Syncom Formulations - Rs.95.00

Incorporated in 1988, Syncom Formulations (India) Ltd (SFL) is promoted by Kedarmal Bankda, Ajay Kumar Bankda and Vijay Kumar Bankda. The company is mainly engaged in pharmaceutical formulations. Its state-of- the-art manufacturing facilities located at Pithampur in Dhar district of Madhya Pradesh and Palghar in Thane near Mumbai. It’s an ISO 9001:2000 certified company. Keeping in view the shifting consumer preferences for the use of herbal products, the company has initiated steps to aggressively manufacture and market of herbal products. Some of the products already marketed are Edicare, Attom Megacaps, Ecziguard, Yes Antacid salt etc. For future growth, the company is putting more thrust on exports and has successfully established its footprint in more than 15 countries of Africa, Latin America, C.I.S. and Asia. To expand its market reach, SFL is in the process of appointing a distributors in Kenya, Tanzania, Philippines, Russia, Ukraine, Moldova and the Domino Republic.

Interestingly, SFL has more than 250 products to offer in ethical, generics, OTC and the herbal range. It is planning to increase its product offering upto 500 products within the next 2/3 years and has earmarked significant resources for product registration process in various overseas markets. Additionally, it has a basket of 20 well-tested and proven herbal products and has high level plans for marketing. SFL is planning an aggressive entry into branded herbal market of South Africa and Europe for which it has already appointed a distributor in South Africa and negotiations are on with an international player to market its herbal range in Europe. It plans to capture a significant market share in these markets through joint promotional activities. SFL has also entered into long-term sales contracts with its distributors in Vietnam, Cambodia, Philippines, and Nigeria.

Besides, the company is negotiating with a Latin American company for contract manufacturing of its brands at its WH0-GMP certified facility. It is also planning to offer comprehensive contract manufacturing services including pilot plant, technical services, quality control and regulatory services for both domestic as well as foreign companies. To take advantage of the burgeoning contract manufacturing, SFL plans to make substantial investment in a new export oriented unit in a special economic zone (SEZ) at Pithampur near Indore. Apart from its contract manufacturing focus, the company has prepared a blueprint to tap the virgin markets of West Africa by increased focus on licensing arrangements with various international players.

To fund all this expansion and growth plans, the promoters are infusing fresh capital regularly as and when required. Earlier in March’05, they made preferential issue of 2.65 lakh shares to themselves at Rs.90 and are now planning to issue 2.78 lakh shares at Rs.84. For FY05, its net sales increased by 21% to Rs.53.50 cr. whereas NP zoomed 135% to Rs.7.10 cr. leading to an EPS of Rs.13. For FY06, we expect it to report Net Sales of Rs.65 cr. and NP of Rs.10 cr., which means an EPS of Rs.18. Investors are recommended to buy this scrip at dips with a price target of Rs.150 in 8~12 months. Long -term investors can even expect a price of Rs.250 in 24 months.