Lasa Supergenerics Limited


(phreak) #362

Few months back it was all Unit V (or was it Unit IV?) and how it was the next big thing for Lasa and how the capacity will go up from 6000 MTPA to 10000+ MTPA or some such (Even as such capacities made no sense for a company with over 20 intermediates). Hardly couple of months into opening that unit, they are already purchasing some other unit? Why? Is the demand so strong? If prospects were so strong then why did the promoter sell so much stake? Is this new unit just for the consumption of media and exchanges to shore up the share price so some more selling can happen? Let’s see.


(Nolan) #363

Unit IV was mainly a backward integration unit. Abhinandan unit should enhance their API/Formulation production capacity. Rival group promoters were selling and there could be various reasons ranging from emotional to rational. Omkar Herlekar, who holds the key for Lasa going forward, has increased his stakes during this period.


(paresh.sarjani1) #364

All your doubts raised are valid.
Unit V of Omkar was pre demerger which became Unit 4 of Lasa post demerger.

Promoter selling has been biggest issue in this company since long. Good thing is selling was by Sir Pravin Herlekar and SVAKS Biotech. I believe this is to just to tender more loan to Omkar Speciality as its been in huge losses.
Omkar Herleker is increasing stake and he has not sold single LASA share.

Buying company for backward integration was already planned and disclosed in last Concall. Rights issue is also planned.

I believe partnering with that China company is expected to grow sales, so preparation for same is going on.

Once March results are out, dust should get settled with respect to auditor exit, etc


(phreak) #365

Omkar Harlekar is also a director in Svaks biotech. Please see here. So he has indeed benefitted from dumping his entire stake there post demerger.

I was comparing Lasa with Sequent and NGL Finechem since all of them are in the Vet API space and this is what I found.

  1. NGL Finechem EV is around 290 Cr and Lasa is over 350 Cr. NGL Finechem has OPM above 20% while Lasa and Sequent have OPM around 8%. This is quite a big difference in favour of NGL.

  2. NGL hasn’t diluted equity in the last 12 years. In comparison, both Sequent and Lasa have gone through dilutions and demergers.

  3. D/E is 0.39 for NGL and above 2 for Lasa!

Clearly one company is way, way better in terms of return ratios, corp governance for a comparable API profile (around 20 for both Lasa and NGL). Why should I pay more for Lasa even at current levels compared to NGL?


(ankitkhemka7) #366

A little confused as to how Omkar Herlekar benefits from Svaks’ selling by virtue of being a Director there… If you meant that he is a shareholder there, then you must produce evidence of the same…Assuming that he is, even then he is clearly not in majority to take any decisions… Basically @phreakv6, it boils down to one insisting on smelling a rat or not… your points about NGL seem valid, yet I could not figure out how you claimed 8% OPM for Lasa… Since you have made your stance clear previously by stating openly that this whole operation is a ‘fraud’, one does wonder why you choose to waste your precious time on a board devoted to a sinking ship… However, I myself am looking forward to Mar’18 results keenly, as well as the future trajectory of share-holding in the company…disappointments on these fronts can be a trigger for booking losses…

rgds
Ankit


(sta) #367

I think @phreakv6. Is doing a very fine job here. The story is not clear. And if someone points out our mistakes I am thankful to him. I am invested in this company but because of negative comments I am alert and always ready to pull the plug.


(paresh.sarjani1) #368

Yeah i am tracking both and invested in Sequent too.

NGL and LASA can be compared.
Not sequent


(paresh.sarjani1) #369

And Omkar Herleker is not benefitting from selling by SVAKS as at the time of demerger only he ceased to be director from all other companies


(Nolan) #370

Dear @ankitkhemka7 , There is nothing wrong in smelling a rat or presenting a counter-view. It always helps in testing investor’s conviction. Lasa might be having issues at the moment but then almost all micro-caps do hold an element of risk, so someone investing in micro-caps must be open to take a bit of calculated risk…

I have chosen to ignore the narrative around promoter holdings and Parent Company linkages. These I believe are short-term in nature and do not present material evidence to conclude decisively. Having said it, I am staying cautious. Meanwhile,there is no change in the opportunity landscape for Lasa, and it will not take time to bounce back as and when it gets reflected in result/s. In contrast, if the operational performance is not in line with expectations, then it would be prudent to revisit one’s invt thesis. Sometimes we make simple models complex by introducing too many insignificant variables. If only we stop once and reconsider the reason/s why, in the first place, we invested in a company, the decision model becomes simple. For me, Lasa has been a high growth business from the time OSCL acquired it and future potential is also good. Promoter promises a moderate growth of 20-25 percent going forward. As long as they deliver on it, rest is all clutter. This, however, is my approach and may not match with others on the board. If, someone concludes that Svaks selling their stake (or other similar stories) is/are significant variable/s, they can accordingly assign them weights in their decision model.


(phreak) #371

One can always complain about the portion size at a restaurant even if they don’t like the taste of the food. Nothing wrong with that.

I was checking OPM of last FY for comparison. I see that Lasa does have 20% in the last three reported quarters. If they can maintain that going forward, they have roughly over twice the sales as NGL Finechem and by that metric, they might actually be undervalued (relatively of course). EV of NGL is 290 and Lasa is 350. So with a 20-30% discount (what I will be comfortable with paying) for past issues and the demerger (Which I thought was a well-planned value-unlocking for the promoter’s family but not for everyone else), the current price might be cheaper by 20% even with the governance discount of 30%. However, I am willing to wait a couple of quarters to see what else the promoters might be upto, other than running the business.

