Buy Strides Shasun; target of Rs 1200: HDFC Securities
HDFC Securities’ research report on Strides Shasun
In another business restructuring, Strides Shasun (STR) has sold its India-branded business to Eris Life Sciences, for a consideration of Rs 5bn. The business contributed only ~5% to the total topline in FY17, and would have required significant investment to scale it up further. This is the second such business rationalisation by STR in FY18, along with the hive-off of the commodity API business. We believe that these divestments would help narrow STR’s focus on the high potential business segments, i.e. the US and Australia, where investments are now complete, and strong growth is expected to kick-in over FY18-20E.
Re-iterate BUY with a TP of Rs 1,200 (18x Sep19E + Rs 100/sh for Solara + Rs 30/sh for Biopharma).
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