Ind-Swift Laboratories: Recommendation review

We had recommended Ind-Swift Laboratories to investors in DSIJ Vol. 26, Issue No. 19 (dated August 29-September11, 2011), when the scrip was trading at Rs 79. Our recommendation was backed by factors like the strong business growth registered by the company in the past three fiscals, its aggressive focus on new markets and the fact of it being a direct beneficiary of patent expiries on innovator drugs. Its capacity addition to cater to the increasing demand was another advantage.

After our recommendation, the scrip witnessed a strong up-move immediately. On 7th September, 2011, through our SMS service, we had recommended that investors should book profits at Rs 87. After that too, the scrip continued to gain and touched Rs 108, with the company posting a good financial performance. We feel that those who have not yet booked profits in the counter can do so at the current levels.

On the financial front, Ind-Swift posted a topline of Rs 359 crore and a bottomline of Rs 28.4 crore for the quarter ended December 2011 as against Rs 310.11 crore and Rs 24.62 crore in December 2010. Its performance on a whole for 9M FY12 too has been good, with a topline of Rs 978 crore and a bottomline of Rs 68.08 crore as compared to Rs 723 crore and Rs 61.22 crore in 9M FY11. At the current levels, we are of the opinion that the scrip has witnessed an up-move but is still available at 4.60x, which is much cheaper. However, a prudent strategy would be to book profits at the current levels.