Shasun Chemical & Drugs - Rs.80.00

From a modest beginning in 1976, Shasun Chemical & Drugs Ltd (SCDL) has acquired a worldwide reputation in the manufacture of Active Pharmaceutical Ingredients (APIs) and their intermediates. Its main products are Ibuprofen and its derivatives such as S+Ibuprofen and Ibuprofen Lysinate, Ranitidine, Nizatidine (Anti-ulcerants) etc. In fact it is one of the world’s largest producers of Ibuprofen and supplies about 15% of USA’s requirement of the bulk drug. Its products are exported to more than 150 countries across Europe, North America, Latin America & Asia. SCDL has licensed technology from Eastman Chemical Company of USA to manufacture and market the excipients like HPMCP & MAP, which find use in enteric coating applications. Besides, its a major player in the anti-inflammatory, anti-ulcerative and anaesthetic segments. It has also formed an alliance with Suven Pharmaceuticals Ltd and Innovasynth Technologies (India)Ltd in the field of life sciences covering R&D and manufacturing to service global pharma companies in collaboration with Austin Chemical Co., USA.
SCDL has two manufacturing facilities at Pondicherry and Cuddalore, both GMP compliant facilities and inspected by US FDA, UK MHRA, EDQM, TGA and other regulatory bodies. Employing over 100 scientist & research associates, its new R&D facility in Chennai does contract research under a full time equivalent (FTE) model and contract manufacturing under the custom synthesis model. It is also in the process of setting up a commercial facility for creation of significant biotechnology capabilities & capacities especially in the area of protein processing solutions and has already set up a pilot scale fermentation unit with 100 litres capacity. It is accelerating new product developments and drugs such as Isradipine and Gabapentin, which are expected to post a significant growth in the next 2/3 years. SCDL is gradually transforming itself from an export centric approach to a CRAMS centric business model. It is also aggressively expanding its presence in the formulations segment and has entered into various manufacturing and supply agreement with multinationals like Glenmark, Codexis Inc., USA, Alpharma Inc. USA etc for marketing a number of generic formulations in US and Europe.
For future growth, the company is placing a greater thrust on the CRAMS segment. And with a strong infrastructure base and long successful relationships with pharma MNCs, it is all set to grow significantly in coming years. Recently, the company went for a stock split from Rs.10 to Rs.2 face value. For FY05, its revenue grew by 22% to Rs.327 cr. and NP increased by 30% to Rs.31 cr. Its first half for the current year was pretty decent and for the full FY06 it is expected to clock a turnover of Rs.375 cr. and NP of around Rs.35 cr. This works out to an EPS of approx Rs.8 on its current equity of Rs.9.16 cr. on Rs.2 FV. Thus the stock is trading reasonably cheap at 10 PE and investors can accumulate it at current levels for 50% returns in 12~15 months.