Positive on Glenmark Pharma: Avinash Gorakshekar, Anagram Capital Ltd

Avinash Gorakshekar, Head Of Research, Anagram Capital Ltd, in a chat with ET Now talks about the pharma stocks.

What do you make of the pharma space?

Within the pharma space, we are positive on the CRAM space - typically on stocks like Jubilant Orgo, maybe a Dishman or maybe a Divi’s Laboratories. These are the large caps which we continue to be confident on because CRAMs which did not perform last year, are likely to do a come back in terms of a business traction this year. We would also be positive on Glenmark Pharma considering the fact that it has significant amount of triggers coming in from a molecule release which probably the market is yet not fully factoring in in the price.

In the smaller caps, we are very confident on stocks like JB Chemicals & Pharmaceuticals. Here very interestingly, this company is into the OTC as well as the cardiovascular space and has been beaten down because the management has been considered to be pretty conservative. But if you see the numbers, they have been a very good strong profit making dividend paying company. In fact last year, they paid 100% dividend. The company’s profitability has also been quite robust. They made a bottom line of roughly about odd 118 crores, on a equity of 16.8 crores. Our sense is that 2011 could see a very strong traction in the business, earnings growth of roughly about 40% and a valuation of just about 5 times.

On an EBIT to EBITDA, the stock trades at roughly about 4 times. This is a very interesting company and investors who want to take a medium term call could probably see 40-50% upside from the current levels.