Alpha Invesco Research Private Limited

BULLSbook
Stock Of The Month : Bliss Gvs Pharma Limited

July
2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

Editors Desk

Dear Investor,

Here is a brief of what you will come across in this edition of BULLSbook.

Profit & Loss account, Balance sheet, Ratio Analysis etc. All above things are important.
But the most critical part while analyzing a company is a simple question, “can this
company really grow its sales while maintaining its margins & overall operational
effectiveness?” In the first section, we’ll take a look at what really separates good
company from an average company.

As the markets have become volatile, confidence levels of many investors are shaken.
Many of them are confused and asking questions about the profitability of investing in
stocks. This is just another routine phase in stock markets where investors are
desperate to get returns quickly but they are not getting it. We recommend our
readers to sit back and read the article in the second section. Let’s get back to the
basics and figure out whether your money is invested in the right business or not. This
is the only thing which drives the stock prices in the long run and investors must focus
only on the stocks & businesses they own.

Third section has the stock of the month. We are recommending Bliss Gvs Pharma
Limited for this month. Majority of its revenue comes from exports to African countries.
The demand for its products in India has seen a uptick. The company is well poised to
exploit the huge opportunity that exists.

All the best.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

Our Approach

Signs Of A Great Company

Many stocks are available at cheapest levels, close
to or below their book value etc. Many companies
are doing decent & are virtually debt free, they
have a track record of decades. Still why these
stocks never give outstanding returns on our
capital? What really separates good companies
from average companies? Let’s take a look.

Huge & Untapped Market : These companies have a very huge & untapped market
opportunity in front of them. Very often, market forces & overall dynamics of the
economy drive the business growth without doing anything innovative. And fortunately,
Indian economy is vibrant like never before in the history. 50 crore potential buyers
are going to consume a large variety of products & services in the next few years. We
are going to see non-stop cycle of growth for the next 20 years or so. Once the overall
industry/markets reach the stage of saturation; the scope for growth narrows.
Example: Agriculture, Healthcare & Food Industry in India. The market is so huge &
largely untapped for many kinds of products & services in these sectors. And on the
flipside, telecom sector is saturated & is full of fierce competition. Companies in
telecom may not provide better returns for investors in the times to come.

Competitive Advantage : Why is it that,

two companies offering the same
product/service at the same price have
different market share ? It’s because of the
competitive advantage. Each company has its own competitive advantage that keeps
its existing customers coming again & again, or the new ones getting attracted to.
For example: A company might have a great product quality as its competitive
advantage, while the other might have customer service / prompt service. Some other
company might have innovation as a competitive advantage. In other words, great
companies are expert/specialists; they have business superiority in some area. And
they are known for it. This is what enables such companies to sell their
products/services at higher prices & command higher profit margins, perhaps making

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

business more profitable. Otherwise, we can see many average companies selling the
same product/services at extremely cheap prices, then why aren’t they successful?

We can see that many companies on the stock exchanges that are having a turnover of
hundreds & thousands of crores, but they are operating on a profit margin of 1%,
some at 2%, 5% or so. Why these companies have to maintain such low margins? Why
can’t they just increase the prices to boost their profits? Because, there are too many
companies selling the same product/service which does not need any special
characteristics. For example: Let’s consider a wheat trading company (Gehun). Let it
be any seller, the overall quality of the product is going to be the same. So any
particular trader cannot sell wheat at higher prices than the overall market. He cannot
decide his price; he has to depend on the market pricing. This way he’ll have to keep
his profit margins at the lowest possible levels to survive. This phenomenon happens in
every market where there is no need of special characteristics or product
improvisation. Companies operating in such sectors can never make it big. Growth
investors should avoid such companies.

On the other side, backed by a strong brand value, business superiority etc; great
companies continue to increase their sales even with an increase in pricing. This way
they generate extremely high cash flows compared to other companies. And by using
these additional cash flows, such companies can grow without even having the need to
take excessive debt to expand rapidly.

In the upcoming edition, we will discuss other equally important critical factors that
differentiate great businesses from the ordinary ones.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

BULLSbook Corner

In this section we will keep you updating about latest sector updates, market updates,
interviews & thoughts of investing legends, significant events & much more.

Investing In Stocks : What Matters and What Doesn't

Investing Does Not Equal Trading

Your perception of stock investing may involve highly

active traders sitting all day in front of a half dozen
computer screens packed with information, while phones
ring off in the background. Or friends with little experience
that claim great success in day trading.

