The Hindu Business Line : Fem Care zooms on export thrust

THE stock price of Fem Care Pharma, a company engaged into business of cosmetics, is on rise in the last one week on huge growth potential from the export markets.

Its stock price has increased from Rs 72 a week ago to today's closing price of Rs 106.40, a gain of around 48 per cent on BSE. The stock was locked in the 20 per cent upper circuit in the last two trading sessions. The trading volumes have also increased during this period and on Friday trading volumes were 28,831 shares on BSE.

Brokers said the company is competing with various multinational companies in the cosmetics and skin-care business and has created niche for its products and brands.

"Fem Care is one of the cheapest stock available among the FMCG companies and has good growth potential," said an FMCG analyst with a domestic broking firm.

For the financial year ended March 2004, EPS of Fem Care was Rs 13.48 and in the first quarter, its EPS was Rs 3.91. It also paid an interim dividend of Rs 2.5.

"Based on the price earning ratio, the stock trades at 8 times its earnings of March 2004 and going forward it is around 6 times its earning, making it one of the cheapest FMCG stock".

He said the company proposes to enter the US market with its products and there is good growth potential from this market which is the highest consumer of cosmetics in the world.

In March this year, the company informed stock exchanges that it is to set up a marketing subsidiary in the US with an initial investment of Rs 3 crore to be called Fem International to market FEM products in the US market only.

The company already sells its products in the SAARC region and the West Asia.

To cater to the increasing export demand, the company has converted its manufacturing facility at Nashik into an export oriented unit and from this plant, the company hopes to increase its export turnover from the current level of Rs 1.5 crore to Rs 6 crore over the next year or two.

It is also planning a new plantat Baddi in Himachal Pradesh to cater domestic market.

However, company officials were not available for comments on these developments and the impact of it on financial performance.