Disc: Not Invested


(Sarvesh Gupta) #372

Few points to be noted here lest we get into a very generic discussion on this stock:

  1. First of all, there are two types of equity investment opportunities - one is characterized by proven track record, established quality of both management and business and hence to an extent commensurate high valuations which persists even during bad times when the business is not performing so well or markets are in bear cycle. These businesses if held for the long term can comfortably beat the market. In short a portfolio of such stocks can give you a very comfortable retirement but not make you wealthy.

  2. The other set of equity opportunities are exactly opposite of the first one - an unproven track record, low quality as determined by either numbers or the perception of the real numbers, perceived low quality of business or management or both. Such businesses, however also trade at commensurate low valuations. These businesses are very risky for most investors as numbers alone wouldn’t justify making an investment. LASA comes under this bracket currently. Most retail investors/non-professional investors should certainly stay away from the same. However, in these investments, if one is right and has a decent position - such investments have the potential to make one not just comfortable but wealthy. On the flip side, if one is wrong, one can loose a large part of their total investments also denting prospects of a comfortable retirement.

  3. Unfortunately, I have noticed that a lot of retail / newbie investors fall in the trap or lure of high risk/high returns opportunities like LASA. They seem to mostly rely on the herd behavior and shallow analysis/ comments which seem to be coming from seemingly expert sounding investors on online forums and blogs. Such investors fail to realize that most of the bloggers and writers on online forums are themselves just novice investors who have read a book or two on value investing and/or Buffett and lack the experience of a true bear market like that of 2009. Its not that the intentions of these so called expert bloggers and online commentators are bad - its just that they have only seen the last few years of bull market in small caps and suffer from lack of full cycle experience. They also fail to realize that in most cases (not all), small caps are just a leveraged bull market bet - providing significantly higher returns in the bull markets and also falling significantly more during the bear markets. This was amply displayed in the present correction where NIFTY has fallen by just 8% from its peak but most small cap portfolios have fallen by more than 25% with over 1400 stocks trading at 40% or more lower than 52 week high.

  4. This is not to say that some one should invest in LASA or that LASA is a bad investment - the important thing is that one needs to understand what category of opportunity it is and what category of investor one is. And then what kind of volatility one can stomach (very important in bear markets as most people are just unable to bear volatility no matter what they think of themselves in bull markets). So, if one is investing in a company like LASA, one better be a very good analyst of the same stock, which means - one should have met and gained comfort from the management if one thinks meeting management is useful, one has done a lot of independent primary work and also and very importantly one comes from a strong enough financial background to withstand volatility as well as have ability to buy more in the fall if one has the conviction. This kind of work is better left to truly experienced and competent investors - so one needs to do an honest review of what kind of investor one is and then only indulge in such investments. Hearsay or just reading comments and thoughts of other people on online forums will never give the conviction to either take a large bet or double down when the stock falls. As someone has said, borrowed conviction can never make your wealthy.

  5. What is also less useful and significantly low efficacy path is just doing basic comparison on usual metrics like EV/EBITDA, Debt to equity etc. - microcaps can quickly change colors based on small changes in numbers. A 2 cr saving on rent can suddenly make the stock cheaper by 30% or sale of one historic land parcel can double the net-worth - so numbers are important but that analysis should come later once one has developed a good understanding of the business and is having a high conviction on the same.

  • For example, given that what we now know about Omkar’s result, I can’t help but comment on the futility of excessive number based research approach when it comes to such stocks. I am sure many would have read this report - http://www.drvijaymalik.com/2017/05/analysis-omkar-speciality-chemicals-limited-equity-research-report.html - this is perhaps the most comprehensive number based analysis on this stock. However, did reading this research piece help a common investor much - I don’t think so. Arm chair investing style will seldom work in such cases.

So overall my hope is that small investors who are generally incapable of doing in depth research will stay away from such hope based investing which is generally catalysed by equally incapable/inexperienced people writing online doing just arm chair analysis. At the same time, I hope that the capable, experienced and those who have the requisite time will also have the tenacity to do a thorough piece of independent work rather than just dismissing such potentially wealth making opportunities on the basis of simplistic arm chair/ratio analysis.


(grohal) #373

There are hundreds of small cap stocks which have gone up more than 10 times since 2014. But earnings/revenue are not up even 2 times for almost all of these stocks.
This is the first filter we should apply before looking at any mid/small cap stock. Because when the next bear market hits us, all of these will be beaten down to levels where they belong!!


(paresh.sarjani1) #375

LASA circuit revised to 10%


(akash123) #376

(post withdrawn by author, will be automatically deleted in 24 hours unless flagged)


(bullrun1988) #377

Lasa Supergeneri insider trade Disposal of equity shares worth Rs 36.96 lacs by promoter now Pravin Shivdas Herlekar having only 2% & RISHIKESH HERLEKAR having 0.83% of lasa.


(sta) #378

The good part is that Mr omkar has has not sold. And has more than 31 percent now. The pressure on the price will continue till Mr Pravin and younger son are completely role out


(bullrun1988) #380

Any link of this news??


(Salman_kn99) #382

Can you tell me how did you get share holding pattern till April?


(sta) #383

Search insider trading for lasa. The photo that I have submitted will come.You can infer from the data given


(Salman_kn99) #384

But Omkar Speciality Chemical holding somewhere around 5% & thats one of the reason prices are falling. See news below:

BRIEF-Omkar Speciality Chemicals Working On Solution About Bank Of Baroda Declaring Loan Account As NPA Source text - bit.ly/2HCehyr Further company coverage: