The management expects the impact of new launches to be limited in FY15 but growth to be driven by market-share gains in existing products.
We retain our buy rating on the stock. Concern on earnings growth slowdown in FY15 is a good opportunity to accumulate, in our view. We expect acceleration in earnings growth with EPS growth at 3%, 17% and 27% for FY15F, FY16F and FY17F, respectively. Earnings surprises and P/E expansion over the next 12-18 months may be driven by: a) clarity on the R&D development pipeline; b) visibility on the US pipeline there is uncertainty on ~33 ANDAs with sales of $8 billion out of 62 pending filings; c) market-share gains and pricing in the US on specific products; d) sustained growth in India and other EMs; and e) surprise in PSAI as segment gross profit is at an eight-year low.
We make marginal change in our estimates (+1%) and reset our 12-month target price at R2,913, based on 18x one-year forward EPS of R162.