Recommendation From Pharmaceuticals Sector
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This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon.
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Gufic Biosciences
THE RIGHT PRESCRIPTION FOR YOUR PORTFOLIO
HERE IS WHY
Consistent finanacial performance
Expected Growth in speciality pharma and ayurveda segment
Strong R&D capabilities
The pharmaceutical industry is one of the biggest and fastest growing industries in India. Gufic Biosciences Limited is one of the fast growing company in the pharma sector. The company is engaged in the manufacture of pharmaceuticals, medicinal chemicals and botanical products.
Gufic is one of the largest manufacturers of lyophilized injections in India and has a fully automated lyophilization plant in Gujarat with an annual capacity of 30 million vials, with scope of increasing to 42 million in the near future. Its lyophilized product includes antibiotic, antifungal, cardiac, infertility, antiviral and proton-pump inhibitor segments.
Gufic is planning to enhance its global focus by deepening its presence in the priority markets of India, Germany, Switzerland, South Africa, Russia, Europe and key countries within the emerging market territories.
Strong Research & Development: Gufic has invested towards enhancement and development of R&D in the last many years to develop new formulations and life-saving drugs and improve the process used for existing products. The company in FY17 was granted with two process patents viz., Tigecycline and Anidulafungin. Gufic has also filed herbal patents for herbal treatment for chronic ailments .
Backed by increasing consumer spending, rising healthcare insurance and rapid urbanisation, the Indian pharmaceutical market is expected to grow remarkably by 2025. Also, the government’s steps to reduce costs and bring down healthcare expenses will help the sector in coming times.
Financials: On the financial front, Gufic Biosciences posted a 14.37 per cent increase in its revenue to Rs63.42 crore in Q1FY18 from Rs55.45 crore in Q1FY17. Also, the company’s PBDT improved 34.58 per cent from Rs5.06 crore in the first quarter of FY17 to Rs6.81 crore on a yearly basis. The company’s net profit also soared from Rs2.55 crore in Q1FY17 to Rs3.54 crore in Q1FY18, an increase of 38.83 per cent.
On an annual basis, the company’s revenue rose 23.28 per cent to Rs249.44 crore in FY17, as compared to the previous fiscal. The company’s PBDT improved 44.85 per cent to Rs21.70 crore in FY17 on a yearly basis. The company’s profit after tax also increased from Rs4.26 crore in FY16 to Rs11.41 crore in FY17.
On the valuation front, the share price of Gufic Biosciences is currently trading at PE ratio of 56.83x. The company’s ROE and ROCE stood at 28.93 per cent and 27.06 per cent, respectively. The stock price has jumped 120.97 per cent in the last one year.
The company has shown consistent profit growth of 49.46 per cent over the last five years. We expect the growth in specialty pharma and Ayurveda segment to remain buoyant. We recommend our reader-investors to BUY the stock.
