Vimta labs short term buy

Vimta Labs is India’s leading contract research and testing organization.  Established in 1984 VIMTA has an envious track record of serving several market leaders across the globe.VIMTA is a team of 748 professionals comprising 433 scientists in various disciplines such as Chemistry, Pharma, Medicine, Microbiology, Molecular biology and Informatics. The team is slated to double in next three years.VIMTA is a multi-site organization with more than 300,000 sqft world class laboratory facilities.The technologies deployed at VIMTA are current and leading edge, duly validated.

The company has started growing their balancesheet from september 2013 and from there on they have increased their profitability significantly. 30 Crs. of revenue and 4 crs. of profit in every quarter makes an EPS of 1.8 in each quarter. Considering the same performance going forward , at CMP of 109 company is ruling at the PE of 15. Most small cap pharma company rules around 20 PE. Further, one positive factor is promoters have increase their stake in the company which shows that they have faith in their business model. With this in mind, we initiate buy call on vimta labs for the target of 140 Rs.

RS software - long term buy.

Company profile - 

Incorporated on 2 Dec.'87, public in 1992, R S Software was promoted by R R Jain, West Bengal Electronics Industry Development Corporation, Technology Development & Information Company of India and Risk Capital & Technology Finance Corporation. The company produces customerised commercial application software as per specific needs and requirements of customers. The company came out with a public issue at a premium of Rs 10 in Mar.'94 to part-finance the project of developing offshore software jobs at its existing hardware set-up in India for clients abroad. R S Software and Hanover Direct of the US have joined hands to set up a joint venture company in the US with the US partner holding 60% of the equity and RS Software 40 %. It acquired ISO 9001, international hallmark of quality in Jul.'94 from KPMG, US. The infrastructure for the satellite link between Calcutta and California was completed in Nov.'95. Its range of activities include on-site consultancy, offshore projects and software products. In 1996, the company entered into a strategic alliance with Software AG, Germany to bring their global solutions into India. It also entered into an alliance with Millenium Dynamics Inc. USA. The company has developed capabilities in the areas of client/server and object oriented technologies.The company is executing projects using Internet and New Technology Group technologies. In Nov 2000, it achieved global benchmarking in the area of best quality practices and accreditation level-3 of People Capability Maturity Model (PCMM). The Company set up its second subsidiary in UK - R S Software (UK) Ltd. to strengthen the marketing arm to reach to the clients in Greater Europe.


Result impact -

Company has posted decent  result with 12 Rs. EPS in current quarter and management is bullish with their upcoming performance. If company can continue with their performance of 12 Rs. then it will make whole year EPS to 48 Rs. With the CMP of 207 Rs. company is ruling at PE of 4 which is lower for medium cap IT company. We can expect company to rise from here in next 3 months for the target of 250+. 

