Buy Natural Capsules; target of Rs 85: Firstcall Research

Firstcall Research's report on Natural Capsules

“Natural Capsules Limited was founded in 1993 and is based in Bengaluru, India. The company is a well-equipped modern manufacturing plant to manufacture Hard Gelatin Capsule shells, Hard Cellulose Capsule shells and Pharmaceutical Dosage Forms in Capsule Dosage Form. The company is also engaged in formulating the pharmaceutical dosage forms in Capsule dosage form, both Pharma and Neutraceutical Products. It offers hard gelatin capsule shells; hard cellulose capsule shells; and bovine spongiform encephalopathy and transmissible spongiform encephalopathy free gelatin, shiny gelatin, sodium lauryl sulfate free gelatin, fortified gelatin, sweet gelatin, fast release gelatin, and printed gelatin/cellulose capsule shells. It is also involved in formulating pharmaceutical dosage forms in capsule dosage form, including pharma and neutraceutical products. In addition, it offers various services comprising contract research in synthetic chemistry, dosage development, and dossier in CTD format, manufacture of API’s and finished dosage forms, development of dossiers/ANDA for products, and contract research and analytical services.”

“Natural Capsules Limited is a well-equipped modern manufacturing plant to manufacture Hard Gelatin Capsule shells, Hard Cellulose Capsule shells and Pharmaceutical Dosage Forms in Capsule Dosage Form has reported its financial results for the quarter ended 31 Dec, 2014. The company’s net profit jumps to Rs. 17.13 million against Rs. 15.76 million in the corresponding quarter ending of previous year, an increase of 8.69%. Revenue for the quarter rose by 21.81% to Rs. 176.26 million from Rs. 144.70 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 3.41 a share during the quarter as against Rs. 3.50 over previous year period. Profit before interest, depreciation and tax is Rs. 37.69 million as against Rs. 32.03 million in the corresponding period of the previous year.”

“At the current market price of Rs. 73.00 the stock P/E ratio is at 5.96 x FY15E and 5.22 x FY16E respectively. Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs. 12.25 and Rs. 13.99 respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 14% and 9% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 3.14 x for FY15E and 2.71 x for FY16E. Price to Book Value of the stock is expected to be at 0.76 x and 0.66 x respectively for FY15E and FY16E. We recommend ‘BUY’ in this particular scrip with a target price of Rs. 85.00 for Medium to Long term investment”, says Firstcall Research report.

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