Investment Rationale
* Indoco has reorganized its business in order to add strength by bringing all the manufacturing units of the group under its fold.
* During the first nine months ending March 2007, Indoco's net sales were up 38% and the net profits increased by 28%.
* Indoco's top 10 products are ranked within the first five in the segment.
* Indoco's research team is working on 9 molecules mainly in the ophthalmic segment.
* Indoco's facility for manufacturing sterile eye drops is US FDA approved and is in a segment that has 5-6 players in the world. • The company has its manufacturing facilities approved by USFDA, UKMHRA, GMP, etc...
* Indoco has received the ANDA approval for Ciprofloxacin, used in sterile eye drops.
* The company has growth plans in the semi regulated markets and has filed dossiers in CIS, South Africa, Australia and New Zealand.
* IMS ORG ranks Indoco 21st in the Prescription Audit and 33rd in the Retail Audit for July 2007.
* During the first nine months ending March 2007, Indoco's net sales were up 38% and the net profits increased by 28%.
* Indoco's top 10 products are ranked within the first five in the segment.
* Indoco's research team is working on 9 molecules mainly in the ophthalmic segment.
* Indoco's facility for manufacturing sterile eye drops is US FDA approved and is in a segment that has 5-6 players in the world. • The company has its manufacturing facilities approved by USFDA, UKMHRA, GMP, etc...
* Indoco has received the ANDA approval for Ciprofloxacin, used in sterile eye drops.
* The company has growth plans in the semi regulated markets and has filed dossiers in CIS, South Africa, Australia and New Zealand.
* IMS ORG ranks Indoco 21st in the Prescription Audit and 33rd in the Retail Audit for July 2007.
Financials and Valuation
Indoco is currently trading at 7.1x FY07E and 5.6x FY08E EPS of Rs. 35.4 and Rs. 45.1 respectively. Given the reorganization of business, the growth in both domestic business and exports, the rankings of the company's products and the business strategy for growth, we estimate the revenues to grow at 33% CAGR from FY06-08E. We initiate our coverage with a 'BUY' rating with a 12 month target of Rs. 350.
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