(Rating: BUY, TP: Rs4,500, Upside: 18%)
A strong quarter; more to come - BUY stays
- While we would have ideally liked a more US driven beat in Q1, reckon it should rebound in subsequent quarters to 20% growth.
- Call commentary in sync with our thesis that even if ROW markets grow faster (which they will), overall margin trajectory should not inch lower. Reason being operating leverage would offset presumably reduced gross margin from ex-US markets
- Directionally, Gland would also pivot towards complex products which might be slower in terms of approval timeline but offer more durable growth beyond FY23.
- Introduced FY24 estimate and build in sustained revenue growth across core and ROW markets coupled with improved gross margin.
- Revise TP to Rs4,500 from Rs3,400 with bulk of it driven by roll over to FY24 EPS (+30% YoY) coupled with marginal bump in target PE to ~35x from 32x earlier as we are confident of 1) sustained revenue momentum beyond FY23 which should take care of margin trajectory and 2) asset turn efficiency to sustain ROCE.