Concord Biotech Hits Record All Time High After Jefferies Sees 19% Upside, Initiates ‘Buy’ Call
Concord Biotech witnessed a remarkable surge, with its shares climbing 8 percent to reach a record high of Rs 1,177.00 on October 6. This impressive upswing came as foreign brokerage firm Jefferies initiated a ‘buy’ call on the pharmaceutical company.
Jefferies maintains a bullish stance on Concord Biotech, citing the company’s extensive portfolio and ample capacities as driving forces behind its industry-leading revenue growth and enhanced operating leverage. In light of this, the brokerage firm set a price target of Rs 1,260 for the stock, which reflects a substantial 19 percent upside potential from the closing price on Thursday.
As of 11:41 am, shares of Concord Biotech were trading 4.10 percent higher at Rs 1,134.55 on the NSE.
Jefferies anticipates steady growth in Active Pharmaceutical Ingredients (APIs) and a significant upturn in formulations, particularly from a low base, as the principal growth drivers for the company throughout FY23-26.
The brokerage firm also expects Concord’s growth to be diversified in the coming years. According to Jefferies, as Concord benefits from increased capacity utilization, its EBITDA margins are projected to improve to 43.5 percent by FY26, resulting in a 30 percent Compound Annual Growth Rate (CAGR) for Profit After Tax (PAT), reaching Rs 520 crore over FY23-26.
The report stated, “Given improved capacity utilization, Return on Capital Employed (ROCE) is expected to expand from 23 percent in FY23 to 25 percent in FY26.”
Furthermore, Jefferies favors Concord Biotech over its peer Glenmark Life Sciences, citing Concord’s superior growth profile, strong track record of execution, industry-leading margins, and return ratios.
Jefferies’ coverage initiation of Concord Biotech comes just over a month after the company made an impressive debut on the stock exchanges. The stock commenced trading with a 21 percent premium to its issue price on August 18. Since then, it has witnessed a substantial increase of nearly 13 percent.