You may (or may not) want to remove these images from your mind, because solid
stock investing is not about active trading, having the fastest computers, or getting the
most up-to-the-second information. Although some professionals make their living by
creating a liquid market for stocks, actively "day trading" is not how most Investors go
about making money.

Beyond having to spend an incredible amount of effort to track stocks on an hour-by-

hour basis, active day traders have three powerful factors working against them;
trading brokerage, transaction costs & higher taxes.

Just as someone can be a great racecar driver without being a mechanical engineer,
you can be a great investor without having a clue about how the trades actually get
executed in the market. How your orders flow from one computer system to the other
is of little importance.

Investing wisely is like a chess game, where thought, patience, and the wisdom to peer
into the future are rewarded.

Investing Means Owning Businesses

When you buy stocks, you are buying ownership interests in companies. Stocks are not
just pieces of paper to be traded.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

So if you are buying businesses, it makes sense to think like a business owner. This
means learning how to read financial statements, considering how companies actually
make money, spotting trends, and figuring out which businesses have the best
competitive positions. It also means coming up with appropriate prices to pay for the
businesses you want to buy. Notice that none of this requires rocket science,
complicated mathematics & statistics or the toughest studies on the planet ! All it takes
is little bit of common sense & willingness to go into the details.

You should also buy stocks like you would any other large purchase: with lots of
research, care, and the intention to hold as long as it makes sense. Some people spend
an entire weekend driving around to different stores for best bargains to save 5000 Rs
on a refrigerator, but they pay hardly any attention into the lakhs of rupees they could
create for themselves by purchasing the right stocks (or avoiding the wrong ones).

You Buy Stocks, Not the Market

We've all seen the experts on television, predicting where the

market is going to go in the future. One thing to remember
when listening to these market forecasts is that stock investing
is about buying individual stocks, not the market as a whole. If
you pick the right stocks, you can make money no matter what
the broader market does.

Correctly predicting market movements is nearly impossible. Very few financial

analysts / portfolio managers have done it consistently and accurately, over the years.
There are simply too many moving parts, and too many unknowns and too many
factors affecting the short term movements of markets. However, by limiting the field
to individual businesses of interest, you can focus on what you can actually own while
dramatically cutting down on the loads of information that is available. You can save a
lot of energy by simply ignoring market predictions.

Stocks are volatile, they always will be. Why is that? Does the value of any given
business really change 50% or more than that year-to-year? (Imagine the panic if the
value of our homes changed this much!) The fact is, the General Stock Market tends to
be a bit extreme in the short term, over-reacting to both good and bad news. So our
decisions shall not be based on anything that has a short term impact.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

Competitive Positioning Is Most Important

Future profits drive stock prices over the long term, so it makes sense to focus on how
a business is going to generate those future earnings. We suggest that - competitive
positioning, or the ability of a business to keep competitors at corner, is the most
important determining factor of future profits. Despite where the financial media, TV
Channels may spend most of its energy - offering mis-information, competitive
positioning is perhaps more important than the economic outlook, and much more
important than the near-term flow of news that moves stock prices, and even more
important than management quality at a company.

It may be helpful to think of the investing process as if you were planning a trip to
Antarctica by sea route in a ship. You cannot do anything about the current weather or
the tides (the current economic conditions). You can try to wait for bad weather that
might sink your ship, but then you are also giving up time. And time is a precious
resource in investing.

The main thing you can control is what ship to get in and who are the captain and
crew. Think of the greatness of a ship as the competitive positioning of a business, the
experience of the captain and crew, and the horsepower of the engine as its cash flow.
Some ships have thick, reinforced metal hulls, while others have weak wooden covers.
Clearly, you would pick the ships that are the safest and have the most horsepower
(cash flow).

The Bottom Line

It is very easy for new stock investors to get started on the wrong
track by focusing only on trading or the overall direction of the
market. It is also very easy for an old stock investor to be on the
wrong track and not know it. To get yourself in the proper mind-
set, remove the noise from media and focus on studying individual
businesses and their ability to create future profits. These tools are available but you
must find them or finds someone who has both the tools and the experience of how to
use them profitable.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

Stock Of The Month

Bliss Gvs Pharma Limited

BSE : 506197 BSE Group :B

NSE : BLIGVS ISIN : INE416D01022

Market Cap : 241 Face Value :1

Dividend : 30% PE Ratio : 6.2

CMP : 22.80 52 Week H/L : 47/19

BULLSbook Target : 80

Holding Period : 24 Months

BUYING STRATEGY

We recommend buying the stock around current levels of 23 & on all declines to 20 if
any. The stock has fallen from its all time high of around 50 to current levels. The
business is growing and the stock is trading at attractive valuations.

