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Buy, Hold, or Accumulate? Decoding Aarti Pharma India's Investment Worthiness

aarti pharmalabs

Aarti Pharma India: A Mid-Cap Gem with Long-Term Growth Potential (Analyst Rating: 7.8)

Executive Summary:

Aarti Pharma India, a mid-cap player in the Indian pharmaceutical sector, presents a compelling opportunity for long-term growth investors. Strong financials, diversifying product lines, and favorable industry tailwinds underpin its potential. While near-term volatility remains a possibility, the long-term outlook appears promising.

  • Sector and Market Analysis:

  • Sector: Pharmaceuticals

  • Current Market Cap: ₹4,554.41 crore

  • Microeconomic Factors: Rising domestic demand, government initiatives to boost local pharma production, and increasing adoption of generic drugs are key drivers.

  • Macroeconomic Factors: Global economic uncertainties and currency fluctuations pose challenges.

  • Benchmark Indices: Nifty Pharma Index, S&P BSE Healthcare Index

  • Rating: 7.8 on a scale of 1-10 (Moderate Buy with Long-Term Upside)

  • Hold existing shares: Existing investors are advised to stay invested for the long term.

  • Consider accumulating on dips: Near-term price corrections could offer attractive entry points.

  • Monitor key risks: Keep an eye on global uncertainties and regulatory changes in the pharma sector.

  • Mid-term (1-2 years): ₹625-675

  • Long-term (3-5 years): ₹850-1050

  • API Manufacturing (60%): Anti-infectives, anti-malarials, and anti-retrovirals are key products.

  • Contract Research (20%): Services include drug discovery and clinical trials.

  • Finished Dosage Forms (20%): Tablets, capsules, and injectables for domestic and export markets.

  • Historical CAGR (5 years): Stock: 90.57%, Nifty Pharma: 14.02%

  • Predicted CAGR (5 years): Stock: 18-22%, Nifty Pharma: 12-15%

  • Beta vs. Nifty and Nifty Pharma: 0.59 (less volatile than Nifty and Nifty Pharma)

  • Debt-to-Equity: 0.65 (manageable)

  • P/E Ratio: 24.1 (slightly premium but justified by growth prospects)

  • Sortino Ratio: 1.25 (indicates strong risk-adjusted returns)

  • PEG Ratio: 0.85 (undervalued based on expected growth)

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