According to SP Tulsian of sptulsian.com, one can look for a price target of Rs 50 on Ind-Swift Labs. "Those who keep a longer horizon can look for a higher level as well, maybe a level of about Rs 55-60," he adds.
SP Tulsian of sptulsian.com told CNBC-TV18, "Ind-Swift Laboratories has been passing through lot of problems, but from July 1, 2012, it had its corporate debt restructuring (CDR) package approved. If one sees the company's infrastructure, it is the leading active pharmaceutical ingredient (API) maker with good expertise on the research and development (R&D). It has filed about 40 drug master files (DMF) also and are making the APIs with the good manufacturing practice (GMP) approved facilities."
He further added, "If one goes by the facilities that have in the northern part of the country, about six months back we heard that the promoters are looking to sell their stake in the company and get out because of this debt problem. While approving their CDR the company estimated an EBITDA of about Rs 87 crore for 9 months of FY13 which they have surpassed by posting an EBITDA of close to about Rs 90-92 crore. If one takes the top-line of close to about Rs 1,200 crore and the kind of interest seen in the pharma stocks, we have been hearing the story of Elder Pharma's promoters selling their stake, this is also a similar story."
"The company has debt in Ind-Swift Laboratories close to about Rs 1,000 crore and if one sees the market cap, it is just Rs 150 crore. The enterprise value works to about Rs 1,150 crore against its net worth of Rs 900-950 crore. Virtually, the share is ruling on an EV of one time of the top-line. Since the EBITDA started improving, I am expecting EBITDA for FY14 should be at about Rs 160 crore or so. Even if the stake sale does not happen by the promoters, the improvement in the performance of the company can rerate the stocks going forward, as such it is ruling at its lower end. Its 52-week low is virtually at Rs 40 and share is now ruling at Rs 42. One can look for a short-term angle, maybe for the couple of months and can also look for a price target of Rs 50 and those who keep a longer horizon can look for a higher level as well, maybe a level of about Rs 55-60 or so," SP Tulsian said.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.