JENBURKT PHARMA

JENBURKT PHARMA

 cmp around 70 market cap 33 crores

Jenburkt Pharma is a small pharma company promoted by Bhuta family which has a manufacturing plant at Sihor near Bhavnagar in Gujarat.  It makes branded formulations which it promotes through its own sales force.   The company has shown sustained though not spectacular growth in its revenues and profits since past few years and seems to be on the cusp of explosive growth.

It has around 81 products and it exports 25 out of these 81 products to around 13 countries.

FINANCIALS:

As on Sep 2010, the company had a debt of around 4-5 crores . Equity is small at 4.65 crores with 46.5 lac shares of Rs 10 outstanding. 

Company has got good net profit margins which seem to be on an upswing since past few quarters.

FINANCIALS FOR LAST FEW YEARS

Year	05	06	07	08	09	10	9M fy 11
Sales	23.5	29	35.4	38.4	42.5	51.4	43
EBIDTA	2.23	2.89	3.55	3.77	4.4	7.07	8.4
Np	0.74	1.04	1.2	1.3	1.63	3.77	5.08
DEBT	8.4	8.4	9	9.53	7	4.87	4.68
EPS	1.6	2.24	2.58	2.8	3.5	8.1	10.93
DIVIDEND	1	1.25	1.25	1.25	1.8	3

As can be seen from above, the company has improved its margins significantly from fy 10 onwards and it seems that this is due to the company having completed its investment phase and now likely to achieve good growth with better margins.

Promoter holding has over the years increased from 39.84% to around 44% as at Sep 2010 through creeping acquisition.

ROE has been reasonably high over the years and likely to be above 45-50 in FY 11 based on expected EPS of around 14-15 per share.

Dividend payout ratio has been reasonably high over the years and if for current year, company declares around Rs 5 per share as dividend, the dividend yield based on cmp works out to around 7% which could offer good downside protection in market declines.

INVESTMENT THEME:

Investment in jenburkt is a low risk moderate reward kind of strategy.  Increasing dividend payout could reduce the downside risk.   And if strong growth comes about there could be significant chances of rerating of the stock. 

NEGATIVE:

With sales of only around 50-60 crores the company seems to have a long way to go in terms of reaching even the mid tier pharma companies. 

All risks associated with small cap companies apply to this company

Acknowledgement:  I would like to thank Mahesh Shah for bringing this scrip to my notice.