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Concord Biotech stock surges 12% on high volumes

Stocks
2 min Read Aug 29, 2024
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Concord Biotech has been a star performer on the stock market in recent times. The stock surged over 12% today, reaching a new all-time high of Rs 1,815 on the National Stock Exchange (NSE). This impressive rise is due to strong growth prospects and increasing optimism from analysts.

Key drivers of Concord Biotech's growth

Choice Broking, a leading brokerage firm, is bullish on Concord Biotech's future, citing several factors that are expected to fuel the company's growth:

  • Robust product pipeline: Concord Biotech boasts a strong pipeline of products, which is expected to drive its top-line revenue at a compound annual growth rate (CAGR) of 25% over the next 3-5 years. This signifies a consistent flow of new offerings that should keep the company's revenue stream healthy.

  • Expanding API and formulations segment: The company's API (Active Pharmaceutical Ingredients) and Formulations segment is witnessing positive developments with new product launches and its foray into injectables. This expansion strengthens Concord Biotech's market position in this crucial segment.

  • Operating leverage and margin expansion: Choice Broking highlights Concord Biotech's underutilised capacities as a significant opportunity. As the company scales its operations to better use these capacities, it is expected to achieve operating leverage and margin expansion. This translates to higher profitability without a substantial increase in operating costs.

  • Exploration of CDMO segment: Concord Biotech's exploration of the Contract Development and Manufacturing Organization (CDMO) segment is another exciting prospect. The CDMO market is experiencing significant growth, and Concord Biotech's entry into this space holds the potential to accelerate the company's overall growth trajectory.

Analyst estimates and target price

Based on these positive factors, Choice Broking estimates a healthy CAGR for revenue, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and PAT (Profit After Tax) over the next three years. They have set a target price of Rs. 1,691 for the stock, valuing it at 36 times FY26E EPS (Earnings Per Share). Additionally, they have maintained a "buy" rating on Concord Biotech, indicating their confidence in the company's future performance.

Concord Biotech's outperformance

It's important to note that Concord Biotech has already delivered impressive returns to its investors. In the past year, the stock has surged a staggering 76%, significantly outperforming the benchmark Nifty, which rallied 30% during the same period. This uptrend reflects the market's growing recognition of Concord Biotech's potential.

ConclusionConcord Biotech appears to be a well-positioned company with a bright future. Its strong product pipeline, expanding segment presence, potential for margin improvement, and exploration of the lucrative CDMO market are all factors that bode well for its growth. For those wanting to invest in stock, Concord Biotech should definitely be kept an eye on - considering analyst optimism and a history of outperformance.