Stock Review: Camson Biotech

A: Camson Biotech is a Bangalore based company. It is the first Indian company to enter into this particular space of biocides, bio fertilisers and hybrid seed quality. They have almost 49 products with them right now. They have mastered few products where there are high entry barriers because of high innovation cost. I feel this company can be a true multi-bagger. But one should buy in very small quantities right now. Rather than chasing the stock price on daily basis, it is better to keep it on a portfolio bet.

The company has expanded its capacity in Nangal in Himachal Pradesh. It will be operational in April 2011. A company, which has a high entry barrier and is setting up manufacturing units in Singapore, Dubai and Cairo and also have large tract of land in Aligarh and is a pioneer in its space, can be played on from a longer-term perspective.

This is the only company in India, which is into this particular space of biocides, with its own R&D on a small scale and it is highly acceptable in the region of Maharashtra. Given the promoter holding is just 31-32%, this might be even bought by some larger players and thus the expression of interest would come in that sense also. It has an earning per share (EPS) of close to Rs 9-10 and is trading at a PE of 12-13 times. It is still trading at a discount of 25-30% to its peer. Thus, we feel that the stock has a target of close to Rs 175-180 from a 12-month perspective.

However, I am seeing the development of the company, the way the company has grown in last three years from Rs 40 crore sales to expected sales of Rs 130 crore in just four years, I think the stock has a potential to be a true multi-bagger in longer-term. So, one should buy in very small quantities as of now and should hold it into the portfolio from a very longer-term perspective. This could be a true multi-bagger