Share of Solara Active Pharma Sciences has risen 175% since the beginning of this year to a new 52-week high of Rs 1,245 today, on the back of heavy volumes.
Solara Active Pharma Sciences stock gained 18.55% intraday to hit a new 52 week and an all-time high of Rs 1245 in Wednesday's trade against the last close of Rs 1,050. The stock opened with a gain of 8.08% today at Rs 1,135 and also touched day's low of Rs 1,120.
Stock price of the company, which was a formed after a demerger of human API segments Strides Pharma and Sequent Scientific in 2018, has gained after 2 days of consecutive fall.
Shares of Solara Active Pharma Sciences have soared 8% in the last week in comparison to the S&P BSE Sensex that increased 4% in the same period. In the past 1 month, the stock price of Solara Active Pharma Sciences has rallied 20% against the 3.69% rise in the S&P BSE Sensex.
The stock has traded in a wide range of Rs 125 during today's session. Solara Active Pharma shares are trading higher than 5, 20, 50, 100 and 200-day moving averages. The market capitalisation of the stock stood at Rs 4,120 crore.
Macquarie brokerage house initiated an 'Outperform' rating on Solara Active Pharma at a target price of Rs 1680/share and said that the company's steadfast long-term focus is its key success mantra. With major capex behind, FCF generation is expected to significantly improve. It added that Solara is still among the cheapest API stocks available globally.
"Over the medium term, we expect Solara's top-line growth to accelerate, led by commissioning of the Vizag facility, CRAMS, expansion to new markets and ramp-up of product filings. We assign Solara a 13x Sep-22 EV/EBITDA target multiple, which is still at a significant discount to most of its global and Indian API peers, and incorporate risks like a high client and portfolio concentration. Our TP implies 12% revenue and 16% EBITDA CAGRs over FY20-30E. Our bear/bull cases derive values per share of Rs1,320/ Rs2,064," the brokerage said.
Similarly, credit rating agency CRISIL, on September 25, 2020, upgraded the rating for the long and short term instruments. CRISIL said the rating upgrade reflects its belief that Solara's business risk profile will improve over the medium term supported by its established market position in key active pharmaceutical ingredients (APIs).
"The ratings reflect Solara's established market position in its key APIs, such as Ibuprofen and Praziquantel, and strong relationships with its customers and suppliers. The company successfully commissioned the first phase of its new plant at Visakhapatnam in Andhra Pradesh. Revenue growth will be supported by steady demand for its existing products and increasing sales of new products over the medium term," the brokerage added.
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