Ajanta Pharma has target of Rs 500: SP Tulsian

Tulsian told CNBC-TV18, "I find Ajanta Pharma quite interesting. The share is ruling at a PE multiple of 7. This is an integrated pharmaceutical company having five manufacturing plants. The focus of the company has been very good on research and development. It is employing about 3,200 people and from that 150 people are working in R&D lab. Their product pipeline seems to be quite strong."

He further added, "For the first nine months of FY12 compared to previous nine months period of FY11, the company posted a growth of 30% in topline and 48% in bottomline. This implies that a topline of Rs 425 crore has been achieved for the current nine months of FY12 with bottomline of about Rs 42-43 crore, which translated into an EPS of Rs 37. The performance has been continuously improving. That 48% bottomline growth has been back-ended."

"We have seen good amount of growth coming in, in the bottom-line in the third quarter, so extrapolating that one can expect the company to post an EPS of close to about Rs 54. Going by the same trajectory, since their focus on R&D has been quite strong, so FY13 could have an EPS of about Rs 65-66. The financial position is not highly leveraged. The debt position is quite comfortable."

"As far as the shareholding pattern is concerned, on a low equity base of about Rs 12 crore promoters are holding about 68-69% stake. The overall growth posted by the company for quite some time has been quite good. The historic book value as on December 31 is Rs 250. So, it is ruling at a price to book of 1.5, PE multiple of 7. I find this stock quite interesting, though it has run-up in the last week, but still one can take a price target of Rs 500 in next six months."

Disclosure: I have no personal holding in the above stock.