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.
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.
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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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