Alembic Pharmaceuticals Ltd is a vertically integrated research and development pharmaceutical company engaged in manufacturing and marketing of generic pharma products. The formulation business accounts for 85% of the total business, while the balance comes from APIs. The company has remained an active player with legacy brands in the anti-infective and cough and cold segment. Alembic has a strong balance sheet, with reserves standing at 40 times the equity capital of Rs 37.70 crore, where the promoters hold a 74% majority stake in the company. With zero debt on its balance sheet and a fast growing earnings per share, Alembic is on a fast growth phase. For Q1FY17, net sales of the company stood at Rs 687 crore, while the net profit climbed higher at Rs 120 crore, making it a strong bonus candidate for the near future. Alembic Pharma has spent nearly Rs 300 crore on a new facility in Sikkim and also plans to spend around Rs 1,500 crore in the next couple of years in a general injectable and onco injectable facility. The company has a market cap of over Rs 12,000 crore on a low P/E of Rs 16.22, while the industry aggregate P/E is higher at Rs 28. There is good scope of price appreciation for the Alembic stock from the current market price of Rs 645. It can appreciate by 30% in the next one year from the present levels. The company is a strong portfolio buy for medium term investors looking at solid fundamental stocks.
Garware Wall Ropes Ltd (GWRL) was established in 1976 in collaboration with Wall Industries Inc USA. GWRL is a leading player in technical textiles specialising in providing customised solutions to the cordage and infrastructure industry. India’s textile sector is one of the largest contributors to India’s exports, with approximately 11% of the total exports. While the Indian textile industry is estimated to be valued around US $110 billion, it is expected to reach US $220 billion in the next five years. GWRL is one of the largest producers of fishing nets in the world and a pioneer in the synthetic cordage segment. It has a dominant market share in North America, Europe and Australia, wherein half the company’s revenue is derived from exports. With a bluechip client list, GWRL is known for innovation in the fields of fisheries, aqua culture, sports, shipping, coated fabrics and geo synthetics. The Q1FY17 results have been quite impressive with sales and net profit growing at a smart pace and the future of Garware Wall Ropes looks quite promising both from strong domestic consumption and export demand. The stock currently trading at Rs 513 on the Indian bourses can appreciate by 30% in the next one year.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.