Kotak Institutional Equities has downgraded Concord Biotech to “reduce” with a target price of Rs 1,950. According to Kotak, the company’s overall topline growth over the past few quarters has been driven primarily by the low-margin formulations segment, which they believe is not the ideal mix.
Kotak also noted that after a slightly below-par API growth print in FY2024 and 1QFY25, they expect a pick-up from 2QFY25. While the company has been witnessing a higher inflow of RFQs in the CDMO segment, Kotak doesn’t foresee any major impact on overall earnings due to the minuscule scale of Concord’s CDMO business, which contributed less than 1% to FY2024 sales.
Furthermore, Kotak pointed out the sharp 32% rally in the stock price over the past month, which has made valuations expensive.
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