Coral Laboratories Ltd.- Rs.129.00

Incorporated as a private limited company in 1981 and converted into public limited company in 1993 Coral Laboratories Ltd. (CLL), is today one of the well-known pharmaceutical companies engaged in manufacturing of various formulations in capsules, dry syrup, tablets, liquid orals, special diagnostic kits, ointments, cream, injections, eye/ear drops etc. catering to inflammatory, bacterial, biotic, protein deficiencies & skin conditions. Its medicines are marketed as ‘Zest’ and ‘Moxbro’ brands. CLL eventually intends to become a global player and has already registered its products in Srilanka, Malawi, Nigeria, Ghana, Kenya, Combodia, Vietnam Lesotho and is in the process of registering its the products in 30 other countries including Chile, Peru, Dominican Republic, Costa Rica, Philippines, Myanmar, Ukraine, South Africa etc to increase its international presence.

CLL has state-of-the-art manufacturing plants at Baroda, Daman & Vasai for strategic convenience. All its facilities are WHO-GMP certified and carry ISO 9001:2000 certification. It has already completed the expansion of its Daman plant and has recently started marketing on its own with 200 trained field force, to make its presence stronger in western and eastern parts of India. For future growth, the company is implementing a huge expansion of Rs.28 cr. in a phased manner. Under Project I, it has acquired 80,000 sq. ft. of plot in Dehradun and has set up a UK MHRA and US FDA compliant formulations plant, which will enable the company to enter into the regulatory export markets of developed countries. Its project II for manufacture of 'Betalactum' will be completed by December’06 and Project III for 'Injectables' will commence production by June’07. Moreover, CLL is looking for joint ventures, contract manufacturing, manufacturing under neutral labels, acquisitions and mergers. Notably, it has already done contract manufacturing for ACI Pharma - USA and Medicale Pharmaceutique- France for their exports.

The company has once again come out with outstanding results for September’06 quarter. Sales increased by 60% to Rs.9.50 cr. and net profit shot up by 70% to Rs.2.35 cr. On a half-yearly basis, it reported a net profit of Rs.4.15 cr., which is equal to its full year FY06 profit. Interestingly, its OPM has improved to 30% this fiscal compared to 26% last year. Assuming the same performance for the second half, the company can clock a turnover of Rs.35 cr. and profit of Rs.8.50 cr. This works out to an EPS of Rs.24 on its small equity of Rs.3.60 cr. Hence, the scrip is trading a P/E ratio of merely 5. However, to finance its future expansion, the company is planning to raise capital via equity route, which will dilute its equity going forward. Its share price is hitting non stop upper circuits since last the few days. So investors are advised to but a declines or sharp dips only with a price target of Rs.180 in 15-18 months.