Hitesh sir, for Page I feel mkt size of economies like SL, Bangaladesh, Nepal and UAE is too small to make any significant impact on Page’s mkt capitalization. UAE may be a very brand conscious market but it is the premium brands like Tommy Hilfiger which scores high there.
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Hi Hitesh,
An interesting anecdote. Praj was one of the few comapnies that we analysed or better tried to in the early days of VP. That takes us back to 2008 or so. Praj was pointed to me by Donald. He asked me to do some ground work. VP was still in the making then and we use to exchange mails.
What I remember from then, Mr Choudhary, the owner/promoter, was working on the next generation (probably the third generation) technology. The idea was to use farm waste to make ethanol.
Rgds
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Hi @hitesh2710 ji
Any views on IPCALAB? They have been again hit with a new FDA warning a while back for their newly constructed Piparia plant as well as for Indore and Ratlam plant. Reading your previous replies to similar warnings I know that these warnings can be a good opportunity for accumulating more stock in a company given that it’s likely to depress the market price.I am fine with holding a stock for long term and not be too much perturbed with up and downs in the stock prices. However do you foresee any major indicators for investors to cut short their losses in IPCA, since it’s being on FDA radar for wrong reasons couple of times in last year? I would really appreciate your views on this.
Thanks.
Disc : Invested
vivek,
Ipca has taken much longer than anticipated in getting its Usfda issues resolved. There could be an opportunity cost associated with these delays. Other wise the company in the past has a good track record and once these issues get resolved returns can be good. But often its the waiting that hurts. I had exited some time back when the stock had managed some kind of a rally.
Hi HiteshBhai,
Very basic question. Working capital = current assets - current liablities . Should current investments from current assets be removed to calculate working capital?
Dear Sunil
You tossed a dicey question, not a basic one. There are different school of thoughts on treating cash and liquid investments. Technically going by accounting definition yes Current Assets includes all that can be realised within a short term e.g. one year.
But for practical investing usage, different treatments are applied. Working capital is used to check:
- Short term financial need of company- whether it can pay off the short term liabilities. One should include even “long term quoted investment/bonds” here as well. Anything that you can collect under the sofa is helpful when you are in trouble.
- Second place where working capital used to check efficiency or operating health of company: here cash is idle, current investment is idle. They don’t have meaning to run the business, hence excluded. That’s why we rely on cash conversion cycle which is more specific.
Some find out a minimum percentage of cash that is required for business say 1% of sales (this is Guy Spier estimation) and take it as part of working capital requirement.
Cutting story short for accounting yes, for investment depends on situation as I put above.
Hope it helps!
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Hi Hitesh
First of all many thanks for helping the investor community here in simplifying and understanding the complex world of Investing in stocks.
On the recent USFDA observations on some very well established Big companies, to name a few -Wockhardt, Ipca, Cadila, Dr. Reddy and some news today on Lupin:
- Is this because these are Old plants, legacy employees/middle management - difficult to change mind set, Chalege attitude.
- Whereas some small pharma companies mostly new plants and relatively new managements like Shilpa, Granules have very little or no issues getting USFDA inspections done.
- or USFDA is tightening the nose and more stringent than earlier as Pharma from India seems to grow Big.
mhs,
Most of the times pharma companies get caught due to issues of data integrity, storage and manipulation. e.g Companies producing a batch of finished drugs (formulation) may not get the desired results sometimes and to avoid batch rejection and subsequent re testing sometimes some employees resort to short cuts and try to manipulate data so suit their purposes. This is just an example.
Now a days some companies have resorted to totally automated data where no manipulation is possible.
There are many other issues where USFDA might have issues with pharma companies. e.g Poor work conditions for employees, cleanliness at plants and so on and so forth.
With a lot of drugs going off patent, the FDA also has a responsibility towards ensuring high standards of manufacturing in companies who supply drugs to US markets.
I think the mind set of the management and training of employees for following SOP is very important.
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Hitesh Bhai…What’s your take on Lupin’s valuation considering it’s making 52 weeks Low due to recent FDA observations? Is there a way to avoid FDA related risk at ones portfolio level?
Considering your black belt in Pharma domain, I am assuming that it’s part of your watch list .Your thoughts would help to make sense of it…Regards
surender,
I dont track lupin and hence not much view about its valuations.
But as a company it remains a good company, but at which levels it becomes attractive for investment I am not too sure. Usually once these companies face USFDA heat, it gives plenty of time for someone to accumulate if he is so inclined.
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What are your thoughts on Hindustan Zinc? I do not see much being talked about it in the forum. Although, the company is posting good profits every quarter, enjoys more than 50% of the profit and have good reserves. Is there any concern with the company? Maybe the government stake in it?
Hitesh Sir,
Most of Indian pharma companies make generics…are there any innovator companies which make patented drugs…anything that we could take a look at…
Sorry for a different and unusual question.
Thanks
I think there are very few companies working on new molecules. The obvious ones that come to mind are SPARC, Suven etc. And some companies like Glenmark, Biocon, Cadila all are having some focus on NCE.
But barring glenmark I think very few companies have met with major succes in NCE field.
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Hi Hitesh bhai what’s ur view on kesoram after their sale of investment in century, tyre plant sale to repay debt…also all chance Aditya birla will take over due to investment pattern which will bring synergy to ultra tech in southern part
Regards
mukesh,
I dont track kesoram so not much idea about its business or valuations.
Hi Hitesh bhai,
Wanted to know your view on Torrent pharma’s news, they are seeking to raise around 10K Cr while they already have debt of around 2K Cr…they might be in process to acquire some company for that they need fund or something else.
are you still holding torrent pharma’s stocks ?
Regards,
Ravindra
ravindra,
I think torrent’s announcement is aimed at getting approval in place for any need which might arise if they were to make a big acquisition. For a company of its size the amount of funds to be raised is not a big concern but as a principle I dont like companies which have to look at acquisitions to grow.
I will reserve my view till the actual acquisition comes through bcos the type of acquisition and amount paid for it would be important.
I hold torrent pharma shares.
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Hiteshbhai do you track HMVL. comparing it to its peers like Jagran which are very comparable in terms of margins etc the margin of safety seems very attractive
HMVL has shown better growth recently and also has lower debt. Is lower dividends and the accumulating cash ye only reason for low valuation.
nnaik,
I dont track HMVL so no idea about it.
Hi Hiteshbhai,
Just wanted to know how would you view Take Solutions. Is it an opportunistic bet or can it be a part of long term / CORE Portfolio?
Tks & Rgds,