To get latest updates on this stock, type BB BLISS on your mobile & send SMS to
56767. The status of the recommendation will be updated in case of a significant
change in the overall strategy.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

ABOUT THE COMPANY

Incorporated in 1984, Bliss Chemical and Pharmaceuticals was primarily engaged in

manufacturing of contraceptive vaginal pessaries — marketed under the brand name
'Today'. After the takeover of GVS Labs in September 2006, the company was renamed
as Bliss GVS Pharma. From GVS Labs, the company acquired the competency to
manufacture various dosage forms such as injectables, creams, gels, syrups, capsules,
tablets and oral suspensions with focus on anti malarial formulations.

Bliss has a significant presence in most African markets through selling branded
suppository dosages and anti-malarial formulations. In India, the company is the
largest manufacturer of suppositories and pessaries — selling them under its own
brands as well as manufacturing them for other pharma companies.

Bliss GVS Pharma sells in over 35 countries but nearly 90 per cent of its revenue
comes from Africa. It has a portfolio of some 60 products in the anti-malarial segment.
Its most popular drug is ‘Lonart’, which is sold in African markets such as Ghana,
Rwanda and Tanzania. Suppositories and pessaries is a niche segment with limited
competition. Zydus Cadila is the only Indian rival in this segment. The company is
renowned for manufacturing and marketing a most unique product 'Today' which is a
Vaginal Contraceptive, a safe female contraceptive aimed at furthering planned
parenthood and is also an established method for preventing conception.

The company’s products can be divided into two categories – over-the-counter (OTC)
and prescription drugs. It has a significant presence in most African markets, selling
suppository formulations and anti-malaria formulations. In FY11, exports contributed
over 95% of total revenues. It has its manufacturing unit located at Palghar,
Maharashtra. The Tax and other benefits to 100% Export Oriented Unit of Palghar have
been diluted by the Government and the Company is now required to make more Tax
Provisions from last financial year. Cipla, Plethico Pharma, Madras Pharma are other
competitors for its anti malaria drugs segment in African markets.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

BOARD OF DIRECTORS

Sr. Name Designation

No
1 Govind G Desai
2 Shibroor N Kamath
3 Gautam R Ashra
6 Vibha N Kamath
7 Shruti N Kamath
8 Ramesh Mishra
10 Mayak Mehta
Chairman
Managing Director
Director
Whole-time Director
Whole-time Director
Company Secretary
Independent Director

FINISHED PRODUCT

Product Name Unit Value Qty % Sales

Turnover
Health Care Products Box 3.15 1605000 1.44%
Pharma Ltr 201.56 67384000 92.10%
Traded goods Box 14.1 N.A. 6.44%

INDUSTRY OVERVIEW

African Markets For Anti-Malarial Drugs :

Researchers have come up with the shocking revelation that nearly a million people die
from malaria worldwide each year because they cannot afford the most effective
treatment and instead often buy old drugs to which the malaria parasite has become
resistant. A study of six high-risk nations by Populations Services International Malaria
shows that Artemisinin combination therapy, or ACT, drugs made by firms such as
Novartis and Sanofi-Aventis can cost as much as 65 times the daily minimum wage in
some African countries. And hence are unaffordable for most of the citizens.

Artemisinin combination therapy, or ACT, is recommended by WHO and is accepted by

over 30 African nations. All of Bliss GVS’s malarial drugs are ACT drugs. Main
competition of Bliss GVS in those markets comes from American and European MNC
pharma companies. Since the prices of these companies drugs are very high in these
poor markets, Bliss drugs provides the same at cheaper prices thus the demand for its
drugs is consistent.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

There are many charity programmes & donations, free drug distributions to cure
malaria are done by various international institutes. However the distributions of such
programmes have not been effective throughout and majority of drugs are stolen and
sold in the black markets or unauthorized pharmacies at higher prices.

There are two ways by which anti malarial drug medicines are sold into African
markets. In first way, the companies sell their drugs to WHO (World Health
Organization) and then WHO distributes them through various programmes. WHO sells
only those drugs which are approved by its labs. Bliss gvs is a WHO-GMP (Good
Manufacturing Practices) compliant company & has applied in order to get eligible to
sell its drugs to WHO. The application is pending and has not been approved yet. In a
second way, companies can sell their drugs through private sector pharmacies. This is
where Bliss gvs has a stronghold and a effective distribution network across major
African nations enables it to keep the supplies smooth.

