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Hold Merck; target of Rs 1080: Centrum

March 13
21:42 2018

Centrum Research’s report on Merck

We maintain our Hold rating on Merck with TP to Rs1,290 (earlier Rs1,080) based on 16x December’19E EPS of Rs80.6. Merck’s pharma segment (74% of revenues) reported 14%YoY growth in revenues due to re-stocking by trade post successful GST implementation. Its chemical segment (26% of revenues) posted 27%YoY growth due to higher off-take.

Outlook

At the CMP of Rs1489, the stock trades at 16.6x CY18E EPS of Rs65.6 and 18.5x CY19E EPS of Rs80.6 and 17.1X CY20E EPS of Rs87.0. We have retained our Hold rating on the scrip, with a TP of Rs1,290 (earlier Rs1,080) based on 16x December’18 EPS of Rs80.6 (earlier 14x CY17E EPS Rs76.9), and with a downside of 13.4%.

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