₹6.96 a share. The stock is available at a discount compared to industry PE of 31.32x. It is quoting at 1.62x of Sales/MCap ratio which is very cheap considering its product mix and capacity expansion plans. We have broadly revised our earnings estimates on higher side for FY19E and FY20E.
Company is consistently showing better performance and it is beating our estimates. IOLCP is adding its capacity rapidly to benefit most from global shortage scenario. On the margins front, the management expects strong margins due to strong demand in its flagship product Ibuprofen.
We are expecting revenue to increase by 60 per cent in FY19 and 25 per cent in FY20. PAT can double in FY19E and about 70 per cent rise is expected in FY20E. We are maintaining our ‘Buy’ recommendation with a revised price target of ₹250 (valuing at 20x its FY19E EPS).
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