Vimta Labs Ltd. share price target

Management Visit Note

Food testing business is seeing significant traction due to rising awareness about food safety, recent enforcement and activism by FASSI. There is also more increase in third party testing rather than in-house testing which will further be more beneficial for company. Hence the company has decided to set-up 9 more food testing labs across the country. Out of this labs at Bhimavaram, Kochi, Nellore, Pune and Visakhapatnam obtained required accreditations & commenced commercial operations. Accreditations for Ahmadabad, Bangaluru, Kolkata & Indore are under progress and commercial operations are expected to commence in third quarter which will further add to revenues and would be a major revenue driver for company in coming years.

VLL has also not leveraged itself and the debt on books is mainly taken to fund the expansion of food testing labs. With the expected strong growth in business fundamentals coupled with operating leverage over next few years profitability is expected to improve significantly. Therefore we recommend to BUY.

Clinical research and testing - Major Revenue Contributor - Provide stability Company has presence in pre-clinical testing having an strong analytical skills and provides these services to pharma, bio-tech, animal health, Bio-similar clients and medical device companies. Analytical division contribute around 45% of revenues which provides better stability to the overall business. In clinical research and testing India is rapidly gaining market share over China due to better quality and technology protection laws. Also the innovators are now outsourcing these operations to low cost countries due to better cost economics. Due to these factors industry as a whole is expected to grow at a good pace which would be...