Dynemic products a good buy

Details about the company-

Dynemic Products Ltd is one of the major manufacturer and exporter in India, offering complete range of Food Colors, Lake Colors, Blended Colors, FD&C Colors & Dye Intermediates. The company has wide applications in food industry, cosmetic industry, pharma industry, Ink and edible ink industry. They manufacture major Raw Material (Dye Intermediates) of Food Colors at their own to ensure that the Food Color produced from them is as per highest Quality Standards. The manufacturing facilities of Dynemic Products Ltd are certified with HACCP & ISO 9001:2000. Dynamic Overseas (India) Pvt Ltd is the subsidiary of the company. Dynemic Products Ltd was incorporated on June 14, 1990 as a private limited company with the name Dynemic Products Pvt Ltd. The company was promoted with the objective of carrying on the business of manufacturing S P C P, the raw material for Food Color, Reactive & Ramazole Dyes. They acquired on lease a plot in GIDC Estate at Ankleshwar admeasuring 1888 sq meter for this purpose. In January 1993, the company was converted into public limited company and the name was changed to Dynemic Products Ltd. In the year 1997 the company acquired on lease two additional plots in GIDC Estate both admeasuring 1888 sq meter. In the year 1999, they started their export sales. They obtained the export order from PT Dyestar- Indonesia. In the year 2000, the company acquired the business of Saffron Dye Stuff Industries and started manufacturing wide range of food colours at Ankleshwar. During the year 2000-01, the company commenced manufacturing of food colour namely Tartrazine at Unit I. In the year 2002, the company obtained 14001:1996 certificate of registration for their Unit II at Ankleshwar. They won the Second Award for Indirect Export of Self Manufactured Dyes for the year 2001-02 by Gujarat Dyestuffs Manufacturers' Association. In the year 2003, the company obtained HAACP Code: 2003 certificate of registration. In the year 2004, they obtained ISO 9001:2000.certification. During the year 2004-05, the company acquired 60% shares of Dynamic Overseas (India) Pvt Ltd and hence Dynamic Overseas (India) Pvt Ltd became the subsidiary of the company. The company's two manufacturing units got the status of EOU from Kandla Special Economic Zone. In June 9, 2005, the company incorporated a subsidiary company, namely Dynemic USA Inc, to expand geographical as well as their product coverage and capture the opportunities to develop market of their products in USA. In January 2006, the company came out with the Initial Public Offer and their shares were listed on The Bombay Stock Exchange Limited (BSE) in February 2006. During the year 2008-09, the company completed the expansion programme and thus increased the total production capacity from 1980 MT to 5700 MT. Also, they started the commercial production during the year. During the year 2009-10, the company initiated to develop D&C Colors (Colors that are used in Drugs, Hair Care, Cosmetics, Personal Care) & InkJet Dyes (these are used in producing Inks for Printing with InkJet Nozzle on various sunstrate like, Leather, Various Textile Products, Food & also for producing Ink for Computer Printers, Writing Ink, Marking Ink, Finer Liner Ball Point Ink & other Ink Industries). The Company is eyeing to start production of these products in near future.

Promoters impact- 

Recently, company has posted a decent growth from last year with PAT almost touching 200% from last year's quarter. Further, company promoters have shown strong faith in their performance by buying 200000 shares from open market with the range from 31-36 Rs. We expect to post a decent result from company this quarter as well. With EPS of 9-10 rs. for the full year, the company is quite undervalued as it's currently at the PE multiple of 3-3.5.With significant growth of order books,we expect company will continue it's spectacular performance in coming quarters. Hence, it's a strong buy at the current level of 34.9. 

V-Guard short term long term buy

Although V-Guard started as a small voltage stabilizer manufacturer in 1977, the company has grown and upgraded its product profile to include UPS, inverters, batteries, cables and switchgears. Over the years, it has also launched several electrical and electronic appliances such as mixer-grinders, induction cookers, solar and electric water heaters, fans, motors and pumps. 

While the economic slowdown has reduced the demand for consumer electronic and electrical products, the demand for products like UPS, inverters, batteries, stabilisers and solar water heaters has risen due to the ongoing power crisis. V-Guard already has 51% share of the stabiliser market. To reach the top position in solar water heaters, it has recently increased its production capacity by 90,000 units per annum by investing Rs 18 crore.

After establishing itself firmly in southern India, V-Guard now plans to expand to other markets. The steps it has taken in this regard have also started yielding fruit. The revenue contribution from the non-southern regions rose from 5% in 2007-8 to 25% in 2012-13. Though the higher advertisement costs for the non-south regions have put some strain on its margins, analysts believe that the margin contraction is temporary because V-Guard has broadly completed the work for distribution reach and will now focus on increasing the revenue per distributor. Since the average revenue per distributor in nonsouthern markets is only Rs 2.5 crore compared to Rs 7.5 crore in southern markets, there is good scope for expansion of business from the non-southern regions on existing investments.

