| NATURAL CAPSULES | |||
 By Hemant Gupta This Bangalore based Natural Capsules is engaged in production of ALL Types of empty Gelatin capsules for Pharma industry. Rationale for recommendation is that company is extremely well managed, almost debt free, regular dividend payout, regular income-tax payment which proves that company has ample cash flows. And now, company has embarked on doubling its production capacity which will boost its profitability sharply.
Current Performance:
H AL F Y E A R E N D E D YEAR ENDED
30.09.2010 30.09.2009 31.03.2010
Net Sales 15.90 14.30 29.50
Depreciation 0.76 0.70 1.46
Profit before Tax 3.28 3.47 6.41
Profit after Tax 2.28 2.50 4.27
Equity 4.50
EPS Rs 5.05 5.56 9.47
For FY10, Natural capsules had reported EPS of Rs 9.47, after paying income tax of Rs 2.1`4 crores.
Last year company had embarked upon expanding its production capacity by 100% and has imported 9 new machines. There has been some delay in commercial production/installation of these machines. Although now 2 machines have already become operational and balance machines will also be operation by March 2011. Full expact of doubling of production capacity will be felt next year onwards.
FUTURE OUTLOOK;
2010-11E 2011-12E
Net Sales 33.50 48.00
Depreciation 1.60 2.50
PBT 6.50 9.20
PAT 4.65 7.20
Equity 4.50 4.50
EPS Rs 10.25 16.00
PE Ratio 5.46 3.50
After touching high of Rs 71, Natural capsules now is an attractive buy @ 56/. Although, turnoverwise, it is a small company but a wellmanaged company with trustworthy management delivering consistently good results. We feel that once entire expanded capacity is operational, scrip will be rerated. Buying recommended as scrip can be Rs 125/ in 15-18 months. A very safe buy. |
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