STERLING BIOTECH LTD

STERLING BIOTECH LTD.
(RS. 149/-) RE. 1/- F.V.):

SBL is mainly in the business of Gelatine manufacturing. Its financials are in the box. According to our sources in the industry (who wish not to be named), such high profit margins in this industry 30% of sales. For overseas operations, employee cost just 1.50%. Equity is 18.67 crs. Profit figures are too good to be true. Even if profit figures are taken on face value, scrip has P.E. Ratio of 77 which is not enjoyed even by bluest of blue chips. Daily trading volumes are 1.50 – 3.00 lakh shares but delivery ratio is 0.50 – 2% only. It clearly shows that vested interests are creating intraday volumes to sustain the share price. If, government imposes income tax on overseas profits, many companies will cease their over-seas operations. Many promoters succeed in showing bogus operations only because they
don’t have to pay income tax. Sell. Fundamentally, share price should be Rs. 3-Rs. 5/- Company has 18.67 cr. shares but only 800 share holders. Actual promoter holding may be more than 90% although, it will be a difficult exercise to prove. Again, company made profit of 53 crs. but dividend is zero. Fundamentally, Sterling International share price should not be more than Re. 1/- – 2/-. Surprisingly, BSE does not put this scrip under’T’ category although, very low delivery ratio indicates high level of speculation.

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