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StoxBox: Buy Aarti Drugs for 16% Upside

StoxBox has issued a "Buy" rating for Aarti Drugs Limited, projecting a target price of INR 602, reflecting a 16% upside from the current market price (CMP). This recommendation is based on a valuation of 23x FY26e earnings and highlights the company's solid growth prospects over the next 12 months.

According to Manish Chowdhury, Head of Research at StoxBox, “Aarti Drugs is strategically positioned in the pharmaceutical industry with its extensive portfolio of over 50 compounds. The company's significant presence in key therapeutic segments and its robust global footprint underscore its potential for substantial growth. Our target price of INR 602 reflects our confidence in Aarti Drugs’ ability to capitalize on its innovative capabilities and operational strengths.”

Aarti Drugs, a global pharmaceutical company, generates 33% of its revenue from exports, with major markets being North America, Latin America, and Africa. The company operates nine manufacturing plants in Tarapur and two in Sarigam, adhering to stringent quality standards and regulatory approvals. Aarti Drugs' revenue has grown at an 8.8% CAGR from FY2020-24, with diversified revenue streams including anti-biotics, anti-protozoal, and anti-diabetics. Recent capacity expansions and new product launches are expected to boost revenue by INR 400-500 crores over the next three years.

Manish adds: “With ongoing capacity expansions and strategic new product launches, Aarti Drugs is well-positioned to enhance its market share and operational efficiency. The company’s focus on innovation and its expansive global market presence provides a solid foundation for achieving our projected growth targets.”

With a strong track record, significant capital expenditure plans, and a focus on expanding its product offerings and export markets, Aarti Drugs is well-positioned for future growth.

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