Venus Remedies may rally to Rs 225 in a year’s time, says SP Tulsian, sptulsian.com.
Tulsian told CNBC-TV18, “Venus Remedies have three manufacturing facilities. They are into the pharma makings and they have 75 product portfolios which are marketed in 60 countries across the world and they have three manufacturing facilities, two in India and one in Germany and they are the world’s top 10 leading makers of the fixed dosage injectables.”
He further added, “If one sees the financial performance they have come out with their Q4 results also. The EPS for FY12 has been at about Rs 53 which has shown a very negligible growth because for FY11 the EPS was at Rs 50-51. But the encouraging part what I liked about the results is that Q4 has posted an EPS of Rs 16 and with FY12 EPS of about Rs 53 and if you have Rs 16 EPS in Q4 alone, because there are nothing extraordinary for these pharma companies that they have the higher profits in Q4. So extrapolating the Q4 trend probably I am expecting that FY13 should be able to post an EPS of close to about Rs 60 and the promoters of the company have been increasing the stake in the company by conversion of the warrants which they have subscribed about six months back and if you see the equity, the equity base is quite low. It’s at about less than Rs 10 crore. Some warrants are pending for conversion, but as of now the equity is Rs 9.75 crore and even post conversion of the warrants equity is not likely to go up more than Rs 11 crore. If you see the financials again the top-line is close to about Rs 400 crore for FY12. I am expecting that FY13 should be able to post a growth of about 20% in the top-lines. That can take it to about Rs 500 crore and as I said that EPS expectation is at about Rs 60.”
“Going by all this the book value of the company is close to about Rs 340-350. So share is available 0.5 to book value and if you take the present price as I said on the expected EPS of Rs 60, the share is ruling at a PE of less than 3. So even if you take this as a generic company or maybe the midcap pharma company, I don’t think that these kind of companies really deserves a PE multiple of less than 3 and the stock is reasonably traded on the stock exchanges. They give a volume of about 25,000-30,000 per day. So if someone can keep a view of about a year or so can expect a price of Rs 225 on the stock.”
Disclosure: I have no holding or interest in the stocks discussed.