Nectar Lifesciences - Rs.225.00

Nectar Lifesciences Ltd (NLL), erstwhile Surya Medicare Ltd, was incorporated in 1995 by Mr. Sanjiv Goyal as a joint venture with Punjab State Industrial Development Corporation Ltd for the manufacture of oral and sterile range of Active Pharmaceutical Ingredients (APIs) and formulations. Today, NLL is among the largest manufacturers and exporters of Cephalosporins (antibiotic used to treat bacterial infections) and Semi Synthetic Penicillins. In fact, it is among the few life saving API manufacturing companies with facilities to produce sterile APIs through both Lyophilization and Crystallization processes. Its products are WHO-GMP certified and are exported to over 70 countries across 5 continents and it enjoys an ‘Export House’ status.

NLL’s state-of-the-art manufacturing plant is spread over a massive area of 5,00,000 sq mtrs at Derabassi Punjab with an installed capacity of 950 MT. Its facilities & systems have been audited and approved by technical & regulatory teams of major pharmaceutical companies around the world. NLL is undergoing a major expansion of Rs.100 cr. that includes setting up a formulations plant at Baddi as forward integration, a second unit for sterile cephalosporin facility adjacent to Unit I at Derabassi and a hitech R&D centre and a Quality Control centre. Recently, the company has set up and commercialized a dedicated manufacturing facility (Unit-III) for Ranbaxy for manufacturing a key intermediate of a non-cephalosporin API. These facilities are USFDA, UKMCA, MHRDA and other regulatory bodies compliant and are expected to get all the approvals soon. To diversify its present product portfolio, NLL is planning to enter into the non antiboitic segment like cardiovasculars (statins and prils) and anti-histamines (fexofenadine). Steadily, it is building a presence in the high value generic markets and looking to increase its contract research, custom synthesis and contract manufacturing services for the regulated markets post US FDA approval. For future growth, it is planning to take a strong position in Phytochemicals which will be fully integrated greenfield operation with its own cultivation of speciality herbs, extraction and purification offering quality herbal products.

In June 05 NLL came out with its IPO rising around Rs.90 cr. by issuing 38.7 lakh shares @ Rs.240 per share. That means that currently the scrip is trading below its IPO price. For FY05, NLL reported a topline of Rs.221 cr. and bottomline of Rs.12.60 cr. For the first six months of FY06, NLL has already posted very impressive numbers with Sales reporting 24% rise to Rs.134 cr. and NP more than doubled to Rs.10 cr. For the full year, it may clock a turnover of Rs.280 cr. and NP of Rs.22 cr. which works out to an EPS of Rs.15 on its current equity of Rs.14.89 cr. The real growth and impact of expansion will be visible only in FY07 and FY08. Although there is a risk of huge equity dilution in future, only long-term investors are recommended to buy with a price target of Rs.380 (70% appreciation) in 2 yrs. It’s another Lupin or Orchid Chemicals in the making.