Book Profit - Ind-Swift Lab

Ind-Swift Laboratories was chosen for our recommendation in the Low Price Scrip column in Issue No 13 dated June 20, 2010. The stock was suggested for a ‘buy’ at the price of `80 on the strength of three main reasons viz. the stock was trading at a very low P/E of 3.83x and was likely to catch up with the valuation going forward, the company has plans to invest USD 5 million to set up a NCE
plant as per the USFDA guidelines, and it has a strategy in place to enter the regulated markets of the US, EU, Australia, and New Zealand. We had then advised to book 50 per cent profit in the stock in our Issue No 20 dated September 26, 2010 at `125.

Previously the company was Clarithromycin which was contributing more than 30 per cent of its 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 `147.30, thus providing a gain of 84.29 per cent from the price it was recommended at for the first time. For Q1FY11 the company has posted better results as the topline witnessed a growth of 17.46 per cent at `200 crore as against `170 crore in Q1FY10. The bottomline witnessed a growth of 32 per cent for Q1FY11 and was `14.86 crore as against `11.27 crore in
Q1FY10. The stock trades at a P/E of 6.7x on its TTM EPS. As mentioned earlier the company is picking up on its valuation. Therefore, our suggestion to investors is to book profit in the counter since it is yielding a healthy return.