Have you invested in Merck stock price; the company gave 170% return in 1 year

When domestic indices took heat last week, there was one stock price which turned out to be different from the trend of exchanges. It is always believed stock market investment is for those who are patient, and if you are an investor in Merck than definitely your good days have arrived for you. Merck is one of the leading science and technology company in healthcare, life science and performance materials. Founded  in 1668, Merck is the world's oldest pharmaceutical and chemical company. On Friday, the stock price of Merck surged by nearly 13% before ending at Rs 2,565.25 per piece above Rs 226.55 or 9.69% on BSE.

Interestingly, on the same day Merck clocked a new high of Rs 2,640 per piece.

With this new high in 1 week, Merck stock  price has risen by Rs 633 or 31.54% last week. And in 1 year the company has managed to give a whopping 170.21% return to it’s investors.

The stock price had clocked low of Rs 977 per piece, and from it the company has managed to grow by 2 folds.

The business module of Merck is quite promising which can be one reason for investors faith in the company. Merck follows a calendar year for reporting it’s financial performance.

Merck’s pharma segment’s revenue grew 14%YoY to Rs 2.24 billion in C4FY17 from Rs1.96 billion due to re-stocking by trade post successful GST implementation.

Merck is a pioneer in the vitamin segment, with three major brands Neurobion, Polybion and Evion. Evion does not fall under the National List of Essential Medicines (NLEM) and hence its price hasn’t been capped. The company’s chemical business (26% of revenues) grew by 27%YoY.

Merck is a debt-free company and had cash/share of ~Rs170. Merck has provided Rs172 million as impairment charges on power plant.

Considering the above, Merck’s new high has even managed to surpass analysts target price for 12 month.

Many analysts are optimistic about Merck in CY19 as well.

Ranjit Kapadia analysts at Centrum earlier said, “e expect the company’s performance to improve further. Merck’s major brand Evion and API vitamin E are out of price control. However, its major CVS brand Concor is under price control.”

Analysts at ICICI Securities said, “ We expect ~13% revenue CAGR in CY16-19E on the back of ~15% growth in domestic pharma and ~7% growth in chemical business. Among MNCs, the stock is available at an attractive valuation of 17.6x CY18E EPS of Rs 68.2 and 14.6x CY19E EPS of Rs 82.2.”

However, IDBI Capital said, “Merck India is a debt-free company and has seen its RoEs improving from 13.5% in CY17P to 16.3% in CY19E.The key upside risks to our call would be 1) higher-thanexpected domestic-sales growth on the back of price hikes and new product launches, 2) pick up in the injectable space which is a high margin segment.”