Small cap stock to buy - Bliss GVS Pharma

I came across a small cap stock discussed in ET Investor's guide. After reading the reasoning and some stock analysis, I thought it could be a good small cap stock to buy for long term investing.

Bliss GVS Pharma is a mumbai based 26 year old export oriented fast growing company. The Company is engaged in manufacturing of female contraceptives, soft pessaries and suppositories. The products are marketed under the brand name 'Today'. Company's products include nonoxynol 9 vaginal contraceptive, 100 milligram (MG) clotrimazole vaginalpessaries and suppositories, and hydrocortisone anal suppositories.

The Company also manufactures to United States specification vaginal pessaries of Clotrimazole and Povidone Iodine in addition to anal suppositories for treatment of piles. During FY10, exports to unregulated markets contributed over 95% of the total revenues of the company. Bliss has a significant presence in most African markets through selling branded suppository dosages and anti-malarial formulations. Company is the largest manufacturer of suppositories and pessaries in India — selling them under its own brands and manufacturing them for other pharma companies.

Growth opportunities for company

The company is ramping up its manufacturing capacities to cater to the increasing demand for suppositories. Its new plant in Thane would be in full capacity production mode by September 2011. The company is planning capex of Rs 35-40 crore in FY11 and FY12. They intend to commission an R&D centre in this year.

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Stock valuation
As on March 2010, company had reserves of 122 crores. For a company with 245 crores market cap, it is very good amount of reserve funds. Company had debt of only 7.64 crore. Company has constantly increasing sales turnover with constant growth in net profits too.

At current stock price, Bliss GVS Pharma is available at P/E multiple of 5 which is below industry average. Dividend yield comes at 2%. The stock is available near it's 52 week low. One may invest in it for long term (2-3 years minimum).