Motilal Oswal Recommends To 'Buy' This Pharma Stock For +30% Upside, While Equity Market Is Down For Omicron

The equity market is down as the investors are concerned about the new variant of the Covid virus named Omicron, which was first reported in South Africa. However, the pharma stocks are outperforming other company stocks, as happened during the first two waves of the pandemic. Now, brokerage firm Motilal Oswal has recommended investors to buy stocks of Solara Active Pharma with a potential upside of 30%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of Solara Active Pharma is Rs. 1169. The brokerage firm, Motilal Oswal has estimated a Target Price for the stock at Rs. 1520. Hence the stock is expected to give a 30% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 1169
Target Price	Rs. 1520
1 year returns	30.00%

Company performance

The company's sales stood at Rs. 16.2 b, in FY 2021, and Motilal Oswal is expecting Rs. 23.6 b sales in FY22 and Rs. 27.5 b sales in FY 23. on the other hand, adjusted PAT was Rs. 2.2 b in FY 21; the firm is anticipating Rs. 3.6 b PAT in FY 22, and a Rs. 4.5 b PAT in FY 23. On account of reduced demand, Ibuprofen prices had corrected by 20-25% over the past 5-6 months, affecting the operating margins from this product. However, prices at the API level are now stable.

Comments by Motilal Oswal

Maintaining a buy rating Motilal Oswal said, "SOLARA is progressing well on building a niche product pipeline and broadening its presence in the regulated and ROW markets." The brokerage firm added, "Additionally, SOLARA is progressing well on ramping up the production of Isobutyl Benzene, a key RM used in the manufacturing of Ibuprofen. This would offset the drop in profitability, to some extent, over the near-to#medium term."

About the company

Solara Active Pharma Sciences is a dynamic, entrepreneurial, and customer-oriented API manufacturer. They have 140+ scientists working at their 2 R&D Centers, and 5 API manufacturing facilities armed with global approvals and 2 dedicated R&D facilities.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

(Also read: Sharekhan Recommends 5 Pharma Stocks To Buy For Upto 57% Upside: Why Should You Invest In Pharma Stocks?)

(Also read: Sharekhan Recommends To 'Buy' This Stock For +33% Returns, In 1 Year)