VALUE PICK - NGL FINE-CHEM LTD.

 

About The Company

NGL Fine-Chem Ltd is a Maharashtra based company manufacturing and exporting Bulk Drugs (APIs – Active Pharma Ingredients)

The company is actively exporting its products world-wide including Europe,Asia & Middle-East.

Products

The company is mainly into Animal/Veterinary APIs & Human APIs.

The company right now has a limited product portfolio, Which they are planning to expand soon.

The Ace Investor – Value Pick

(BSE:532707) NGL Fine-Chem Ltd.

The stock is currently trading around Rs 71 with a market cap of 44 crores.

Current P/E is around 8 and Promoter Holding is strong at 62.86%.

Like our earlier picks (SKM and DYNEMIC) NGL too is a export driven company.

Exports constitute more than 70% of Total Sales.

The company has seen a sharp growth, i.e. the Total Sales for FY13 were at 55.57 crores and Net Profit was at 2.91 crores while for FY14 sales rose to 78.87 crores and Net Profit rose to 4.53 crores.

Even the OPM improved from 13.28% to 13.88%.

At current P/E of 8, NGL if compared to other Human Pharma/API stocks is cheap but there are not many veterinary dependent API/Pharma companies listed on the exchange except for Hester Biosciences which actually is a Vaccine and Pharma company for Avian,Swine & Large Animals trading at a P/E of 35.55.

NGL has been a growing company, It has shown consistent growth right from FY05, here is the Annual Results table attached below.

	Mar 05	Mar 06	Mar 07	Mar 08	Mar 09	Mar 10	Mar 11	Mar 12	Mar 13	Mar 14
Sales	10.30	11.61	19.46	12.64	24.63	28.00	35.04	36.11	55.57	78.87
Operating Profit	1.99	1.21	3.24	1.08	4.25	5.04	4.86	3.70	7.38	10.95
OPM	19.32%	10.42%	16.65%	8.54%	17.26%	18.00%	13.87%	10.25%	13.28%	13.88%
Other Income	0.51	0.51	0.12	0.13	0.08	0.17	0.49	0.13	0.19	0.09
EBIDT	2.50	1.72	3.36	1.21	4.33	5.21	5.35	3.83	7.57	11.04
Interest	0.13	0.25	0.42	0.41	0.43	0.50	0.56	0.92	1.18	1.29
Depreciation	0.24	0.42	0.51	0.59	0.76	0.78	0.94	1.35	1.93	2.32
Profit before tax	2.13	1.05	2.43	0.21	3.15	3.94	3.85	1.56	4.46	7.43
Tax	0.34	0.24	0.84	0.04	1.19	1.23	1.43	0.50	1.54	2.18
Net profit	1.78	0.81	1.59	0.16	1.96	2.70	2.42	1.05	2.91	4.53
Adjusted EPS in	5.93	1.31	2.56	0.26	3.16	4.35	3.90	1.69	4.69	7.31

As above inputs have made it clear that NGL has a lot of potential, And future outlook is for stable growth even if the product portfolio doesn't expand hugely.

Currently trading around 71, Buy this undervalued stock to play the pharma growth story for a target of Rs 200 in mid to long-term.