Based on the screenshot that you’ve shared, it’s clear that CFO was negative only in fy18 in contrast to your comment of it being negative for 3 years.
Secondly, where did you see the cash flow statement for this year as they only share the balance sheet and PnL. Did you just assume that the operating cash flow would be negative in fy 19 as well?
Regarding receivables, they’d fallen in March18 to 7.1cr from 7.9cr in Mar17, which highlights receivables have been fluctuating and I don’t see any big red flag in that. Capex not leading to increase has different reasons which Dhiraj has mentioned in previous post.
Agreed that the company doesn’t look very exciting per se, but finding faults where none lies isn’t right either. At 8.7 pe and ev/ebitda under 5 it certainly looks attractive to me even with single digit growth.
Your original comment said cash flow, not operating cash flow, thats what made me to comment cash flow is negetive, cash flow is negetive for last 3 years, see net cash flow the bottom row.
i meant to say FY18, not FY19. I also mean to say capex completed in Fy17(based on numbers in cashflow).
My comment was only to provide my observation, people have their own reasoning to invest and everyone has their own risk appetite. Happy investing.
I see it purely as a value stock which are sort of out of fashion these days. Best case , it can be a 3-5 bagger in next 4-5 years, worst case it’ll just give 4-5% div yield.
I’m happy to wait til the tide turns.
Happy investing.
Normally, when investor refer to cashflow without any specific mention, it would be operating cashflow (post working capital change) or free cashflow (operating cashflow net of routine capex) which is also called free cashflow for equity investors, in my opinion. Since balance sheet always Talley, higher operating cashflow has to find out it place to matching debit. It can be investment, capex or increase in cash balance. So the movement net cash balance does not make any significant input to investment decision for me. This is my view and as you correctly said, investment is personal matter and would differ from person to person so even evaluation of the company.
Also agree with other view on thread at every business is good at value. The value may differ from investor to investor. While I have existed my position from company, I may enter again if I find valuation more attractive. I would request all contributor to thread to ask difficult questions and replay with facts with equal vigour. My only request to all members to have healthy discussion without any taking dicussion personally which would benefit all investors.
Happy investing !!!
Discl: exited from my tracking position.
Excellent set of Q3 numbers from BDH. Highest ever sales and profits. TTM revenue crossed 50cr for the first time. Let’s see if the trend continues over coming quarters.
Any reasons for sudden increase in sales? Is it one time?
Not tracking company now. Since they work as contract manufacturer, generally business is not very volatile.
Considering the sales growth has been flattish for quite some time, I think the jump in sales might be due to certain price hike they might have done supported by lower rupee.
Other possible reason could be revenue generation from other initiatives that company had taken which hadn’t been contributing to sales up till now.
the jump is quite substantial. so your second point look more likely
2 quarters down, sales and profits, both have again jumped to the highest ever level, proving Q3-18 sales weren’t fluke.
The newfound growth is most likely coming coz of revival seen at IPCA. IPCA is coming out of a long patch of regulatory mess(2015-2018) and showing good traction.
After Q1 results, and after 2-3 UCs, bdh is still trading at a PE multiple of just 7!
I think, even if they do annual sale of around 60cr in FY20 (Not far fetched considering TTM sales of 57cr) and make profits around 6 cr, it deserves a valuation multiple of atleast 11-12PE, giving us market value of 65-70cr, translating into 1 year upside of 70-80%.
Views invited.
Disclosure: Invested
Dear Puneet,
Is there any relation between IPCA and BDH?
BDH is a contract manufacturer for IPCA.
Good set of numbers for Q2’20. At YoY level, both topline and bottomline have grown by 15-18%. Now the company is trading at PE of below 7 which I feel is super cheap for a cash rich company, starting to show growth in revenues after 3-4 years.
While scanning through the site, I came across the BDH’s product list and found out that they manufacture Chloroquine phosphate which is being touted as one of the potential drugs for COVID-19. I think this is what has caused a sudden interest in BDH, resulting in consecutive UCs. If this indeed leads to pickup in demand, this could change fortunes for bdh.
Disc: Invested
In my limited understanding, one need to differentiate a bulk drugs (or API) from forumlator. The real skill in pharma is mainly to manufacture bulk drugs. While novel drug delivery system (NDDS), is also an area of significant value addition, in domestic market, innovation are mostly in API then with forumlator (except some higher end products like insulin injections/ asthma pumps).
BDH in my limited understanding has forumlation capacity (tablet/capsule/ syrup etc) then bulk drug capacity. Hence, they can buy drug and convert in tablet. While approval with WHO and other authorities are important factors, but still, bulk drug of HCQ would be major beneficiary (even assuming Government does not control price).
So in my limited understanding, BDH is unlikely to gain majorly due to COVID crisis due to HCQ. Having said that, change in Pharmaceutical sector perception and decline price may be positive and I have no view on same.
Discl: No investment, Not SEBI registered investment advisor, Not recommending.
what is volume growth? is there any data regarding this? where done the companies mention volume growth? please help @ sahil vi
Is there any outlook going forward?
Where can i find data about its business, capacity utilizations, outlook etc.