Quick Pick - RPG Life

 

RPG LIFE - CMP 103/-

 

Company is in to manufacturing of  Formulations & Bulk drugs for Oncology, CVS, CNC and Immunosuppressant. Around 50% revenues comes from domestic formulations, while 35% comes from the Bulk drugs/APIs. Company is making both - Bulk & Formulation plants FDA compliant in 2008, so as to export formulations and bulk drugs to US and Europe and gain better margins.

 

Company is restructuring its business, leading to hiving off of the investments held directly and through subsidiary; in to a separate holding company, which will unlock significant value. Restructuring scheme is approved by members of company and is now pending with Highcourt [likely to get approval shortly]. After that, company will de-merge the business as per the scheme and will allot new shares to existing holders, which will then be listed on stock exchanges.

 

Company holds investment worth Rs 195 Crs [Mkt value as on 27/12/07] which will be transferred to Brabourne Enterprise [with Equity Capital of Rs 10 Crs] and NAV for the same will be Rs 195 for 10 FV stock. On listing this holding company can list close to Rs 90, at a discount of more then 50%. The RPG Pharma, another de-merged company with expected EPS of Rs 6/- in March'08, could very well list at Rs 60-70.

 

So, post restructuring one can expect combined value of stock rising to Rs 150 or more. Thus implying a gain of around 50% from current price of Rs 103, in next 4-6 months. BUY.