Solvay Pharma India Ltd: Making your investment safe

One good thing about the stock exchanges is they have all kinds of scrips: starting from the Ispats to the Solvays.

Solvay Pharma India Ltd is a subsidiary of a dutch pharmaceutical - chemical giant Solvay. Solvay bought out most of Duphar's products to enter into the Indian market, and has now a strong presence in the pharma industry. Some of its most famous products are Influvac (the influenza vaccine), Duphalac (lactulose) and Duvadilan (for pregnant women).

In these troubled times, one has to find safer avenues for capital. In the equity markets, shares of Pharma / FMCG companies are always preferable since they are, well, traditionally "recession proof". But when you are making a safe investment, you have to choose wisely. An investment in Ranbaxy would not be safe, since it has way too much attention and is a trader's favorite. Agreed, that Ranbaxy shares have a great upside, but then, so do Unitech's.

Coming back to Solvay, have a look at the following figures: From a 68.4 crore company in 2001, it has grown steadily into a 200 crore company in 2008, on income basis. As like most of the MNC pharma companies, it has 0 debt,. What i am betting upon now is some organic growth by the company. Since its inception, Solvay has grown inorganically - buying brands from Duphar (after separating from it) as a starter. As on Dec 07, it had reserves of 66 crores, which grew to 85 crores by Dec 08. Its PAT rose from 92 crores to 99 crores, and it also pays reasonable dividend. (Rs. 17.5 per share of cmp as on 17 april 2009 of Rs. 600)

The bet is on organic growth, and more involvement of the parent company for a larger market share in India. The negatives are pretty much none - the scrip may get delisted (that is unlikely), like most MNC companies after the shares have run their course, but the possibility is remote. Now, i am simply opinionating, but i do think that Solvay Pharma India Ltd is that boat that can steer your capital out of safety in this financial maelstrom.