Fundamental Analysis of Jeevan Scientific Technology Limited


(dhanvarsha) #1

We have minute holdings in this company for tracking purpose.

Company Profile

Jeevan Scientific Technology Limited, established in the year 1999, is a global management consulting, technology services and outsourcing company located in Hyderabad, India. It’s a CRO & active in Clinical Research field.

Services:

• Clinical Operations
• Bioanalytical Services
• Clinical Data Management
• Biostatistics and Statistical Programming
• Medical Writing
• Pharmacovigilance Services
• Regulatory Affairs
• Quality Assurance
• Project Management

Corporate Office:

Plot No. 1&2, Sai Krupa Enclave
Manikonda Jagir, Near Lanco Hills
Golconda Post, Hyderabad 500 008
Telangana., India.

Chairman: Mr. Sreerama Koteswara Rao Surapaneni
Executive Vice Chairman & Managing Director: Mr. Krishna Kishore Kuchipudi

Shareholding Pattern:

Promoter Group: 30.41%
Public Holding: 69.59%

Technical Analysis:

Company’s current stock price is 43.80.

Market Cap: 33.88 Cr.
Stock P./E.: 30.80
Book Value: 6.41
Face Value: 10
52 Week High/Low: 56.00 / 24.00

Disadvantages:

  • Though the company is reporting repeated profits, it is not paying out Dividend
  • Company has low interest coverage ratio.
  • Promoter’s stake has decreased
  • Promoter holding is low: 30.41%

Notes:

They are being active in Clinical Research field. Yet there is less competition & hence they can acquire the market with ease. Once they establish their footprints in India, they can also go further with the expansion plans globally. Growth prospects are very high.

Regulatory body is a cause of concern as in recent past they haven’t sanctioned many approvals rather delaying the process because of safety concerns.

They have been trained. Hence the Approvals with appropriate projects will be given with due consideration. These projects are very lucrative and hence once the approval is given the Liquidity and the OPM will increase. US FDA has recently approved the facilities after Audit for the Company.

Apart from Regulatory bodies, the procedure to conduct clinical trials was bit stringent. Highly qualified professionals are required to manage such processes.

Trainings are mandatory and should have the teams globally to manage Projects.

Data Management & Other technologies are being used in this process. Hence the Systems should be with strict securities & should be managed by well qualified professionals.


(AbhijitMani) #2

If you could throw some light on the how scalable this business can be & also what is the management commentary on the road ahead ?
When you say " these projects are very lucrative" , can you quantify them ?
also, after the US FDA approval, what kind of new opportunities will this open up for the company ?


(dhanvarsha) #3

@humbleInvestor,

Thanks for your response.

The Company is dealing in Clinical Research, BA/BE Studies, Data Management & the other activities.

These projects are funded mostly by the Global MNC Sponsors.

The technicality of these projects are very deep & high.

Once, they get the clear approval from US FDA or say DCGI (Drug Controller General of India) then they own the patent rights for approx 15 Years. Hence to conduct these projects, they receive huge funding based on the Indication of decease, The remedy & the Protocol ( A Document or SOP to conduct a particular trial).

I will try to get some management commentary on the same as you have suggested.


(dn2017) #4

My two cents having spent the past decade servicing the pharma industry.

This is a commodity service. There are thousands of small and large CROs. I have not studied this company but in general such small companies don’t get studies directly from sponsors and mostly subcontract from large CROs. Its very very difficult to scale up this business. Grossly overvalued in my view.


(NALAM PRASAD) #5

Hi Sir,
Since you made the comment, stock has come down. Since you are from the industry may I request you to clarify two things of the industry:
(1) Receivables of this company relative to sales are quite high. As per Screener, it is 291 days as of Mar 2018. Of course, Mar 2018 AR has one more line in Trade Receivables, “Other receivables” which is nearly 50% of the total receivables. Is this the industry practice that the customers make payment after a long delay.
(2) The expenditure on tangibles and intangibles (In intangibles, I saw a new head called ‘Intangibles Process’) in the last two years is quite high. Again, is it the industry standard that gross block to sales ratio will be a low number.
Regards,