Amar Remedies - Book Profit

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Amar Remedies (BSE Code 532664) formed part of our recommendations in the Low Priced Scrip column in Issue No 6, dated March 13, 2011. The stock was recommended at the price of `87 on account of three main reasons at that point of time: the stock trades at a low price to book value of 1.27 times and a reasonably high dividend yield of 1.10%, the sales and net profit have witnessed a CAGR growth of 32.72% and 23.70% respectively in the last three years and the Oral Care segment offers a huge potential as penetration and per capita consumption of oral care products are very low. At present the stock is quoting at Rs 107.9, giving a gain of 24% from the price it was recommended. As mentioned earlier, oral care contributes to 60% of the company’s topline.

This segment offers a huge potential as penetration and per capita consumption of oral care products are very low. However, rising per capita income and increasing awareness are driving the demand for oral care products. Consumers have started switching to value-added toothpastes such as gels, mouth washes and teeth whitening products. The company plans to focus on cities to expand heir footprint. The business, kicked off in 2010, has witnessed a growth rate of about 50%. It is believed that, going forward, the retail arm is going to play a vital role in the growth of the company. At present the stock has achieved our target and, therefore, we advise our readers to book profit in the same.