Formulations Market :
The pharmaceutical formulations market includes the domestic and the export market.
The domestic market accounts for approximately 61 per cent of total formulation sales.
The share of exports has steadily risen from 30 per cent in 2005-06 to around 39 per
cent (market size: $5.2 billion in 2009-10) in 2009-10. The domestic formulations
market has expanded at a CAGR of 14-15 per cent over the last three years and
reached a size of Rs 417 billion in 2009-10. This was primarily driven by robust growth
witnessed in the anti-diabetic, cardiovascular, gynecology, respiratory and Neuro/CNS
segments. In 2009-10, the lifestyle diseases segment grew by nearly 25 per cent as
compared to the overall industry growth of 17.7 per cent. In the domestic market,
lifestyle segments such as anti-diabetic, cardiovascular and gastrointestinal have
emerged as chief growth drivers over the last 3-4 years. Acute segments, mainly anti-
infectives, have continued to expand at a steady rate due to inadequate sanitary and
hygiene conditions. The domestic market is concentrated at the top with the top ten
players controlling about 38 per cent of the total formulations sales. Within exports,
entry barriers are significantly higher in the regulated markets as compared to semi-
regulated markets due to stringent regulatory norms in the regulated market.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

STRENGHTS, OPPORTUNITIES & THREATS

Bliss gvs’s ‘Lonart’ is one of the most popular & largest selling anti malarial drugs in
Africa.

The company enjoys a very cost effective and huge sales & distribution network in
Africa. Instead of employing the entire sales team the company has only one
distributor in each country. These distributors can get up to 100% margins on certain
niche products & in return they employ & maintain the entire sales staff. This way the
company has more than 400+ sales staff across the continent.

The management is exploring new markets such as the UK, South Africa, Genoa and
Latin America. Presence in diversified markets reduces the risk of slowdown in a
particular market owing to recession or macroeconomic problems. In 2010-11, the
company started supplying anti-fungal medicines in African markets, where there is
huge demand for such products.

Bliss gvs is expanding manufacturing capacity at the Palghar plant; the expansion is
expected to be completed by September 2011. This plant will produce suppositories.
The management is expecting approval from the UK drug regulator (MHRA) for this
plant. The company is also planning a round of capacity expansion of Rs 35 to 40
crores in 2011-12 and again in 2012-13, for the development of its research and
development centre. It is also planning to manufacture steroidal suppository,
ointments and tablets manufacturing in 2011-2012.

Bliss gvs has signed a joint venture agreement with Kuwait Saudi Pharmaceutical
Industries Co in Kuwait for establishing a suppository line manufacturing facility. With
this JV, company is well positioned to be a prominent manufacturer of suppository
formulations in the Middle East. Products in suppository formulations segment are
rectol, vomitin, conlax, anomex, glycerin, etc.

In India as yet the public at large are not familiar with the use of medicinal
suppositories as base. Today “The Women’s Contraceptive” is yet to be accepted as
alternative mode of birth control.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

Risk/Threat Factors
90% of the Business of the Company mainly depends on export of anti-malarial
products. The Company though well organized and maintained its risk against currency
fluctuation is the significant one.

The Company mainly exports to African countries where the stability of Government &
policies of the Government is a matter of concern.

Raw material price fluctuations & intense competition are general risk factors in the
industry.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

SHAREHOLDING PATTERN

shareholding

Promoters 63.84%
Public 36.16%

Public Shareholding Pattern

FII’s & Mutual 2%

Funds/UTI/Financial
/Financial
Institutions/Banks/Insurance
tions/Banks/Insurance
Companies

Corporate Bodies 8.35%

Individual Shareholders up to 20.48%

1 Lac
Individual Shareholders more 3.02%
than 1 lac
Others ( NRI’s, Clearing 2.30%
Members)
Total 36.16%

Promoters hold majority stake in the company.

company Their stake is consistent around 64%
over the years.
Alpha Invesco Research Pvt Ltd www.bullsbook.com

BALANCESHEET

in Cr. Mar-11 Mar-10 Mar-09 Mar-08 Mar-07

SOURCES OF FUNDS :

Share Capital 10.31 10.31 10.31 6.45 6.31

Reserves & Surplus 156.31 122.89 87.2 55.43 17.22
Total Shareholders Funds 166.62 133.2 97.51 61.88 23.53
Secured Loans 8.24 7.64 2.42 3.49 7.63
Unsecured Loans 0 0 0 0 0
Total Debt 8.24 7.64 2.42 3.49 7.63
Total Liabilities 174.86 140.84 99.93 65.37 31.16

