Merck - Rating – Buy; Target Price – Rs840 - Centrum

- We expect Merck to report a revenue growth of 20.0%YoY but decline 3.1%QoQ to Rs2.01bn. Pharma sales are expected to grow by 19.6%YoY but decline by 11.5%QoQ to Rs1,305mn. The chemical business is likely to grow by 19.4%YoY and 16.5%QoQ to Rs750mn.

- We expect Merck's EBIDTA margin to improve by 50bps YoY to 15.6%.

- We expect Merck to benefit from NPPP as its API vitamin E and its second largest brand Evion (vitamin E) have come out of price control. The brand has annual revenues of ~Rs510mn.

- We expect the company to report 7.7%YoY growth in net profit to Rs216mn.

- Our target price of Rs840 is based on 14x Dec'15 EPS of Rs60.

Source : Equity Bulls

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