Scripscan:SMS Pharmaceuticals Ltd
BSE code: 532815
cmp:156
Story:SMS is among the world's top producers of bulk Ranitidine (an anti-ulcerant), and revenues from this product accounts for a major portion of its revenues.While this exposes the company to pricing vagaries of this particular product,as contributions from other products such as sumatriptan and gemcitibine scale up, the concentration risk will diminish considerably. As outsourcing becomes an integral part of the pharma landscape, outfits focused on a specific activity of the manufacturing chain (such as bulk drugs, as is the case with SMS) will be better placed to reap benefits. Given SMS' sphere of operation, we believe that the comfort level of the formulations players will be higher when they deal with players unlikely to morph into competitors. SMS already has leading names such as Ranbaxy, Dr Reddy's, Cadila, Sun and Torrent as its clients. We expect the business profile to improve further, as SMS pursues supply deals with players based abroad. An investment may be considered to the Hyderabad-based bulk drug player SMS Pharma.At present price of 150 its quoting at low single digit PE multiple based on its forward cosolidated earnings. This is reasonable, in the light of prospects in the contract manufacturing space and a fairly strong patent expiration pipeline over the next few years.Buy it to reap good capital appreciation in the coming months.
Regards,
ARUN
I can be reached at:arunanalyst@rediffmail.com
Monday, December 21, 2009
Important Disclaimer&Privacy policy
This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: arunsharemarket@gmail.com
Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
