Shilpa Medicare – Update

We recommended SML in our blog on 26^th July, 2009 @ 90. The stock has witnessed a fantastic upmove and has been hitting upper circuits since last few days. The stock was locked up at 161.70 today J

At CMP, we advice small/partial profit booking but at the same time one shouldn’t underestimate the long term story in this stock. The stock still has long term potential for the following reasons:

1. The company is all set to emerge as the biggest & dedicated player in the Oncology segment.
2. The company has fantastic operating margins of 25-30% and the company is growing @ 30%+.
3. For co’s growing at such pace with such high margins, the PE multiples could be in the range of 15-20.
4. If so, price target of Rs 200 can be achievedJ.

Other triggers are:

1. The company is expected to receive USFDA approval by the end of this year.

Apart from that, we are awaiting the annual report of the company and looking for industry/market updates. Chip in your updates, if any.