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Shasun Pharma-Multi-Bagger

(May not be useful for Day-Traders)

BSE: 524552 | NSE: SHASUNPHAR

After 3 years of consolidation Shasun Pharma is now ready to move into a substantive growth phase with a slew of product launches that include Telapravir and Streptokinase to it's existing pipeline of Ranitidine and Ibuprofen.

The US based pharma major Vertex Pharmaceuticals recently announced that the USFDA's antiviral drugs advisory committee voted in favour of approving Telaprevir as a treatment for Hepatitis C Virus (HCV). The FDA's decision on Telaprevir's approval status is expected shortly. FDA usually follows the advice of the advisory committee although it is not binding.

Shasun would be supplying input materials to Vertex for Telaprevir for a period of 4 years which is expected to drive earnings.

Potential market size for Telaprevir is expected to be US $ 2 Bn. Shasun would be able to add $ 35 mn to it's top-line owing to Telaprevir.

On the bottomline, an incremental EPS of Rs 16 is likely to get added from this opportunity.

Taking into consideration the option value for Telaprevir at a multiple of 3XFY12E, we arrive at a target price of Rs 126.

BUY

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.