Ind-Swift : Fast worker
Chandigarh-based Ind-Swift Ltd (ISL) has grown according to the plans it has spelt out at various times over the past years. Financial year 2003-04 was especially good as it introduced a few new products, set up an office in the US, inked co-marketing pacts, started substantial phased investment in a new research and development (R&D) set-up and received one US patent for a NDDS of controlled release of a macrolide drug (Clarithromycin).
That's not all. In the latest development, the company has received
(a) Process patent for a soluble and stable salt of erythromycin derivatives and its use in pharmaceutical formulations, and
(b) Process patent for a tasteless, directly compressible complex of fexofenadine and its use in pharmaceutical formulations. The company has received letters of acceptance from the Indian patent office in this regard.
The company has done well in its financials. Also, starting Year 2005, MNC pharma majors could make a beeline for India looking for low-cost contract research and manufacturing (CRAMS) facilities such as that of ISL, as they try to introduce their cutting edge products in India. This will have a significant positive impact on ISL's future. All these point to significant investment promise in ISL. We take a look.
Background & operations
The Rs 212-crore Ind-Swift Limited is an emerging pharma company, which has proven expertise in finished dosage forms. It is present is high-margin and high-visibility segments such as gynaecology, cardiology, diabetology, paediatrics, endocrinology and nutraceuticals.
It has a subsidiary named Ind-Swift Laboratories Ltd, which is one of the world's largest manufacturers of macrolides and is a significant player in Clarithromycin, Clarithromycin Granules, Roxithromycin, Roxithromycin Granules and Azithromycin.
ISL possesses state-of-the-art manufacturing facilities, which are built in accordance with USFDA norms. These are being used for the company's CRAMs efforts, which currently contribute about 20% of the company's bottomline. This figure is to be hiked to about 35% in the coming 3 years.
Towards this end, the company is investing Rs 35 crore in various infrastructure development projects. These include capacity expansion of its plants and R&D capability enhancement. ISL has contract manufacturing pacts with pharma giants Ranbaxy Labs, Lupin Labs, Nicholas Piramal, Unichem Labs and USV. It has also entered into contract a research agreement with a European pharma major.
With an eye on exploiting opportunities thrown up by the opening of the pharma industry, starting 2005, ISL is working towards entering into pacts with pharma MNC originators who are willing to license their products for manufacture and sale in these low-cost markets.
ISL is also currently working on 12 new molecules in segments such as cardiology, diabetology, oncology, anti-diarroheal and neurology. These are in the NDDS, modified release and combination therapy segments.
ISL's US patent for NDDS of a macrolide antibiotic drug (Clarithromycin) is the fourth for the company. ISL is making efforts to file patents by developing non-infringing process of finished dosage forms based on NDDS as well as developing non-infringing alternate manufacturing processes for active pharmaceutical ingredients (APIs). Towards this, ISL has already filed patents for two of its products based on NDDS.
Financials
For the financial year ended March 2004, ISL notched up a topline of Rs 212.99 crore up 18.82% from Rs 179.15 crore in the previous year. Operating profit at Rs 22.63 crore was up 34.54% from Rs 16.82 crore. Profit after tax (PAT) was up 36.6% from Rs 10.19 crore to Rs 13.92 crore.
For the quarter ended June 2004, on a topline of Rs 50.06 crore (Rs 59.13 crore in June 2003), the operating profit was Rs 5.85 crore (Rs 5.3 crore). PAT too was up at Rs 3.75 crore (Rs 3.05 crore). The company has an equity base of Rs 4.63 crore as on March 31, 2004. The EPS works out Rs 30.06.
Outlook
The company is poised to do well in the CRAMS segment. Its Rs 35-crore capex on enhancing capacities and R&D capabilities is a decisive step in this direction. Its export thrust gets a push from its new US office. Its presence in various high-visibility segments in India gives it fundamental strength.
At a market price of Rs 124 and EPS of Rs 30.06, the stock comes at PE of a mere 4.12. This is very low for a company of the size of ISL. |