APPLICATION OF FUNDS :

Gross Block 40.84 35.78 34.53 21.3 19.12

Less: Accum. Depreciation 20.91 15.57 10.17 6.6 3.67
Net Block 19.93 20.21 24.36 14.7 15.45
Capital Work in Progress 7.55 3.41 0.13 0.04 0.14
Investments 1.7 0 0 0 0

Advances, Loans & Current Assets

Inventories 11.61 30.67 38.69 19.12 3.4
Sundry Debtors 119.61 70.4 46.15 45.27 27.05
Cash and Bank Balance 17.98 15.32 6.85 6 4.12
Loans and Advances 35.11 19 10.87 5.74 7.52
Less: Current Liab. & Prov.
Current Liabilities 34.44 11.67 24.89 24.46 22.51
Provisions 4.19 6.5 2.23 1.04 4.01
Net Current Assets 145.68 117.22 75.44 50.63 15.57
Total Assets 174.86 140.84 99.93 65.37 31.16
Contingent Liabilities 2.13 2.23 0.4 0.26 0.12

The company has maintained healthy & steady reserves. It has diluted its equity in
2007 to fund the expansion. The debt component is very low compared to the size of
the company; Company is well poised to survive in the higher interest scenario
compared to its competitors.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

PROFIT & LOSS ACCOUNT

in Cr. Mar-11 Mar-10 Mar-09 Mar-08 Mar-07

INCOME :
Sales Turnover 219.29 169.35 133.27 102.66 62.9
Other Income 1.87 2.25 6.92 1.34 0.1
Stock Adjustments 0.7 0.79 -0.16 2.91 -1.83
Total Income 221.86 172.39 140.03 106.91 61.17

EXPENDITURE :
Raw Materials 128.09 91.36 69.68 47.5 33.83
Excise Duty 0.45 0.47 0.32 0.27 0.56
Power & Fuel Cost 0.54 0.37 0.27 0.27 0.12
Other Manufacturing 3.77 2.45 2.66 2.2 2.56
Expenses
Employee Cost 4.31 2.6 2.12 4.67 1.2
Selling and 21.47 20.43 17.12 9.65 11.12
Administration Expenses
Miscellaneous Expenses 2.63 1.52 1.76 2.81 2.33
Profit before Interest, 60.6 53.19 46.1 39.54 9.45
Depreciation & Tax
Interest & Financial 2.15 2.04 2.26 1.38 0.67
Charges
Profit before 58.45 51.15 43.84 38.16 8.78
Depreciation & Tax
Depreciation 5.47 5.4 3.59 2.93 2.92
Profit Before Tax 52.98 45.75 40.25 35.23 5.86
Tax 12.35 4.03 2.8 1.5 2.02
Profit After Tax 40.63 41.72 37.45 33.73 3.84
P & L Balance brought 101.62 69.43 35.59 2.91 0.01
forward
Appropriations 11.21 9.53 3.61 1.05 0.94
P & L Bal. carried down 131.04 101.62 69.43 35.59 2.91
Equity Dividend 6.16 5.15 1.55 0.64 0.69
Preference Dividend 0 0 0 0 0
Corporate Dividend Tax 1.05 0.88 0.26 0.11 0.05
Equity Dividend (%) 30 50 15 10 10
Earning Per Share (Rs.) 3.84 3.96 3.61 5.21 6.01
Book Value 16.16 12.92 9.46 9.59 37.29

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

From the P&L account we can observe;

The sales are going up on a consistent basis and have a CAGR (compounded annua
growth rate) of more than 35% in the last five years. Employee cost has gone up
during last year. Interest cost is stable due to low debt. Selling/Admin cost has gone
up marginally and is lesser than the growth in sales which is good. Tax outgo has
increased from 4 crores to 12 crores this year since the government has abolished the
tax incentive scheme for export oriented units. Raw material cost has gone up by 40%
where as sales have gone up by 30%. This has impacted operating profits.

