Thanks anindya for the explanation about generics and branded generics.
In India, typically most pharma companies market their own brands and can be termed as branded generics.
Nowadays some cities have started seeing pure generics medical shops but I think until doctors embrace the concept of prescribing generic drugs, mainly by their generic names rather than brand names, this trend of growth in generics is unlikely to catch up.
Coming to Alkem, it seems a company similar to the likes of Torrent Pharma, ajanta, Intas, and the rest of the lot. It does have a dominant place in antibiotics therapy. And much is talked about its US prospects though I dont know much about it.
Personally I would like to wait some time and know more about the company before taking a call.
Interesting question here would be - what are the manufacturing
practices/standards that are being questioned from USFDA? If so, why
would the investors flock to the smaller companies? Why can they maintain better operational standards? Simply because of the size of the operations? What is your take on this?
PS: This piece of news is generic to the Pharma Industry
There are various theories doing the rounds about companies getting caught with USFDA inspections and reasons.
They can range from as mundane thing as a leaky tap in a toilet or a lab to data integrity issues.
Its difficult to find out what exactly would be the problem with the regulator but companies would have to be on their toes.
If u read the concall of q2 results of unichem or its q2 presentation, they mention that they successfully negotiated surprise inspections from USFDA at 3 of their plants without any observations. So if unichem can negotiate these things I dont know why companies like sun and dr reddys get stuck.
Hitesh Sir, Can you please start separate thread for Dhanuka Agritech?
As we know, it is good quality business with potential growth story.
India’s food demand growth requires a big improvement in crop yields; crop protection set to play a critical role.
Strong presence in high-growth crop protection segments, better profitability should be driven by the focus on high margin products licensed from global innovators.
There are several positive comments from management which indicate that the declining trend in earnings may have bottomed out. Despite poor monsoon , it clocked c4% volume growth in H1FY16 and management indicated a clear market share gain.
There is already a thread on dhanuka. u can click on the symbol of magnifying glass on top right corner of VP page and put in dhanuka. Its the search option.
While analysing HFC pack, GRUH and Repco giving -ve or < 5% returns YoY and Can Fin homes getting good re-rating and making to 3 to 3.5 times book value. All the HFC is having lots of run way to cover for next 5 years time period and it will be great to know how they’re looking at current valuation terms. What is your view on DHFL since it is having AUM like 6 times of can fin homes, NPA is 0, GNPA is at low levels, average ticket size < Rs 12 lakhs and hidden assets in the book like insurance and etc.
Wanted to know any good book reference on learning techno-fundo analysis.
Canfin has been one of the fastest growing HFC in the sector amidst a general slowdown. And NPA is near zero since a long time. So its undergoing re rating currently.
GRUH and Repco had a lot of run up earlier and are now undergoing time correction to catch up with earnings. I dont track DHFL so not much idea about that.
One thing to keep in mind while going gung ho about HFCs is that during fy 17, deferred tax provisioning would be to the tune of 50% of total and fy 18 will have no provisions. (If u read the footnotes of results of most HFC they have clearly mentioned that they have to provide for deferred tax in ratio of 25:25:50 for fy 15, 16, 17.) So optically fy 17 results would appear slightly tepid for most of these HFCs. Whereas fy 18 would look much better y-on-y.
I dont expect Canfin to trade at par with gruh or even repco bcos both the latter have very high ROEs and ROAs.
I dont think there is any book which combines techno funda. But there are loads of books on technicals. If u want a simple free one then nooresh merani has put up pdf files of his book write up on his website analyseindia.
My understanding is housing finance companies were NOT doing provisions before this mandate, so they were asked to do from 2014-15 from their profits. Also to catch up for previous years, they were asked to provide it from General reservers to deferred tax provisions in 25:25:50 manner for 3 years. So if they are providing this deferred tax from generate reservers (not from profits) how would that impact results? I may be wrong, but want to double check.
If you look at Can fin 2014-15 Results, they provided provisions of 14.25C from net profits for that year and provided another 18cr from General reservers to catch up previous years.
as far as my understanding goes its just an accounting entry but markets look at reported numbers and these numbers do impact the net profit figures.
A better way to look at such situations is to look at operating profits but try explaining such situations to markets.
I also fear for the sector when people start taking the growth in the HFC for granted. And nobody seems to be looking at factors/reasons that could derail the companies.
I pulled this information from canfin 2015 Annual report, I think i got my numbers bit wrong,
Deferred Tax Liability (DTL)
During the year, NHB has directed all the HFCs to provide for deferred tax liability in respect of balance in the special Reserve created under section 36(i)(viii) of IT Act 1961 as on 31/03/14 and permitted to adjust the same from the retained earnings.However, based on the representations from the HFCs, the NHB has through a general circular, permitted all the HFCs to adjust the Deferred Tax Liability in a phased manner over a period of 3 years in the ratio of 25:25:50, starting from FY 2014-15.
Accordingly, during the year, the Company has transferred 18.50 crore (25% of 73.99 Cr) in the current year from the general Reserve to DTL, towards the DTL liability. Further Deferred Tax Liability of 7.98 crore is also charged to the P&L account on account of special Reserve appropriated during the current year.
I am a new member on VP and would like to have your views on GIC housing finance. I find that we don’t have a thread on it and hence putting the question here.
The run up in gic has been slow as compared to other HFCs and that has caused GIC to remain relatively inexpensive so would like your views on it.
This is from Repco Annual report, they already provided all the catch up provisions in the last year itself. they are not going to be impacted with this 25:25:50 provision rule.
During the year National Housing Bank vide their circular 65/2014-15 dated August 22, 2014 directed Housing finance Companies (HFC) to provide for deferred tax liability in respect of amount transferred to ‘Special Reserve” created under Section 36(i)(viii) of the Income tax Act 1961. NHB further advised the Housing finance companies to provide deferred tax liability in respect of accumulated balance of special reserve as on 31/03/2014 out of reserves over a period of three years commencing from the current year in a phased manner in the ratio of 25:25:50. However the company has adjusted the entire deferred tax liability of Rs.45,72,75,504 on account of Special reserve outstanding as at 31/03/2014 out of the general reserves outstanding at the beginning of the year.
Further in respect of special reserve under section 36(i)(viii) created during the current year, the company has recognized deferred tax liability of Rs.14,23,42,704/- on such Special reserve and charged to statement of profit and loss in accordance with the NHB guidelines.
I read on thread of Deepak Ferti you have exposure to Torrent Power. Even i am looking fresh at the company with the gas availability & prices coming down.
Whats the status on Sugen ? Have the power plant gone full functional ? Could you please share some info on the company since important things is to predict the profit pool going forward then just the current financials.
@manish We will take the topic forward on the torrent power thread.
@dhruwang, welcome to VP. GIC hsg bcos of the relatively lower growth shown by it has been a laggard among all HFCs. But as a business, housing finance remains a great business and therefore growth opportunities will remain for gic also. Management needs to be a bit more aggressive in its growth pursuit. But overall it remains a low risk moderate return kind of bet.
