Shares of Poly Medicure jump 9%

Shares of Poly Medicure Ltd. surged early on Wednesday after Investec initiated coverage on medical devices maker with a ‘buy’ rating.

The brokerage set the target price of Rs 1,690 apiece, implying a return of 18.7% from Tuesday’s closing price.

The largest Indian exporter of consumable medical devices is set for strong earnings (29% Ebidta and 31% EPS CAGR over FY23-26) trajectory, as it capitalises on multiple industry tailwinds in the form of government support, import substitution and China plus one in export markets, the brokerage said in an Aug. 22 report.

Highlights

• The company has favourable macros conducive for long-term growth.
• Poly Medicure is one of the approved applicants under two PLI schemes for medical devices.
• With two-third sales from exports and distribution across over 120 countries, company is also a beneficiary of China plus one theme.
• Its exports growth is set to accelerate to 22% CAGR (FY23-26).
• Company is constructing four new plants that will double its current capacity.
• These new plants will be commercialised over the next 12 months and will be fully ramped-up by FY27.
• This should aid strong growth both in India as well as exports.
• New therapies and U.S. ramp up to drive growth diversification beyond consumables.
• Its foray into renal/diagnostics/others has reduced its dependence on infusion (which is more than 65% of revenue) and should reduce further.
• Europe is one-third of total sales. Expects U.S. to contribute 8-10% of company’s FY26 sales.
• With recent approvals in the U.S. for two products (five to seven approvals expected) and a strong growth outlook, the region is set to gain prominence.
• Company’s strong brand equity will help cross-sell and aid deeper penetration in India.
• It is amongst the top three manufacturers of IV cannula in the world, with over 250 distributors.
• Significant expansion in export markets (to over 120), hospitals reach (over 6,500), new product launches and sales force increase led to sales CAGR (FY16-23) of 15% and better PAT CAGR of over 20%.

Shares of Poly Medicure surged 9.50%, before paring gains to trade 6.58% higher at 10:10 a.m. This compares to a 0.07% decline in the NSE Nifty 50.

The stock has risen 70.7% on a year-to-date basis. The total traded volume stood at 7.6 times its 30-day average. The relative strength index was at 71, implying that the stock may be overbought.

Of the five analysts tracking the company, three maintain a ‘buy’ rating on the stock, while two suggest a ‘hold’, according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 2%. BQ Prime