grI recently wrote about my new investment: Ankur Drugs & Pharmaceuticals. Here's a small update that further reiterates my belief that the company is headed for good times. The promoter of this company - Purnandu Jain has been an active buyer of his company's shares in the recent months. The quarterly shareholding pattern available for this company on the BSE indicates this. Check these links 1,2 and 3.
Promoters buying shares from the secondary market is a fairly strong signal. This is because unlike selling , buying is a voluntary decision. People can end up liquidating some of their holdings for reasons like buying a new house, repayment of some loan, etc. The bottomline is selling can be a forced decision. Whereas buying shares (making investments) is mostly voluntary, unless you are a large steel manufacturing company. Noteworthy is the fact that pple make investments only when they think that the investment they are making is the one that CAN yield the highest return for them at a reasonable risk.
Therefore, I for one am quite bullish over the fact that Ankur Drugs is a). recording robust growth in its business and b). the promoters in the company too feel the same. Not just promoters, Reliance Capital (one of the largest and best performing mutual funds) too feels the same. It picked up a 9.5% stake in Ankur Drugs in November last year.
Disclosure: I've a long position in the company bought at Rs.92 per share. I bought these 2-3 days prior to my blog entry on this company. The stock has since moved by over 45% and is currently trading at around Rs.137. I expect the company to report a PAT of over Rs.20 crore for the fiscal 2007. Discounting this by a multiple of 8-10 times gives me an approximate price target of Rs.180-200 per share.
More updates: Dilution of equity due to the conversion of FCCBs
I had done some rough computations on the likely effect of the conversion of the 16,000 FCCBs (amount: USD 16 million) issued by the company in May this year. Here's how they look:
1).Assuming the FCCBs get converted at a price of Rs.100 per share.
2).No. of additional shares would amount to around 7.4 million shares.
3).Current shares outstanding is 9.5 million.
4).Shares o/s post the conversion would amount to 16.9 million.
5).With a NPAT of Rs.42 crore (as claimed by the company's head), year end EPS would stand at Rs.24.9 per share.