Thyrocare Tech surges 5% after Co authorises Dr. A Velumani to appoint CEO

Edelweiss Securities said it believed the company's business could bounce back by Q2FY21-end, but only in Sickness.
Shares of Thyrocare Technologies surged over 5.5 per cent on the BSE on Friday, a day after the company informed that its board has authorised Dr. A Velumani, Chairman of the company, to identify and appoint a suitable candidate as a professional chief executive officer (CEO) for the company.

At 11:32 AM, the stock was trading over 4 per cent higher at Rs 798 on the BSE as compared to a 0.09 per cent fall in the S&P BSE Sensex at 38,807 levels. The stock had hit a high of Rs 809.80 in the early trade, up 5.6 per cent against Thursday's close of Rs 766.70. 

"The Board also authorised Dr A Velumani to identify a competent candidate for the position of Managing Director, CFO, CIO, CAO, CMO and recommend to the board for approvals for terms and remuneration when a suitable candidate is identified for further approvals," Thyrocare Technologies said in an exchange filing on Thursday. 

"Covid-19 regime has changed the business mix for Thyrocare and impacted its profitability because of lower gross margin at 53 per cent (v/s 72 per cent YoY) due to the use of high-cost reagents for Covid test, aggressive pricing for Covid test; and increased employee cost at 16 per cent of sales (v/s 11 per cent YoY and 13 per cent QoQ)," analysts at Prabhudas Lilladher had observed in the company's Q1FY21 result review note issued on August 4. 

"We remain negative on the entire diagnostic chain due to possible structural change in the coming years and expensive valuation at Mcap/sales of 10.3x, PE of 60x (FY21E) and 40x (FY22E)," they had said.

The brokerage had a "SELL" recommendation on the stock with the target price of Rs 307 based on 18x of FY22E.

Edelweiss Securities, on the other hand, said it believed the business could bounce back by Q2FY21-end, but only in Sickness, whereas Wellness is likely to remain subdued for a longer duration. 

"The weaker-than-expected Q1FY21 performance prompts us to revise down FY21/FY22E EPS 26%/5%. However, given the robust long-term outlook, particularly on preventive healthcare, we raise our target multiple to 30x (from 25x). Maintain ‘HOLD’ with revised target price of Rs 650," the brokerage had said in a report dated July 31.

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