Nicholas Piramal - Good BUY for One Year Term
Investors with a 1 year perspective should consider buying shares of Nicholas Piramal, a leading pharma company engaged in custom manufacturing drugs for Western companies and selling branded formulations in India. It is one of the top contenders in India to capture a fair share of the $15-billion outsourced pharmaceutical manufacturing market, as it has both the expertise and capacities to make the cut.
At the current market price of Rs 355, the stock trades at 17 times its estimated 2008-09 earnings per share. This appears reasonable given the company’s strong growth in 2007-08, which has the potential to improve over the next couple of years.
In the last 12 months, Nicholas Piramal’s sales grew by a handsome 16.2 per cent and net profit by 53 per cent. The company has turned its focus to contract research and manufacturing services recently, buying Pfizer’s drug unit in 2006 and Avecia’s unit in 2005 (both in the UK).
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