Stock watch: Punjab Chemicals

Punjab Chemicals and Crop Protection Limited (PCCPL) , formerly known as Punjab Chemicals and Pharmaceuticals is a good stock to watch out for the long run.

The scrip was up 4.70 per cent to Rs 275 as compared to its previous close of Rs 262.65. The company, established in 1975, began as a joint venture with Punjab State Industrial Development Corporation and Excel Industries Ltd, with a focus on manufacturing high quality agro chemicals for international markets.

PCCPL had forayed into the pharmaceutical intermediates by acquiring a controlling stake (of 53 per cent) in Alpha Drug India Ltd (ADIL). PCCPL is now in the process of merging ADIL and STS Chemical Ltd with itself with effect from 1st April, 2004.

For the year ended FY05 , turnover of the merged entity was Rs 260 crore and profit after tax (PAT) was Rs 14.25 crore with an EPS of Rs 21.90. The equity capital post merger is expected to be around Rs 6.5 crore approximately.

Alok Agarwal, senior analyst at Motilal Oswal Securities Limited said, " For the current year FY 06, we expect a turnover of Rs 320 crore with PAT of Rs 17 crore and an EPS of Rs 26. Similarly for FY07, expected turnover would be around Rs 370 crore with PAT of Rs 23 crore and and EPS of Rs 35".

The company earns 60 per cent of its revenue from exports and with the monsoon being good we expect the company to perform well, he added.