Book Partial Profit - Ind-Swift Lab

Ali On Content / 13 Sep 2010

The company is planning to invest USD 5 million to set up an NCE plant as per the USFDA guidelines and is strat-egizing to enter regulated markets like those of the US, EU, Australia, and New Zealand. 

Ind-Swift Laboratories (BSE Code: 532305) was our recommended company in our Low Priced Scrip column in Issue No 16 dated Aug 1, 2010. The stock was recommended for buying at the price of Rs 80 on the back of certain reasons at that point of time viz. it was trading at a very low P/E of 3.83x and was likely to catch up with the valuations going forward. The company is planning to invest USD 5 million to set up an NCE plant as per the USFDA guidelines and is strategizing to enter regulated markets like those of the US, EU, Australia, and New Zealand.
Previously the company was heavily depended on single product Clarithromycin which was contributing more than 30 per cent of its We had recommended Indraprastha Gas (IGL) to our investors in Issue No 5 dated February 15-28, 2010 when the scrip was trading at Rs 210. Our recommendation was backed by various factors such as the strong financial performance of the company, expected expansion plans of taking its number of CNG stations to 210 from the earlier level of 181, and last but not the least, good valuations. In addition to this, there were some additional factors like long-term exclusive rights, debt-free status, assured gas supply, consistent dividend payment history, and rising crude oil prices. We had placed a target price of Rs 270 in one year. Now at its current levels the scrip is trading at Rs 362, reflecting an appreciation of 72 per cent. (Send your feedback to comment@dsij.in)topline. But the company is on its way to de-risk its dependence and now has more than 30 products in its portfolio.

At present the stock is quoting at Rs 125, thereby providing a gain of 56.25 per cent as against the recommended price. For Q1FY11 the company has posted better results with its topline witnessing a growth of 17.46 per cent at Rs 200 crore as against Rs 170 crore in Q1FY10. Its bottomline witnessed a growth of 32 per cent for Q1FY11 and was Rs 14.86 crore as against Rs 11.27 crore in Q1FY10. The stock is trading at a P/E of 5.8x on its TTM EPS. As mentioned earlier, the company is picking up on its valuation. Therefore our suggestion to investors is to book partial profit in the counter of around 50 per cent and then stay invested in the rest for better yields. 

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