A company that increase sales by five times in four years at a constant profit margin will be more then a five  bagger in terms of price

       Vimta Labs – Contract research will drive high growth

Vimta seems to be engaged in contract and clinical research for major foreign companies. It is trying to encash on the cost differential structure that we have with the West. Over the past two years the margins of the company have expanded probably because of increased focus on clinical research Clients include six Fortune 500 companies and three of world's "Top Ten" generic drug development company.

Companies such as Vimta cannot be evaluated on PE basis alone. This is because a small cap company could have a radically different PE even if it gets a couple of its acts together. So the financials above should be more as a reference point rather then a complete guide to analysis.

The company ahs a vision statement to be among the top 10 global research and Contract Company by 2010. This seems very interesting. The company intends to grow both organically as well as inorganically. The mere scale of opportunity makes one believe that there is more to this company then mere financials .Contract research could be a big thing and once a company gets its act together pharmaceutical is one industry that can put it in the higher league. Though their business models was very different an investor could think that Matrix was a Rs 4 crore company in 2001 which the promoter “N Prasad sold off at close to Rs 6250 crore last week..

The Indian clinical research market will be a US $ 1 billion industry in  2010 from the current level of US $ 100 million. A ten fold growth in 5 years at a CAGR of 58%

The company intends to get into newer areas like Genomics (detailed study of the human DNA system) Proteomics (plays a role in the life of organism and helps in discovery of causes of certain diseases.)

The proposed food safety bill will increase create stringent testing compliances for the Indian processed food industry and that is another area where Vimta is looking at.

Recommendation: Vimta is a company to keep an eye on..  If any body could fill us in on the business processes in further details a better understanding of the stock could be developed. Apart from that the stock does appear to be a buy at current levels for a 3 – 5 years perspective in which the investor should be able to multiply wealth.

Source company website and bseindia.com