Medi Caps - Rs.68.00

Incorporated in 1986, Medi Caps Ltd (MCL) is the flagship company of Medi-Caps Group and is India’s second largest manufacturer of empty hard gelatin capsules. Its product range comprises sizes ranging from 00, 0, 1, 2, 3, 4 and elongated, fortified in more than 1000 shades. Its capsules are CONI-SNAP type, which have a double lock feature to ensure that the capsule’s body and cap are not easy pulled out unless filling and closing are finished by high speed filling machine. MCL also makes Halal Gelatin Capsules manufactured only from Halal Gelatin procured from Halagel-Malaysia as the Muslim community only consumes animals slaughtered according to Islamic procedure. It also produces Lifill-Caps capsules that have been specially designed to be sealed for secure containment of liquids and semi-solids. Currently, there is a growing trend of clear capsules being used widely for health supplementary foods. Hence to cater this segment, MCL is making capsules without using any sodium lauryl sulfate in the manufacturing process.

MCL’s ultra modern GMP certified manufacturing facility is spread across 80,000 sq. ft. at Pithampur in Dhar district of MP. Presently, it has an annual capacity of 3500 million capsules and supplies to most of the pharma majors like Wockhardt, Glaxo, Nicholas Piramal, Pfizer, Cadila, IPCA Labs, Searle India, Wyeth, Lupin Lab etc. The company has pioneered some advanced features in product development such as Perlz Capsules in metallic color made from a special herbal substance, which is effective in stabilizing emotions; allay fears and ease frustration and anger. It also brightens the eyes and help regenerate tissues. For further convenience of its customers, MCL has mastered capsule printing and offers Python printing which is a modern technology that allows printing around the capsule in a unique pattern. To maintain its growth momentum, the company is continuously launching new variety of capsules and variants and is also expanding its marketing reach in other countries for export growth. In the domestic market, it has added many multinational clients with the improved quality of its products and services.

MCL is a debt-free company with huge surplus funds of about Rs.20 cr. invested in mutual funds and listed equity shares. This itself works out to Rs.64 per share. Besides, it has massive reserves of Rs.27 cr., which leads to a book value of Rs.88. So financially & fundamentally, the company is on a strong footing. For FY06, its sales witnessed a fall of 15% to Rs.17 cr. but net profit jumped by 55% to Rs.6.20 cr. on the back of strong profit-booking in its share investments. It has reported good numbers for the June’06 quarter and for the full year FY07, it is expected to report a top-line of Rs.23 cr. and bottom-line of Rs.5.75 cr. This works out to an EPS of Rs.18 on its tiny equity of Rs.3.12 cr. At the current market cap of Rs.22 cr., this stock is available very cheap and can appreciate 50% in 9-12 months.