I would trust the management 50pc. Each quarter, the debt climbs by 100 cr and the company maintains that they don’t want more debt.
2020 is a far cry. For me, profit growth without balance sheet growth n cash flows doesn’t mean much And that alone drives valuations.
I’m happy with the turnaround but remain unsure if the stock will bounce back above 130.
Although Q2 results were positive, the disappointment was the lack of sequential gross margin improvement.
The reasons for this dismal show include:
The mix during the quarter in the API business for new capacity coming on stream being more skewed toward developing markets where the margins tend to be lower. In addition, our company trimmed down some volumes in India for Metformin due to competitive pricing. Overall this resulted in the gross margin benefit from expanding US revenues being offset by unfavorable geographic mix within the APIs.
Raw material cost inflation continues to be an issue. Given the lag with which price increases are coming through, the pass-through is still not reflecting in gross margins. crude cooling down is a major positive on this aspect.
Our management is confident that after the completion of the last round of major expansions (Oncology API and FDF), steady deleveraging can be expected from the next year. The current gross debt of Rs 1120 Cr should decline to Rs 900 Cr over next two years.
2HFY19 is expected to be stronger as the impact of additional asset utilization plays out. The margin impact, however, would be fully captured only in FY20.
In the next 2-3 years, the focus will be on higher capacity utilization. During FY18-21, the company expects a ramp-up in capacity utilization across its key molecules, including Paracetamol with expanded capacities of 6000tpa with validations for higher-margin developed markets, and Metformin, for which demand growth is expected to remain strong in the developed markets.
Did anyone attend the concall? Was there any talk of impact on USD loans due to appreciating dollar? And what ia the jump in the intangibles?
I did see it. The question is: is the debt being used and paid back outside of India? That way conversion to INR doesn’t happen
The mutual funds have shown some interest mainly Kotak, DHFL, BNP, Invesco & Reliance during October’18
The MF Holding is inching towards previous high…
Is it slowly & steadily… good to see someone from promoter group buying at current levels… I know the numbers are TOO small to make any impact but certainly confidence booster for investors
ANDA approvals for Methylphenidate Hydrochloride Extended-Release Tablets USP, 10 mg and 20 mg.
Are we really ready to turn around
Domestic pharma industry contributes to over 4 per cent to the gross domestic product, against the global average of 9 per cent. This makes India a country with one of the lowest medicine spends.
Although no one would be interested personally in spending more on medicines, but as a owner of pharma industry contributor, the growth projected provides nice outlook for upcoming future.
However, spend on medicines is projected to grow by 9-12% in the next five years compared to China’s 5-8%, which will thrust India forward to reach the list of top 10 countries. There are close to half a million people directly, and over a million people indirectly, employed in the domestic pharmaceutical industry. This makes India the second highest skilled biotech workforce.
ANDA approval trend is encouraging although the report says that it will increase the competition & companies will observe pricing pressure. Let us see how it impacts our company
Pledge release notification of 75L shares by KPC, balance pledge still remains 5.33 Cr shares.
In the past, release of pledge is followed by creation of additional pledge and that too for more shares. So let’s wait and watch
Few key notes from concall
Pledge is down from 60% to 53% & further reduction planned in current quarter, expect better figures by Q4 results
The debt to EBITDA ratio reduced from 2.6 at the end of Q2 to 2.3 at the end of Q3
Management wants to have debt to EBITDA at least 1.5 & they don’t wish to be zero debt company rather they may explore further CAPEX for next level of growth after 2-3 years, obviously once they are able to utilize current facilities
GranulesIndiaLimited.pdf (334.7 KB)
Promoters sold 50 lakh shares to a group of reputed investors in a block deal on the stock exchanges, to mobilize about INR 50 Cr. In addition to it, the promoters are also monetizing personal assets worth up to another 50 Cr., which is expected to be complete shortly
The funds raised through these transactions will be used to reduce promoter leverage by up
to Rs 100 Cr. and which will subsequently bring down the Promoters pledged position to
around 30% from current level of 54%.
Good to see that management is walking the talk & have reduced the pledge by almost 35% of total promoter pledge. The pledge during start of quarter was above 6 Cr, which has gone down by 2.15 Cr. Pledge has been the major curse for this scrip & investors can fell fresh life with recent developments.
