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Surya Pharma - Further details

I am able to collate the details of the developments with Surya Pharma.

1. The company has undertaken a de-bottlenecking exercise in its existing plant which will help it to increase productivity and revenue in second half of FY 2008.

2. The company has started exporting Menthol and menthol derivatives from August 2007. Hence, the full impact of revenues from Menthol exports would start reflecting in the coming quarters.

3. The company has embarked on construction of a new plant in the tax haven state of Jammu in accordance with US Food and Drug Administration to manufacture Active Pharmaceutical Ingredients (API) in the areas of therapeutic oncology and sterile cephalosporins.

4. The company is entering into high margin injectible business and also anti-cancer drugs.

The above factors would help the company to achieve higher revenues and profits in the second half year. The first 6 months EPS works out to Rs15 and I believe the second half year can contribute atleast the same amount if not more. Assuming the full year EPS works out to Rs3o, at current market price of Rs110 it is quoting at a forward FY 2008 PE of less than 4. It makes a strong case for buying at current levels and I am planning to buy it.

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