Shares of Kilpest India have surged close to 100% in just the last two months, analysts at Nuvama see the stock going further up as they note that the company has a strong network of dealerships, sticky
customers, and a presence in 35 countries.

The Kilpest Analyst: Thakur Ranvir Singh for Nuvama initiated the ‘buy’ rating on the stock with a price target of ₹1,184. The target indicates an around 46% upside from the current market price of around ₹807.

The Kilpest Thesis: The brokerage noted that while the company started out as an agrochemical business its foray into the molecular diagnostic business has been a notable change. The domestic brokerage highlighted that the diagnostic business clocked 46% CAGR (compound annual growth rate) in the last five years (FY18–23) and contributed over 80% of revenue in FY23 from 33% in FY18.

The firm said that the company can now be recognised as a diagnostic player. The analyst expects
the company to sustain healthy growth in the molecular diagnostics business led by product launches, acquisition of new customers, and geographical expansion.

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The brokerage firm stated that they expect the Indian molecular diagnostics market to grow from $0.95 billion in 2022 to $1.6 billion by 2030 (7% CAGR). The firm estimates that the company’s addressable market stands at ₹300–400 crore.

The firm noted that currently, Kilpest commands a 10–12.5% market share which “offers it a huge growth potential on the strength of its in-house enzyme production and bulk procurement of other components that gives it a competitive edge.”

“Despite the recent run-up, Kilpest is available at a discount of 51% to the average P/E (price to earnings )ratio of two prominent diagnostic players: Dr. Lal PathLabs and Metropolis Healthcare,” the brokerage firm added.

Price Action: Kilpest’s share price was down 4.20% to trade at ₹805 in early trade on Tuesday.

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