Pharmaceutical drug manufacturer, supplier, and exporter, Medico Remedies Ltd., has been recommended by analyst Nikhil Bhatt for a short-term buy. Founded in 1994, the company is WHO-GMP- and ISO 9001-2015-certified and has hygienic production facilities located in Palghar, India. Medico Remedies has been profitable since 2014 and has shown consistent growth in its overall sales.
The stock was consolidated between Rs.70 to 80 after the split and has confirmed a breakout by making a new 52-Week High recently.
The company’s stock price has shown an impressive 400% compound annual growth rate and has room for further growth after a recent stock split. Medico Remedies has been effectively using shareholder funds for its business-related activities, resulting in an improving return on equity (ROE) over the last two years.
Bhatt recommends buying the stock at its current market price and holding it for the short term, with a target price of Rs. 120 and a stop-loss of Rs. 63. The stock has shown a positive breakout near the first resistance and its relative strength index (RSI) indicates price strength, making it a suitable option for buying. Although the stock may be overvalued compared to its peers, Medico Remedies’ annual net profit rose 88.7% in the last year to Rs. 4.9 crores. Its sector’s average net profit growth for the last fiscal year was -7.9%, which justifies its higher valuation.
Medico Remedies has a huge recurring customer base in more than 35 countries worldwide, thanks to its state-of-the-art manufacturing plants and latest R&D facilities. The company’s revenue was $17 million in the trailing twelve months.
The company’s promoters own a significant 73.34% stake in the company and have not pledged any shares for short-term borrowing. The company has an interest coverage ratio of 11.7, meaning it can comfortably meet its interest payments with its earnings.
Overall, the analyst’s report recommends Medico Remedies as a suitable mid-to long-term investment option for those starting to accumulate close to the current market price. The fundamentals and technicals of the company have made the stock immune to the bearish market, with the shareholding its price without plunging like its peers. Additionally, the pharma sector has shown a decent recovery in the past five trading sessions, adding more momentum to Medico Remedies in the upward direction.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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