Investment Opportunity: Arvind
Remedies.
Industry: Pharmaceuticals-India-Formulation
Horizon: 8 to 14 months
(NSE Symbol: ARVINDREM | BSE Code: 531823)
Last closing price (22-08-2014): Rs.48.70 Face Value:-Rs.10/- Book Value:Rs.41.10
Share Holding Pattern: Promoters-36.15% &
Public-63.85%
Price Background: The all-time high for the script is Rs.85 was made on 1.7.2003 and
all-time low of Rs.10 was made on 13.7.2004 thereafter it came back to this low
point number of times but did not break it. High and Low for year 2013 was Rs.61
& Rs.24.60 . The high & low for year 2014 (as on date) is Rs.56.10
& 30 made on 2.1.2014 & 24.7.2014.
Fundamental: The Company has come out with good financial result and posted Net
Profit of Rs.58.90 crores for FY 2013-14 against Rs.40.61 crores for FY 2012-13
giving an EPS of Rs.10.02 for 2013-14
against Rs.8.42 for 2012-13.The company has declared dividend of 8% for the
year 2013-14.The company clocked a sales
of 258.61 Cr for the June-14 quarter which is 40.67% higher then the
corresponding June-13 quarter but if you compare it with March-14 quarter then
the sales are marginally down by 5.76% but the Net Profit has risen by a
whopping 145% at 26.11Cr giving a quarterly EPS of Rs.3.83 based on this we
can conservatively assume that if other
things remain the same it can clock an annualized EPS of Rs.12/,therefore at
current price the stock is running at a P/E of 4.05 on 2014-15 EPS and at a P/E
of 4.86 on 2013-14 EPS whereas the industry P/E is between 12-15.Therefore, I
feel that the stock is grossly under
-valued and has a good potential to move up from here.
Technical: Technically the stock is nicely poised.
Recommendation: I expect a return of 50-75 % from here in 8-14 months. I therefore
recommend investing at least 40% of the marked fund for the script at the
current level and then suggest buying on dips. Kindly be alert if the stock price goes below 42 and stays at that
level. Please get out of the stock if price closes below 40 and stays for 2-3
days.
Note:
1.
Price stated here is of spot market
2.
Recommendations are valid till the stop
loss is triggered
3.
Kindly note that make your cost your stop loss in favorable
trade and then trail it as the price of the stock moves up to gain maximum
profit.
Contact me for strategic guidance to enter and
exit the trade
