Analysis of Ind-Swift Ltd

Introduction

Ind-Swift Ltd is the formulations division of the Ind-Swift group which was incorporated in the year 1986. The company, over and above the local formulations business is also engaged in CRAMS (Contract Research And Maufacturing Services), a very lucrative outsourcing business for pharma companies in India. It also indulges in R&D to supplement the CRAMS as well as its own aspirations.

Financials

The Q2FY11 sales for the company stood at Rs 214.94 Cr against Rs 161.86 Cr in Q2FY10. Net profit is up from Rs 9.52 Cr to Rs 9.57 Cr, owing to pressure on profit margins. For H1FY11, the sales stood at Rs 393.34 Cr up from Rs 320.81 Cr for H1FY10. Net profit in the same period was up from Rs 18.17 Cr to Rs 20.58 Cr.

The EPS for this half is Rs 5.26, bringing the current EPS to Rs 10.52 as against Rs 9.12 for the previous fiscal. The current PE multiple stands at 3.2, much lower than the Pharma sector average of around 26.1. If the company delivers a good performance in Q3, the share may touch a level of 46 from which  it had fallen in the last month.

Other Positives

Current ratio of the company stands at 2.96 up from 2.71. Cash flow to debt ratio is also at a respectable value of 9.25. The cash position of the company has increased to Rs 52.4 Cr at the end of FY10 from Rs22.96 Cr for the previous fiscal.

In this fiscal, the Promoters have increased their stake in the company by 3%, which is also a sign of their confidence in the company.

Negatives

The major negative is the increasing Debt of the company which has taken the total debt-equity ratio to 2.05. This in turn may mean large amount of investments for expansion.