Shares of Concord Biotech fell on Monday, April 29 after Citi revised its target price, citing revenue and EBITDA concerns, while maintaining a 'Neutral' rating on the stock. Shares dropped 1.84% intraday to Rs 1,061.8 apiece. The scrip was trading 0.67% lower by 10:17 a.m. The benchmark NSE Nifty 50 was down 0.18%.
The brokerage, in its recent note, sharply cut the target price to Rs 1,190 from the previous target of Rs 1,680. Notably, the latest target price marks a 10% upside from the previous closing of Rs 1081.7.
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Citi's target price is among the lowest, according to analysts tracked by Bloomberg. The brokerage has revised down earnings per share by 20-23% for FY26-27, which primarily highlights a deceleration in both Active Pharmaceutical Ingredients (API) and formulations revenues, which has subsequently led to a compression in EBITDA margins.
According to the company, growth in the nine months of FY26 was impacted by temporary headwinds such as tariff-related uncertainties, tender deferrals in the Middle East, and delays from Central Drugs Standard Control Organisation (CDSCO). However, the note cites the slowdown to adverse competition in certain products. Hence, it lowered the FY27-28 revenue growth forecasts from 17-18% to 14% YoY.
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While maintaning a 'Neutral' rating on the stock, the note metioned that Concord is one of the few companies that was able to scale up in the fermentation segment where the entry barriers are significantly high. The company is likely to have a long runway of growth due to several reasons such as -
- Favourable industry tailwinds such as a growing number of organ transplants, increasing generic penetration in select fermentation APls, high entry barriers and low competitive intensity.
- Strong execution while gaining market leadership in key immunosuppressants
-Built a comprehensive product / customer basket and quality track record.
- Large manufacturing facilities.
The key upside risks that could cause the stock to trade above target price include sharp pick-up in supplies from new facilities, margin expansion; and significant scale-up in formulations segment. Some of the downside risks that could affect target price include slowdown in APl growth due to competition, impact on margins; and slow ramp-up at new facilities.
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