Orchid Pharma: Investec initiates coverage with 'buy', sees 23% upside – 5 key reasons
Orchid Pharma (ORCD) rising another 23 percent in the next 12 months. The brokerage has initiated coverage on the stock with a ‘buy’ call and a target price of ₹800. ORCD is poised for robust growth in the next three years under the leadership of the new management, Dhanuka Group, effectively implementing a turnaround strategy and capitalising on ORCD's strengths in Cephalosporin APIs.
Management efforts have significantly boosted EBITDA over the past three years while reducing leverage, said the brokerage. It also pointed out that the addition of the Production Linked Incentive (PLI) for 7ACA enhances ORCD's position in the Ceph API market. The brokerage predicts a substantial over 35 percent EBITDA Compound Annual Growth Rate (CAGR) for the core business (excluding PLI) from FY23 to FY26.
Additionally, various strategic options, such as a global New Chemical Entity (NCE) launch, entry into India Branded business, collaboration with Shionogi for Contract Development and Manufacturing Organization (CDMO), and re-entry into the US market, could propel ORCD to new heights, added Investec. The stock has jumped 67 percent in the last 1 year and 86.5 percent in 2023 YTD, giving positive returns in 7 of the 12 months so far. It has advanced 15 percent in December so far, extending gains after a 21 percent rise in November.
However, it was in the red in the 3 months prior to that between August and October, down 18 percent. In 2023, it shed the most in October, down almost 12 percent and rose the most in November, up 21 percent. The stock hit its 52-week high of ₹678.40 last week on December 8, 2023.
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