Wockhardt Is Still A ‘Buy’ Candidate

We had recommended Wockhardt in our Mindshare column of August 7 and again on August 27 with a ‘buy’ call on it. Our primary target of Rs 1,320 has been achieved by the scrip. We also covered the full analysis of the company in the latest issue of our magazine Dalal Street Investment Journal. The scrip at a price of Rs 1,407 has posted handsome gains and this has been so despite having recently been moved to the ‘T2T’ category. This indicates that the scrip is supported by strong fundamentals and there are no speculations in the counter. We believe that the scrip will move out of the ‘T2T’ category soon.

The company has recently received final approval for a generic version of anti-depressant drug called Wellbutrin SR. The market for this drug is USD 268 million. Prior to that, it also received USFDA’s approval for the generic versions of Parkinsonism drug Requip XL (USD 58 million) and anti-psychotic drug Geodon (USD 1.3 billion). Overall it has received six approvals over the last 15 days which have kept its shares surging and beating its peers.

We believe that on a conservative basis its shares could touch a target of Rs 1,591 and hence it is still a ‘buy’ candidate. Looking at the rally in the stock, the stock will try to attain an aggressive valuation and therefore remains a re-rating candidate. We believe that there is about 15 per cent return still left in the stock on a conservative basis and one should buy the stock on every dip. The rally suggests that we have been proven right about our recommendation.