Scripscan:Sequent Scientific Ltd
cmp:54
Code:512529
Story:They are making APIs (Active Pharmaceutical Ingredients) which we loosely call as bulk drugs for human and veterinary sections. In fact, they are supplying anti-Malaria API largely to Cipla .They have five manufacturing plants and two R&D centers, one at Mangalore and another at Bangalore, and those R&D centers are really doing very well.With a strong executive team and 600 people workforce, the company is impressive in terms of presentations or with project structuring.About 55 APIs are under development stage. This cannot just be treated as a general bulk drug maker or general API company because any breakthrough in any of them, out of 55 APIs even if they are able to succeed in four-five APIs also, that can give them very good profits.In FY11, the company had a topline of close to Rs 300 crore and EPS of close to Rs 7. The company declared 15% dividend, but since all the operations are integrated into one company R&D as well as the production operations, they had bad working in first half where they posted a loss of about Rs 10 crore in the six months ended September 2011. However, topline has very well been maintained at about Rs 160 crore. So, going forward, I am quite optimistic on the stock. At one time may be six months back the stock used to rule at about Rs 100-110 but because of the subdued working in these two quarters the share has corrected now to about Rs 53-54.I don’t think from hereon the share seems to have much downside. The present market cap of about Rs 120 crore and even if I add the entire debt including the working capital, gives an enterprise value of about Rs 300 crore for the company. With a shareholding pattern of 72% held by the promoter, 22% held by about 15-20 HNIs, the public float is very low.So, I find this company quite interesting and if somebody can really remain invested with a view of about two-three years, this can really be a very blockbuster kind of investment in someone’s portfolio. But one has to be very patient. One cannot take a monthly or a quarterly call on the stock. Downside seems to be limited may be 10-15% but on a two-year horizon share can give a return of 100-150% also.
Source:SPT