Though V-Guard may look expensive if one follows the historical PE analysis (see table), analysts believe that the higher valuation is justified because of higher growth. As per the consensus estimates, V-Guard's revenues and net profit are expected to grow at an annualised rate of 23% and 30% respectively between 2012-13 and 2014-15. Due to factors like its strong brand in the south and faster growth in non-southern markets, strong cash flows, improving margins and diverse products, V-Guard is a good long-term bet.

Result impact

vguard- q4 earning has soared 120% on the basis of cost cutting. Company has always posted decent earnings with continuous top line and bottom line improvement. With the strong result the stock is best pick from the current level of 492 and we will see the level of 600 in coming days.

AARTI DRUGS A long term bet

Aarti Drugs Ltd is one of the leading pharmaceutical manufacturers in India. The company is engaged manufacturing of pharmaceuticals. ADL operates in the anti-diarrhea, anti-inflammatory and anti-biotic therapeutic segments. They manufacture vitamins, anti-arthritis, anti-fungal, antibiotics, antibiotics and angiotensin converting enzyme (ACE) inhibitors in their manufacturing units located at Tarapur and Sarigam. They are having their R&D center at Tubhe, Navi Mumbai The manufacturing units of the company are GMP certified. Their products include active pharmaceutical ingredients, steroids, pharmaceutical intermediates, and specialty chemicals, such as benzene sulphonyl chloride, benzene sulphonic acid/ ammonium/ sodium salt and benzene sulphonamide. They are having one subsidiary company, namely Suyash Laboratories Ltd. Aarti Drugs Ltd, a part of Aarti Group of Industries, was incorporated in the year 1984. In the year 1993, the company implemented the second phase of their backward integration project and set up facilities for glyoxal (the main raw material for imidazoles). During the year 1994-95, the company commissioned a plant to recover and market ammonium sulphate derived from plant effluents. Also, Rupal Chemical Industries, a group company, was amalgamated with the company. During the year 1996-97, the company started their production of secnidazole and dichlofenac sodium. During the year 2000-01, they started the commercial production of Pharmaceutical Ingredients. During the year 2002-03, the company expanded the production capacity of bulk drugs by 598,000 kg to 17,430,000 kg. During the year 2003-04, the company further expanded the production capacity of bulk drugs by 588,000 kg to 18,018,000 kg. During the year 2004-05, the company started commercial production at their newly setup intermediate plant at Tarapur. During the year 2005-06, the company increased the production capacity of Pharmaceutical by 2,325,000 kg to 24,020,000 kg. They entered into joint venture with Chinese company engaged in Active Pharmaceutical Ingredients (APIs) manufacturing and formed Huanggang Yinhe Aarti Pharmaceutical Company Ltd for manufacturing and selling of APIs in China. Also, they acquired controlling stake in Suyash Laboratories Ltd so as to make the said company a subsidiary of the company. During the year 2006-07, the company increased the production capacity by 570,000 kg to 24,590,000 kg. During the next year, they increased the production capacity by 399,000 kg to 24,989,000 kg. During the year 2008-09, they further increased the production capacity of Pharmaceutical by 50,000 kg to 25,000,000 kg. During the year 2009-10, the company carried out research and development work/ process improvement work in bulk drugs, such as antihistaminic/anti-allergic, anti-inflammatory and anti-diabetic. ADL has sold/exported intermediates, such as Stage-I of pioglitazone and AU-% for tamsulosin. They expanded the production capacity from 25,000,000 kg to 25,716,000 kg. The company is expanding their production capacity in various products-lines to cope up the demand. They are also in the process of acquiring ISO 9002 compliance for all their units.

Result impact - 
If we see purely fundamentally then this stock has posted a result of 18 rs EPS in this quarter considering this quarter is always good for pharma companies, we will likely to see yearly EPS is around 60 Rs. Company is handsomely paying dividend rs. 10 for the whole year and posted 2 fold jump in the profits.

At the price of 377 its still cheaper and we recommend to buy at CMP for the level of 500+ in coming days.