RATIOS
in Cr. Mar-11 Mar-10 Mar-09 Mar-08 Mar-07
Debt-Equity Ratio (x) 0.05 0.04 0.04 0.13 0.29
Long Term Debt-Equity Ratio (x) 0.03 0.02 0.01 0.1 0.24
Current Ratio (x) 4.94 4.61 3.18 2.15 1.53
Fixed Assets (x) 5.72 4.82 4.77 5.08 5.69
Inventory (x) 10.37 4.88 4.61 9.12 31.37
Debtors (x) 2.31 2.91 2.92 2.84 4.31
Interest Cover Ratio (x) 25.64 23.43 18.81 26.53 9.75
Operating Profit Margin (%) 27.63 31.41 34.59 38.52 15.02
Profit Before Interest And Tax Margin (%) 25.14 28.22 31.9 35.66 10.38
Gross Profit Margin (%) 26.65 30.2 32.9 37.17 13.96
Cash Profit Margin (%) 21.02 27.82 30.79 35.71 10.75
Adjusted Net Profit Margin (%) 18.53 24.64 28.1 32.86 6.1
Return On Capital Employed (%) 34.93 39.7 51.43 75.85 36.21
Return On Net Worth (%) 27.1 36.17 46.99 78.98 27.47

Debt to equity ratio is low since there is very less debt. Current ratio is healthy i.e.
company is in a good position to pay all its creditors. Operating profit margins have
taken a hit in the last two years since there is a rise in the raw material prices.
However this has been the general industry trend and hence not a major cause of
concern. As the scale of the business has gone up, net profit margins have gone down
as well. We expect operating profit margins & net profit margins both to stabilize
around current levels & improve in the years to come.

Low growth companies with no expansion plans or with declining business can also
have low debt to equity ratio, since they don’t need to raise debt. Investors should stay
away from such companies. Debt to Equity ratio is not the only tool to Measure
Company’s financial strength. Rather, investors should look for companies which are

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

growing without taking excessive debt/loans. Also, it is a bad sign if a company starts
raising lot of debt when the industry is in boom. It shows over enthusiasm & short
sightedness of the promoters.

Always look for Operating Profit Margins rather than Net Profit Margins. Since OPM
gives the actual business picture & companies profitability. NPM (Net Profit Margin) is
calculated after deducting taxes, duties, depreciation, interest cost etc. All of these
factors are variable, so they may not give a clear idea about company performance.
Sometimes we see sudden growth in a particular company’s net profits but not in
operating profit. This increase comes by tax refunds, depreciation effect etc. Also,
sometimes we see a sudden rise in company’s income but not in company’s net sales.
This rise in income comes through an asset sale, extraordinary gain etc. Such type of
gain is one time & not permanent. Hence investors should always find an answer to
this question, from where the income & profits are coming ?

We expect 25% growth per annum in sales for the next 3 years. Even if we consider
conservative estimates, Bliss gvs should post a sales turnover / net sales of 275 crores
in financial year 2011-12, 340 crores in 2012-13 & around 420 crores in 2013-14.
Company’s OPM (operating profit margin) is most likely to remain in the range of 27%.
Net profit margins are expected to remain around 18%.

By this logic, Bliss gvs will post a net profit of around 50 crores in 2011-12 & around
60 crores in 2012-13 & around 75 crores in 2013-14. This will result into an EPS
(Earning per Share) of 4.7 in financial year 2011-12, around 6 Rs in 2012-13 & around
7.5 Rs in 2013-14.

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

WHY INVEST IN THIS COMPANY

Bliss gvs has developed a strong distribution network in its largest selling market
Africa. The company is one of the reputed names in Anti malarial drugs and owns some
of the highest selling brands like ‘ Lonart’.

Company is virtually debt free & the planned expansion will increase production facility
significantly.

The company is aggressively expanding its presence in middle east & other markets
like latin america.

FII’s & Mutual Funds have little exposure to the stock & is yet to catch the mass
investor attention. Sooner or later the stock is poised to attract large institutional /
individual investors, which is likely to result in further acceleration of stock price.

The company will maintain its growth rate of more than 20% in the coming years. We
expect the PE to get re-rated around 10 to 12 in the next couple of years coupled with
a rise in the earning per share.

This is the approximate estimated stock price movement in the next 24 months. This is
an overall view. Short term fluctuations in the market may take the prices up or down
than our expected levels.

Financial Year Stock EPS PE Stock Price

2011 Bliss gvs 4.7 6 28
2012 Bliss gvs 6 6 to 8 48
2013 Bliss gvs 7.5 10 to 12 80

July 2011
Alpha Invesco Research Pvt Ltd www.bullsbook.com

NOTES

DISCLAIMER:- The views/opinions expressed in this report are personal opinions. Calculations
and estimates are based on certain assumptions. It should be noted that the information
contained herein is from publicly available data or other sources believed to be reliable. The
user assumes the entire risk of any use made of this information.

July 2011