Ahlcon Parenterals - Rs.48.00

Promoted by Ahluwalia Contracts (I) Ltd. and Mr. Bikramjit Ahluwalia, Ahlcon Parenterals (India) Ltd. (APIL) was originally incorporated in 1992 under the name and style of ‘Gujarat Inject (Rajastan) Ltd.’ but was subsequently renamed to APIL in 1993. Within a short span of time, APIL has become a leading manufacturer of specialty parenteral products of large volumes and eye & eardrops of small volumes. Today it is engaged in manufacture of life-saving Intravenous Fluids and medical disposals by employing the aseptic Form-Fill-Seal Technology imported from Switzerland. In fact, APIL has developed a niche market for specialty products of high quality standards with very few competitors to match. Its product range includes Dextrose, Saline, Electrolytes, Amino Acids, Fat Emulsion, Blood Substitutes, Injectibles, Eye Drops etc.

APIL’s manufacturing facility located at Bhiwadi, Alwar, Rajasthan, is equipped with highly sophisticated fully integrated production process wherein by one continuous operation the container is blow formed, filled with the solution and sealed. The entire process takes place in a completely sterile environment within the machine untouched by human hands, which eliminates all risks of contamination. Notably, its manufacturing facility is WHO-GMP and ISO-9001-2000 certified and it is in the process of getting MCA-UK certification soon. Encouraged by the overwhelming success of its diversification into ophthalmic products, the company is adding more value-added ophthalmic products and is expanding its existing Infusions and Anti- microbial solutions. Moreover, it has already initiated the process of setting up a state-of-the-art Testing facility and Formulation development laboratory equipped with the best infrastructure. Even though the major share of its revenue is contributed by contract manufacturing, the company has started building its own branded products and is putting more thrust to market such products in the domestic and global markets. On the export front, it has made arrangements with several international agencies for increasing the base of exports and is planning to increase direct and indirect exports to many countries.

In spite of uncertainties prevailing with respect to excise duty on MRP basis, APIL reported healthy numbers for FY06. Its sales grew by 25% to Rs.45 cr. but net profit trebled to Rs.6.70 cr. on the back of higher operating margins. For the June’06 quarter, it reported double digit growth on both top-line as well as bottom-line. With its technological edge and with long-term outsourcing arrangements with major pharma giants, APIL may end FY07 with a turnover of Rs.50 cr. and net profit Rs.7.50 cr. This translates into EPS of Rs.10 on its current equity of Rs.7.20 cr. It may declare 20% dividend for FY07, which means a yield of more than 4% at CMP. With its 52-week high/low as Rs.83/ Rs.39, the scrip is a relatively safe bet at current levels. Investors are advised to buy with a price target of Rs.65 (35% return) in 9-12 months.