Aarti Drugs


(Ayush Mittal) #21

Yes, good results yet again and the biggest positive is the liberal dividends.

The company has already paid two interim dividends of Rs 3 each i.e… Rs 6 as div till now!

Other good indicators are consistent buying by promoters and effort to improve things.

However, I’m confused on the quality of business as the co is more into API space and has had low ROE over the years.

Views Invited

Ayush


(Prashanth Mysore) #22

There was an accident in one their plants in Tarapur, after which the stock was beaten down quite heavily.

Recently there seems to be an up-move, after the clarification from the company here:

The stock is trading at less than its book value and whats more interesting is the promoters loading up :

http://www.moneycontrol.com/company-notices/nestleindia/notices/AD

Would like the view of boarders on this special situation.


(Subash Nayak) #23

Aarti board MC message board is full of message with promoter buying big way from open market. Seems like the fear of the fire incident has been overdone.

Sunidhi security as come out with a buy call with a price target of 210


(Ruan) #24

Always a good sign when a promoter starts accumulating. Aarti is known for their quality APIs and most of their products are not in the ‘me too’ segment. As is always the case, NP might not be something to rave about when it comes to API manufacturers.


(Subash Nayak) #25

Another awesome result from Arti drugs: http://www.moneycontrol.com/livefeed_pdf/May2013/AARTIDRUGS_31mar2013_S.pdf

Sales up 9%

EBITDA up 71%

NP up 86%

Dividend 4rs (Total for yr rs-10)

This time I have 6% of my portfolio in Aarti drugs.

[ http://www.moneycontrol.com/livefeed_pdf/Feb2013/Aarti_Drugs_Ltd_060213_Rst.pdf :)(

](http://www.moneycontrol.com/livefeed_pdf/Feb2013/Aarti_Drugs_Ltd_060213_Rst.pdf)


(Prashanth Mysore) #26

Hi,

Excellent results from Aarti Drugs!

This was a given, after one looked at the way promoters were buying every other day before the results…

Though FY11 was not great for them, they’ve have had an amazing FY12 and 13.

Ayush, can you share your views on ADL post results please?

Reproducing a section from an ICRA report:

"Scale, Diversification & Market Position â With an operating income of Rs. 659 crore in FY12, ADL is amid-sized Active Pharmaceutical Ingredients (API) manufacturer for generics. The company has a strongpresence in certain therapeutic areas such as anti-diarrhoeal, antibiotic, anti inflammatory, Vitamins andanti fungal. Amongst these, anti-diarrhoeal and antibiotic segment together contributes ~50% of the APIsales. Some of the major bulk drugs manufactured include Ciprofloxacin, Enrofloxacin, Metronidazole,MBO, Tinidazole, Ketocanazole, Diclofenac Sodium and Niacinamide. The company has a strong marketshare in domestic market, for certain products like Ciprofloxacin, Metronidazole and Tinidazole. Thecompany has a well diversified geographical presence with ~40% of revenues derived from exports withfocus on Asia, Latin America and Europe. Apart from manufacturing APIs, the company producesintermediates, specialty chemicals, and steroids. API sales are the revenue drivers of the company andcontribute ~80% of revenues. Within domestic market, company has a diversified client mix includingcustomers like Cipla Ltd, Dr Reddyâs Laboratories Ltd, Cadilla healthcare Ltd, Ranbaxy Laboratories Ltd,Alembic Ltd, Piramal Healthcare Ltd, Unichem Laboratories Ltd, Unimark Remedies Ltd, Glaxo SmithkineLtd, Deepak Fertilizers & Petrochemicals Ltd, etc. The company has limited presence in regulated marketsthough, with increased DMF/COS filings, is expected to register healthy growth from exports to regulatedmarkets going forward. Semi regulated markets in Asia, Europe and Latin America contribute ~75% ofexport sales.

Revenue Growth â

ADL registered healthy growth in FY12 after a muted FY11 though The growth hasbeen even stronger in current fiscal on back of expanded capacities coming online and strong demandfrom domestic as well as exports market. ADL is expected to cross Rs. 850 crore operating income in FY13and maintain the growth momentum in next fiscal too"


(Ayush Mittal) #27

Yes, the results are great plus the liberal dividend pay-out makes it a safe stock. Stock looks undervalued at current levels.

On the concern - the balance sheet is still heavy…the business is quite capital intensive.

Ayush

Disc: I hold


(Subash Nayak) #28

Promoters buying like crazy - seems some positive black swan in offing

Total 16K share brought by promoter in short period of time


(Subash Nayak) #29

Sunidhi security has come up with a buy reco with target price of 260.

Disc: Aarti Drugs is 9% of my portfolio


(Excel Monkey) #30

Guys come with some exports related ideas

15% rupee depreciation is a big thing

Probably we should shun the pharma companies which cater to the local market and look at the one’s which derive a major part of their revenues from exports


(Prashanth Mysore) #31

Another set of good results from Aarti Drugs.

Revenues up 15% and Net profit up 33%

EPS of 9.78 vs 7.33

Went through their annual report, here are some points to highlight:

  1. Focus on internal process improvements showing results.

  2. Increased expenditure on R&D: 7.36 Cr vs 5.64 Cr

  3. The Company has successfully validated processes for few potential APIs at US FDA approved plant E-22. It will file 20 Drug Master File with Global Regulatory Authorities in next 2 yrs.

  4. Focus on core business of API. Does not have any subsidiaries

  5. FII holding at 0.47%

If the company continues to deliver good results, it definitely deserves a better PE than the current 4.96

Disc: Invested from lower levels


(Ayush Mittal) #32

Yes, its commendable that they have been able to maintain nos despite the fire accident which happened. Going by the aggressive and consistent promoter buying since several months, it seems something is happening here.

Ayush


(Bhaskar Jain) #33

http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2013/ucm369409.htm

Personally didnt find any shocking revelation but would like your comments. What was bad was that the company did not notify the exchange on receiving the warning letter immediately and did so only as a after-thought when it was out in the newspapers.


(Ameya) #34

Anyone still tracking Aarti Drugs. This stock is looking very interesting to me as promoters are buying from open market almost every other day.

Financial parameters on screener look very positive. Company plans to take advantage of several drugs going off-patent soon. They have most of the exports to non-US countries, so lesser regulatory risk.


(Ameya) #35

Anyone still tracking Aarti Drugs. The promoters seem to be buying heavily from open market. Anyone tracking for long, can you please comment on current valuations versus past?


(vishal singh) #36

technically looking good a close above 800 with a price target of 1000 in short term.


(vishal singh) #37

disc:invested


(vishal singh) #38

Aarti Drugs standalone net profit rises 36.26% in the September 2014 quarter

Net profit ofAarti Drugsrose 36.26% to Rs 18.75 crore in the quarter ended September 2014 as against Rs 13.76 crore during the previous quarter ended September 2013. Sales rose 15.37% to Rs 285.88 crore in the quarter ended September 2014 as against Rs 247.80 crore during the previous quarter ended September 2013.


(DHARMESH) #39

Latest presentation

http://www.aartidrugs.co.in/index.php?option=com_content&view=article&id=113&Itemid=116


(ASPN) #40

@subashnayak_19_, Hi Subhash, are you still tracking this company? It has been a multibagger after your find :slight_smile: .

Motilal Oswal has issued an initiating coverage report now. (It already features in the list of potential 100 baggers by MOSL).

How do you see the future of this company? Request your views pls.