| (Rs Cr) | Q4FY05 | Q4FY04 | % change | FY05 | FY04 | % change |
| Net sales | 54.26 | 43 | 26.78 | 170.33 | 162.07 | 5.1 |
| Other income | 0.07 | 0 | 250 | 0.62 | 0.5 | 24 |
| Operating profit | 11.29 | 6 | 74.77 | 29.4 | 22.69 | 29.57 |
| OPM (%) | 20.81 | 15 | - | 17.26 | 14 | - |
| Net profit | 4.74 | 2 | 124.64 | 11.50 | 6.10 | 88.52 |
| Net margin | 8.74 | 4.93 | - | 39.12 | 26.88 | - |
| EPS (Rs) | 3.30 | 1.50 | - | 7.9 | 4.20 | - |
| Trailing 12-month P/E | 13.08 |
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| This strategy, and the focus on high margin products, helped operating margins expand by more than 500 basis points during the quarter and 300 basis points during the year. |
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| As far as product categories go, the share of SSPs - which is currently around 50 per cent of total revenues - is expected to come down, going forward. |
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| On the contrary, high margin products like Antihistamines (medicines that help stop allergy symptoms such as itchy eyes, sneezing, etc.) are likely to have an increasing share of revenues, compared to around 8 per cent presently. |
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| Besides, contract manufacturing activities are likely to garner a higher share of sales going forward. |
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| The company has bagged several contract manufacturing orders in the API and formulations space. It has announced a tie-up with a UK-based pharmaceutical company for supplying off-patent API supplies worth Rs 200 crore over the next five years, starting FY07. |
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| It plans to set up a greenfield project in Jammu to service this project. The proposed capex for this plant is at Rs 80 crore. Surya Pharma also has another contract with a Middle East-based company for supplying advanced intermediates. |
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| This contract is estimated to be around Rs 110 crore, over the next three years. |
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| According to an analyst from a prominent domestic research firm, considering the company's size, an investment of Rs 80 crore in a new greenfiled project is a big input. Thus any delay in the implementation of the facility will be risky. |
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| The company has a high working capital loan of Rs 43 crore as on December 2004. Thus the higher interest burden may act as a drag on future performance. |
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| The commissioning of the Jammu plant (which will enjoy fiscal benefits such as excise and income tax exemptions) by FY07 is expected to result in considerable improvements in both topline and bottomline. |
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| Moreover, increasing revenue prospects as a result of the shift in focus towards high-margin products, apart from contract manufacturing, are also likely to benefit the company going forward. |
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| Analysts are expecting an EPS growth of 94 per cent in FY06 to Rs 15.5 and 100 per cent in FY07 to Rs 31. The stock currently rules at a trailing 12-month P/E of 13x. |
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| Though the company doesn't have competitors with a similar business model, it can be compared to firms like Neuland Laboratories (P/E - 9x), a Hyderabad-based API manufacturer, and Shasun Chemicals & Drugs (11x), which is into contract manufacturing. |
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| Compared to these firms, valuations are reasonable, and considering Surya Pharma's growth potential, the stock is attractive at current levels. "The scrip should cross Rs 200 levels in 12 months," said one analyst. |
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