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Saturday, May 30, 2009

Jupiter Bioscience Ltd:-Future growth prospects and outlook

Scripscan:Jupiter Bioscience Ltd
Traded in:Nse-bse

Story:With FY09 Revenues of Rs 143 crore (Rs 129 crore), after tax profits of Rs 32 crore (Rs 31 crore) and an EPS of Rs 19 this stock fetches a lowly PE of 3.7 and a dividend yield of roughly 3 per cent. Surprisingly FIIs which bought over a Rs 100 crore QIP placement a year ago at Rs 141 a share have been resilient and held on to the stock while the resident investors sold off the stock in early March 2009 to as low as Rs 25.So all those who think they have missed the run-up may still be proven wrong. After all it was only 2 years ago that in a much celebrated announcement Ranbaxy-then owned by the Singh family had taken a 14.9 per cent strategic stake in the corporate by subscribing to 32,00,000 warrants to be converted at Rs 147 a share. Post sale of Ranbaxy to Dai-Ichi no announcement has come about the conversion of warrants into Equity and the 20 per cent upfront payment made to Jupiter has been allowed to lapse.Still 47 lakh shares amounting to 29 per cent of the Equity of Jupiter continue to be held by FIIs led by ABN Amro (8.68 per cent), Macquarie Bank (6.61 per cent), Swiss Finance Corporation (4.65 per cent), HSBC (5.58per cent) and CLSA Mauritius (3.40 per cent), adding to the roughly 20 per cent stake of the promoters.Jupiter owns 6 plants in all, with 4 spread over in Andhra and Karnataka and one each in Switzerland and the US state of Maryland. Jupiter has been successful in winning a long term contract from Merck, Germany to supply peptide raw materials and intermediates manufactured by the company.This contract was won after a long process of validation of the technological capabilities and business processes by Merck compared to many other international players. Many leading pharmaceutical companies in Europe and USA have also begun sourcing their requirements from the company.Jupiter has made significant investments in upgrading its quality assurance system to meet the expectations of these international customers. Significant investments were also made in all the manufacturing facilities to upgrade and modernize the facilities and equip them to handle the new products being manufactured by the company. The analytical facilities and R&D Infrastructure systems in line with the growth in business. A major revamp in the unit which was acquired from Aurobindo Pharma Limited to make it suitable for manufacturing the peptide group of products has also been made.World wide peptides are being increasingly used as targets for therapeutics, vaccines, diagnostics and drug delivery systems. The trend is on the increase because of the inherent limitations of the small molecules to handle the growing complexity of diseases. The company is therefore provided continuous challenges in synthesizing the peptide building blocks to support the drug development industry.In 2010 the company expects to launch some of the generic peptide APIs in the unregulated market barring any unforeseen delays in regulatory. Further the company will also consolidate its position in the custom peptide synthesis work especially through the solid phase synthesis route from the US facility. The company is also planning to manufacture some organic APIs in the coming year the processes for manufacturing the same are under development.The fact remains Jupiter Bio will not fetch a miserly market cap of Rs 115 crore for too long. The prospects seem bright.A great buy at dips.


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