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Stock Pick From The Heathcare Sector

| 6/14/2012 9:00 PM Thursday

Low Priced Scrip is hidden gem, today's underdog, a stock with future potential that is expected to fetch returns within 1 year. This is a stock picked carefully based on a fundamental analysis of the company.

The company recommended as the Low Priced Scrip for this issue is a leading company from the healthcare sector which also has a presence across the pharmaceuticals manufacturing value chain.

Granules India - Rx For Healthy Returns

  • GIL has been clocking a five-year CAGR of 28 per cent against the 14-15 per cent growth that the sector as a whole has been recording.
  • It has a presence across the pharmaceuticals manufacturing value chain through three business verticals – Active Pharma Ingredients (APIs), Pharmaceutical Formulation Ingredients (PFIs) and Finished Dosages (FDs).

Does it really make sense to recommend a scrip that has already soared by a humongous 58 per cent on a Year-to-Date basis? Well, yes, if it happens to be Granules India (GIL). But why is this so? The company is in a major expansion mode, which is sure to take it to the next level. GIL has seen a consistent improvement in its EPS over the past three years, and has been paying dividends consistently over the past nine years. This is precisely why we are recommending this stock to our readers, as we think that it can give them at least 20-25 per cent returns.

BEST OF LAST ONE YEAR

Name of Company

Reco.

CMP(Rs)

Gain%

PTC India

45.00

60.00

33.33

JK Lakshmi Cement

48.50

64.00

31.96

Dena Bank

80.50

101.00

25.47

Omkar Specialty Chem.

58.50

68.00

16.24

IDBI Bank

81.00

93.00

14.81

Power Grid Corp. of India

96.00

107.50

11.98

GIC Housing Finance

84.00

89.00

5.95

Syndicate Bank

99.10

102.00

2.93

CMP as on June 12, 2012

GIL has a presence across the pharmaceuticals manufacturing value chain. It has three business verticals, viz. Active Pharma Ingredients (APIs), Pharmaceutical Formulation Ingredients (PFIs) and Finished Dosages (FDs). While it has facilities in India and China, it also has a presence in 60 other countries. Currently, PFIs add 35 per cent to its topline, while FDs and APIs add 33 per cent and 32 per cent respectively.

GIL has a capacity of 18000 tonnes per annum each of APIs and PFIs. It also has a capacity of 18 billion tablets in the FD segment. The company has already increased its API manufacturing capacity to service the higher demand, which means that this segment will continue to add incremental revenues in the future. It intends to double its PFI capacity and triple its FD capacity in FY13.

 

Find More Articles on: Stock Recommendations, Fundamental Picks, DSIJ Magazine, Low Priced Scrip, Product, Small Cap

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