Nectar Life Sciences Ltd
CMP Rs 36 (FV 1) Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 845 crs Date: 4th Sep 2015
Target : Rs 50 Time frame : 1 year target
About the Company:
The company is promoted by Mr Sanjiv Goyal and has presence in Mohali. It has 11 state of art plants which have global certifications. The company was started in the year 1995.
Nectar Lifesciences Limited incorporated in 1995, an integrated pharmaceutical company, primarily manufactures various active pharmaceutical ingredients (APIs), intermediates, and finished dosage forms in India and internationally. The company offers contract research and manufacturing services, including process development and optimization, process scale up and validation, preparation and international submission of drug master files and certificates of suitability, multi kilo pilot plant production, bulk production, and Chiral resolution; and chemical and analytical development, and analytical and manufacturing services, as well as engineering consulting services. Its APIs and intermediates comprise cefixime trihydrate, cefuroxime axetil, cefpodoxime proxetil, cefdinir, ceftriaxone sodium, cefotaxime sodium, cefuroxime sodium, ceftazidime, cefepime hcl, cephalothin, cefazolin sodium cefprozil, cefoperzone sodium, cefpirome sulphate, and cefoxitin sodium. The company also offers contract manufacturing for finished dosage forms, such as tablets, capsules, dry powder oral suspension, and granules and injectibles. In addition, the company offers generic and OTC products for various therapeutic areas; a range of diagnostics products; empty hard gelatin capsules; and manufactures menthol and allied products, including menthol crystals, menthol flakes, peppermint oil, cis 3 hexenol, mentha piperita, Indian spearmint oil, menthones, mint blends, dementholised peppermint oil, and other customized mint based products. Contract Research & Manufacturing Services • API's & Intermediates • Formulations • Generics & OTC • Diagnostics • Empty Hard Gelatin Capsules • Menthol are the main areas in which the company operates.
The company had reported sales of 1638 crores and net profit of Rs 62 crores for the year 2014. The EPS stood at Rs 2.77 per share. For the year 2015, the sales rose marginally to 1643 crores and net profit was at Rs 66 crores and EPS was at Rs 3.12 per share. For the year 2016, Sales is expected to be in the region of Rs 1800 crores and net profit of 77 crores with EPS of Rs 3.46 per share.
Promoters hold about 44.35% while the Fii hold about 1.61% and Dii’s hold about 12.89% and public holding is at 41.15%
Comparisions to Peers:
The company can be compared to some small and well managed pharma companies like Granules India, Venus Remedies etc.
The company at the current price is available at a very low PE of forward just 10 and other pharma companies are at a PE band of 20 to 40. Even if it is a bit re rated, it can jump to cross the half century mark.
The share which is quoting at Rs 36 has the potential to cross the 43 mark in the medium term and can also cross the 50/- mark in the next 1 year. It is a fundamentally sound pharma company.
( Disclosure: The analyst has no holdings in the company as on date of issue being published)
The analyst has submitted all information as per SEBI requirement for the criteria of a research analyst