02-04-2024 02:18 PM | Source: Sushil Financial Services
Buy Venus Remedies Ltd. For Target Rs.388 By Sushil Financial Services

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Deleveraging product portfolio: Anti-infectives have been the core portfolio for Venus Remedies, with the majority of the sales coming from this segment. The company doesn’t want a concentrated product portfolio and as a result, it is increasing its exposure in other segments like oncology, anticoagulants etc. This could lead to higher margins, as anti-infectives is a highly competitive segment.

On the domestic front, the company has made significant inroads into government institutions and corporates with a focus on tender participation. Its products are registered in 10 institutions and it plans to add 10 more in FY24. Also, recent registration in government medical stores is likely to contribute to the revenue.    

The Over-the-counter market in pharma is expected to grow in the high teens over the next 3-4 years. The COVID-19 pandemic has heightened the attention on health and nutrition, especially ensuring adequate immunity and energy levels to address current health concerns. The company launched its first product in the consumer healthcare space, R3SET – a Pain Management solution to capture the growth opportunity in the OTC space. Reset is a holistic pain management solution that ensures maximum efficacy and long-term healing by combining essential oils with nanotechnology. It has fulfilled around 4,000 orders and has the aim to reach about 1lakh customers. The company has collaborated with expert physiotherapists and orthopaedicians to address lifestyle-related issues that give rise to pain-related problems. It aims to introduce a range of disruptive products like gastroenterology, hygiene, stress management, vitamins, and supplements over the next 4-5 years.

Expansion of geographical footprint: The international business primarily focuses on therapeutic segments such as Antibiotics, Anti-coagulants and Oncology. Exports contribute more than 70% of the total revenue of the company with a presence in over 80 countries with niche products like injectables for critical segments like antimicrobial resistance, oncology and anticoagulants. The company has consistently raised its dominance in the markets by securing government tenders with competitive bidding and also through marketing tie-ups with leading pharmaceutical companies globally. Entry into developed countries has been challenging esp. for the small pharma players, therefore the company is focusing on emerging economies like the Middle East and South East Asia region. The company believes that emerging markets will emerge as key growth engines for the future. Going forward, it plans to expand its global presence to 100 countries and file new dossiers in key markets to achieve an overall turnover of Rs.1,000cr by FY26. 


The company has paid up its dues and with a clean balance sheet and investments in R&D and new products, it is poised for the next phase of growth. With the strengthening of international presence, change in the product mix and use of technology leading to higher operating efficiency, we forecast Venus Remedies revenue/PAT to grow at 14%/20% CAGR over FY23-26E. At the current market price, the stock is trading at an attractive level of 8.4x P/E on FY26 EPS. Going forward, we expect the company to deliver an EPS of Rs.36.9 in FY26; assigning a target multiple of 10.5x, we arrive at a target price of Rs.388 showcasing an upside potential of 25% from current levels with an investment horizon of 18-24 months.


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