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Saturday, September 17, 2011

Brooks Laboratories Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Brooks Laboratories Ltd

Story:Brooks Laboratories, promoted by Atul Ranchal Rajesh Mahajan (with 35.33% stake) is a contract-manufacturing player supplying injection tablets and dry syrups to leading domestic pharma companies. It manufactures a wide range of products in the formulation segment encompassing beta lactam, cephalosporin & general injections. In the domestic markets its customer base (currently 158) includes companies like Zydus Cadila, Aristo Pharmaceuticals, FDC, Nectar Life sciences, Hetero Healthcare, Medley Pharmaceuticals, Wockhardt, Parental Drugs and Alembic.Further, it is now expanding the business into the International markets of Africa, Middle East and Latin America.It currently own and operate a manufacturing facility (CGMP certified) at Baddi, Himachal Pradesh (commissioned commercial production in 2006), with 1620 lakh (injections – 300, tablets –1200 and dry syrup – 120) combined capacity. The present manufacturing facility of the company is WHO-GMP compliant, which allows selling the goods in India, Africa, and South East Asian Countries & CIS Countries onlyCompetition in the domestic as well as overseas market is high. The company does not seem to have any major USP vis-à-vis other players.The company recorded 17% growth in net sales to Rs 52.54 crore in FY 2011. OPM inclined by 130 basis points to 17.6%, resulting in operating profit to increase by 26% to Rs 9.27 crore. Finally, there was 35% growth at PAT level to Rs 6.99 crore. There was no major increase in sales the past two years (sales in FY 2009 were Rs 44.93 crore) as it decided to concentrate on products/companies offering more margin.The PE works out to 9 times trailing earnings which is high for a tiny contract manufacturer.Sell it at higher levels to move on to some better growth oriented counters with cheaper valuations.

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