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Thursday, April 14, 2011

Bafna Pharmaceuticals Ltd:-Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Bafna Pharmaceuticals Ltd
Duration:9-12 months

Story:The Rs 76 crore Chennai-based Bafna Pharmaceuticals is a SME engaged in the manufacture of Betalactum and non-betalactum range of anti-biotic drugs.The company has rapidly increased its exports over the last few years.A significant chunk of its exports are contributed by Sri Lanka while the rest half are contributed by the contract manufacturing business.CRAMS offers a better growth outlook due to low-cost advantage in India. The company is well diversified in terms of therapeutic segment exposure with presence in anti-infective, cardio-vascular, analgesic and antipyretic, antihelmintics, appetite stimulants, cough & cold preparations, antiulcerants, anti diabetic and vitamins.Besides having a 20% margin, the contract manufacturing business allows the company to launch these products in the non-regulated markets in Africa and CIS region.The company is also expanding from being present only into antibiotics to drugs in the life style-related illness.Bafna Pharma's focus on the European market,launching of'Branded Generics'in non regulated market and efforts to launch domestic brands in lifestyle segment should catapult the company in the top global league.The series of initiatives like obtaining EU GMP UK MHRA approval for the Grantylon facility,revamping of the Madhavaram facility,launch of Formulation R&D facility in Grantylon and obtaining 11 site variation approvals from MHRA,UK are some of the critical milestones that would guide the company towards not only greater revenue growth but also increased profit margins.With all these measures in tow, the company intends to achieve revenues of Rs 500 crore by 2013.The company's stock is currently trading at a P/E of 30(trailing earnings).Typically, pharma companies trade at twice and more of its revenues.Bafna Pharma is currently trading at a market cap of Rs 77 crore much below than its expected total revenues of Rs 110 crore.With everyhting looking up for the company backed by an experienced visionary quality pedigree team,Bafna pharma is a great great long term buy.

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