Fulford (India) Ltd. - Rs.586.00

Fulford India Ltd (FIL) was originally incorporated as C.E. Fulford India Pvt. Ltd. in 1948 and began with the manufacturing and marketing of pharmaceutical consumer products like ‘PEPS’ cough tablets and ‘Zambuk’ herbal ointment. In 1968, Schering-Corporation, USA, took over the company by acquiring 100% stake from C. E. Fulford Limited, UK and subsequently set up a plant in Andheri, Mumbai, for manufacture of pharmaceutical products. Notably, Schering-Plough Corporation, USA, is a leading research-based company, engaged primarily in the discovery, development, manufacturing and marketing of pharmaceutical and health care products worldwide.

Today, FIL markets innovative and science based products in therapeutic areas like Oncology, Virology, Cardiovascular, Dermatology, Suncare, Anti Infective and Anti Histamines. Most of these products are original research products of its parent company. Few of its well-known brands are Netromycin, Garamycin, Elocon, Dipsalic, Dipgenta, Diplene, Lotriderm, Dipform, Emolene, Tinaderm-M, Clingard, Shade, Polaramine, Celestone, Top Nitro, Integrilin, Temodal, Remicade, Zadine etc. Presently, FIL derives close to 50% of its revenues from dermatology products, 30% from Oncology products, 8% from cardiovascular products and the balance from Anti-Infectives. Being a marketing company, majority of its work force of 480 people constitutes the marketing field force that generates prescription sales. Importantly, FIL has successfully reduced the number of drugs under price control to less than 40% and is launching new products for Gastroenterology, Collitis, Hair care and Hepatatis-B.

To maintain its growth, the company is taking various initiatives that include restructuring, introducing new products, enhancing the field force and effectiveness and productivity. For the six months ending 30th June’06, its top-line grew marginally to Rs.71 cr. but its net profit declined by around 15% to Rs.6.20 cr. Still, for the full year CY06, it is expected to report sales of Rs.150 cr. and net profit of Rs.16 cr., which means an EPS of Rs.50 on its tiny equity of Rs.3.20 cr. Thus a company backed by Schering-Plough Corporation of USA, which holds 40% stake in FIL, is available at P/E ratio of 12 makes it a fairly cheap investment compared to its peers. With huge reserve of over Rs.35 cr. makes it a strong bonus candidate too. Investors are advised to buy only on sharp declines with a price target of Rs.900 (50% appreciation) in 18-24 months.