JHS Svendgaard Laboratories Ltd - 35.00 Rs

Promoted by Mr. Nikhil Nanda, JHS Svendgaard Laboratories Ltd (JSLL) was incorporated in 2004 to carry out the business of manufacturing, exporting, importing, trading, buying and selling of oral hygiene products whether raw, semi-finished or finished. In 2005, JSLL took over three proprietary firms namely M/s Sunehari Svendgaard Laboratories, M/s Sunehari Oral Care and M/s Jai Hanuman Exports, which were established by Mr. Nikhil Nanda only. Intially, company use to produce only toothbrushes, but today, JSLL is engaged in manufacturing a wide variety of dental and oral care products as contract manufacturer for many domestic as well as global brands. The product range currently includes toothbrushes, toothpaste, denture cleaning effervescent tablets, tongue cleaners etc. Recently it also started manufacturing and supplying whitening products such as mouth rinse and whitening gel for one of its customer who has introduced these products for the first time in the Indian market. Although not significant still it markets toothpaste under the brand name 'TAAZGI' in the domestic market.

JSLL has three manufacturing facilities viz. Unit - I & II at New Delhi and Unit - III (100% EOU) at Noida SEZ. Recently it has set up an integrated manufacturing facility at Kala Amb, in Himachal Pradesh to get excise duty as well as income tax benefit. Notably, company has imported Anchorfree technology enabled machinery from Boucherie, Belgium which is much better than conventional technology and is rapidly gaining importance across the globe. JSLL has slowly and gradually graduated from being just a toothbrush manufacturer to handle moulder as well as blister former and are further adding more and more integrated operations into the existing system, to become a single point solution provider for all the oral health care product requirements of its customers. On its HP plant becoming fully operational, its capacity will get augmented to 116 million units p.a. from 40 million for the toothbrush segment, 2700 tonnes p.a. from 450 tonnes for tooth paste. For denture cleaning effervescent tablets it will get increased to 180 million units p.a from existing 5 million and 500000 litres p.a from existing 60000 litres for other oral care products. Importantly the Kala Amb, HP plant has just started commercial production from April 2007.

JSLL has a good mix of export and domestic sales roughly in a proportion of 50:50 and has received top exporter award for toothbrushes & dental plate brushes for the year 2004-2005 & 2005-2006 from The Plastics Export Promotion Council (PLEX), sponsored by Ministry of Commerce, Govt. of India. Couple of months back it acquired 51% stake in M/s. Nikiven Personal Care Products Pvt Ltd thereby making it a subsidiary of the company. In future company may announce few foreign acquisitions to become a global player. For FY07, JSLL recorded a modest growth of 10% for both topline as well as bottomline to 32 cr and 4.40 respectively. This works out to an EPS of 3.50 Rs on equity of 12.50 cr. With the expansion effect kicking in from current quarter it may end FY08 with sales of 50 cr and PAT of 6.50 cr i.e. EPS of more than 5 Rs on current equity. For FY09 it has the potential to post around 8 Rs EPS. Considering its IPO price at 58.00 Rs, scrip is currently trading at 40% discount to it and has almost bottomed out. Investors are advised to accumulate at declines with a price target of 48 Rs (40% appreciation) in 12~15 months.