At CMP, adjusting for R&D pipeline/Zetia launch, the stock trades at 15x FY16E core-EPS of R43; 25% discount to larger peers like Cadila. We raise our target PE to 17x (from 15x earlier) to factor in strengthening US franchise. Maintain Buy with revised TP of R800 (17x FY16E EPS + R70 for R&D/Zetia launch) versus R688 earlier.
We expect US revenue to grow 23% (in USD terms) in FY16 led by potential launches Finacea, Micardis HCT, Yaz, Yasmin, and Ortho-Tri Cyclen. Further, Zetia (180-day exclusivity; launch in December 2016) and oncology injectables would drive FY17 growth. GNP, over past 2-3 years, has focused on niche filings in areas like complex injectables, oncology injectables, immunosuppresants, apart from strengthening its derma and oral contraceptive basket. We believe the benefits of these would accrue with a lag of 2-3 years (FY17 onwards), thus providing visibility to US growth.