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Friday, November 20, 2009

Alkali Metals Ltd:Future growth prospects and outlook,buy/sell/hold,analysis and recomendations,news,views and target

Scripscan:Alkali Metals Ltd

Story:Company is profit making concern since incorporation. It has an in house Research and Development facility recognized by the Minis-try of Science and Technology, New Delhi. This facility operates through three modules, being, a laboratory for gram level operation and research, a pilot plant and a proving facility to upscale the pro-duction process from pilot plant to a commercial scale and full fledged production. Also, company manufactures over 246 prod-ucts. Many of the products manufactured by company have multiple applications and can be used in the Bulk drug, Pharma industry, agro based products etc.The company has reputed client base which include names like Dr Reddy’s Lab, Rallis India, Granules India,Porus Drugs & Inetrmediates (P) Ltd ,Azide and Allied Chemicals. Also company exports its products to companies like Allwin Asia Limited, Nihon Siber-hegner K.K,Novasep Syntheasis ,Euticals S.P.A and teva Pantex Chemicals Limited.Company faces significant competition from other players. There are a few Chinese companies producing similar products apart from Rohm and Haas, USA and Rhone Poulenc, France.Short fall or non – availability of critical inputs and any escalation in their prices could have an impact on the operations and financial condition of Company.The company at a prsent price of 130rs is quoting at a p/e multiple of 6-7 times its fy11 earnings . The company has grown with a CAGR of just 11% in topline from FY04 to FY08 while the bottomline of the company has posted a CAGR of just 6%. The company has not been able to show consistency in its financial perform-ance which has been reflected from its volatile earnings .The stock market can only show some respect to the stock price if future numbers betters the pastperformances.Hence looking at all these factors,Its a "very risky buy" meant for only high risk apetite investors.

btw:If the swine flu comes back to the scenario one can expect alkali metals to have a sentimental booster then as it manufactures sodium hydride, a compound used to make drugs that treat swine flu.It would benefit from the higher sales of sodium hybride as demand from pharma companies would pour in bigtime.

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