Concord Biotech hits record high after Jefferies initiates ‘buy’ call; sees 19% upside

Jefferies also prefers Concord Biotech over its peer Glenmark Life Sciences due to its superior growth profile, strong execution track record, industry-leading margins, and favourable return ratios.

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Shares of Concord Biotech surged 8 percent to hit a record high of Rs 1,177.00 on October 6 after foreign brokerage firm Jefferies initiated  ‘buy’ call on the stock. Jefferies remains bullish on the pharma company and believes its wide portfolio and adequate capacities would drive industry leading revenue growth and operating leverage. On that account, the firm rolled out a price target of Rs 1,260 for the stock, reflecting a 19 percent upside potential from Thursday’s closing price.

At 11.41 am, shares of Concord Biotech were trading 4.10 percent higher at Rs 1,134.55 on the NSE.

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The brokerage also feels that steady growth in APIs (Active Pharmaceutical Ingredients) and a sharp uptick in formulations, largely on a low base, as the major growth drivers for the company over FY23-26.

Jefferies also expects growth for Concord to be broad based in the coming years. “As Concord derives operating leverage benefit from higher capacity
utilization, its EBITDA margins should improve to 43.5 percent by FY26 and result in 30 percent PAT CAGR to Rs 520 crore over FY23-26,” the firm stated in its report.

“Given improved capacity utilization, ROCEs (Return on Capital Employed) should expand from 23 percent in FY23 to 25 percent in FY26,” the report stated.

Moreover, the firm prefers Concord Biotech over its peer Glenmark Life Sciences due to its superior growth profile, strong execution track record, industry-leading margins and return ratios.

The coverage initiation by Jefferies came in just over a month after Concord Biotech made a stellar debut on the bourses. The stock listed on the exchanges at a premium of 21 percent to its issue price on August 18. Since then, the stock has risen nearly 13 percent.

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