Poly Medicure - at an inflection point!


(AMN) #201

I am invested in Page, but completely missed the other 3, in spite of the fact that Valuepickr and other forums have been saying good things about these cos for long. The wait may be very long and frustrating, but in my opinion we have no option but to wait for a significant price or time correction before we buy these cos. In the meantime, I have invested in more reasonably priced at growth cos like Ajanta and Kaveri.

1). Page

2). La Opala

3). Poly Medicure


(Ankit Gupta) #202

Ashwin,

Don’t look at Ashiana from earnings basis. Ashiana should be evaluated from cash flow from operations perspective. You can read about that in their ARs and presentations. If you compute valuations from cash flow perspective, it wouldnt look that expensive then.

Abhishek -


(vivek bothra) #203

@ Abhishek - One of the best articles I read and re read to understand if I am paying too much is this one from Sanjay Bakshi - http://fundooprofessor.wordpress.com/2013/10/11/october_quest_2013/

Hope you get the insights that you are after!!


#204

Ankit -

I own Ashiana housing and that is precisely the point I wanted to make. We should never value it by the earnings and they’ve changed the accounting system and earnings will be lumpy, etc. We can’t just see that it is trading at 140 times earnings and it is expensive. GRUH from the time I was investing seemed expensive. If we know the business and the future potential well, then PE multiple is one of the worst way to value a business and base your buy/sell calls.

Mr. Market is no fool. I would prefer a 30-40 times earnings stock over a 7-12 times earnings stock if I’d to invest blindly in a business! :slight_smile:


(Abhishek) #205

Ashwin, ankit, ajit and vivek - thanks for your comments.

@ vivek - I have read and reread that article many times. I have also however read that it is important to buy quality companies but at realistic and not obscene valuations. For example, in the book Warren Buffet’s Portfolio, he talks about always drawing a historical range of PE of a high quality stock. Most of his big bets, I have noticed were made at the lower end of the 10 year range. Poly Med has always been a fantastic high quality business - yet 3 months back it was available at a “low” PE of approx 25. How do you suddenly justify paying 50 times. Agreed there was a verdict on the patent battle but some part of that was always priced in. Same is the case with the other 4 stocks. They have always been high quality stocks. How do you justify paying twice the 10 year historic average PE for each of them. Page has been fairly well discovered in the last 3 years. Only about a year back, it was available at 30 times earnings. What has changed so drastically that it is now worth 60times?

On another note, can anyone post a DCF that they might have done on Poly med? It would be nice to see what that throws out. I just can’t make any sane DCF which justifies something like this. Even at a 15% discount rate, you would need 10+ years of 25-30% growth to justify that kind of price. Where is the margin of safety on that?

Professor Bakshi talks about instant vs delayed gratification. But I am not sure if any of us here is smart enough to look that far down the line and say nothing is going to impact this business even 10 years down the line. I have a couple of such businesses in my PF - P&G is one of them. But I am never comfortable holding on to it.

I have made a lot of mistakes in my short investing experience of 3 years. This includes picking stocks with trashy fundamentals at low PE’s and averaging bad stocks on its way down. After 3 years, I have started to at least understand on a basic level the difference between quality and trash. I know investing is a journey and mistakes are part of it but I am now trying to avoid the next mistake of investing in quality but at the wrong price.

PS: Moderator/Admin - please feel free to ask us to direct this conversation to a new thread if it is necessary.


(Punit) #206

Quick qst to VP members - Where do you find historical PE data other than paid site such as Capitaline?

Thanks in advance


(HG) #207

An update on the 100% FDI in medical devices-

http://economictimes.indiatimes.com/news/economy/policy/make-in-india-pm-modi-government-plans-to-approve-100-fdi-in-medical-devices/articleshow/45385375.cms


(HG) #208

damaging article on polymed promoters-vadra links on the IE site -


(Raj Panda) #209

Thanks HG for reporting this. The article does look damaging to my untrained eyes.

Disc: Was invested since 2012 and got out after reading this article.


(HG) #210

Ya - I also got out of it today. Not waiting to find out what happens next.


(Tolaha) #211

On googling, found that this news had broken out initially in early March 2013.

The prices have more than doubled since this news broke out. I do hold a very small percentage (< 2%) in my PF. Wouldn’t have invested if I had known about these shady “connections” earlier!


(Ashwini Damani) #212

Questions to ask

1.How Old is this news ?

2). Why hasnt the price reacted negatively ever

3). What are the facts of the news. Who will be punished for wrongdoing (if any) and what will be the impact of it on company.


(HG) #213

Hi Ashwini,

Those are good questions and the price action today after I sold out made me think whether I should have held on :slight_smile: Others might be able to weigh the sector tailwinds (FDI etc.) against the cons and still be invested. But, I realized I was not comfortable with what was mentioned in today’s article and I’m ok with having sold it off. Who knows - maybe it will all be ‘settled’ and nobody will be punished. And maybe the price will double from here. So be it. I sold out coz I just did not want to deal with the uncertainty. It was >10% in my portfolio and I was loath to sell it but at least I won’t be thinking about it for nights to come.


(Ashwini Damani) #214

So,

This issue can be resolved through position sizing


(Hemant V Bhatia) #215

@Tolaha,

If you had gone through this thread, in March 13 ,concerns were raised on this but then it was ignored & price almost tripled from that level & in the bargain lost the opportunity :),so mkt always have its own logic on response to the news.


(Tolaha) #216

Oops! :slight_smile: Went through the thread and saw your comments posted during those days. For a change, I seem to have profited (minor though) out of my lack of time for basic reading.


(HG) #217

Arghh…anger directed at promoters caused me to sell out of a high allocation in polymed. Even though a decent amount was made, I really shut myself out from future gains. One of my goals this year was to make less mistakes - but what a mistake this is. Feeling bad/sad/angry at the same time. A good lesson learned for me…though I’m feeling bad/sad/angry all at once :frowning:


(Venkatesh) #218

This stock has come on the radar of FIIs. Grandeur Peak and Matthews India Fund has bought this stock. After being up 80% I sold the stock in December 2014 after reading that article. Have bought back every share I sold at a 5% higher price.

Also see latest interview on moneycontrol http://www.moneycontrol.com/news/business/poly-medicure-eyes-22-25-growth2-yrs-rs-100-cr-capex_1264311.html


(Venkatesh) #219

Finally a solid3QFY15 by the company. Sales up 22%, EBITDA up 37% and Recurring PAT up 43%. 9MFY15 Recurring PAT is up 20%.

Year End Mar31 (Rsmn)

1Q

2Q

3Q

4Q

FY14

1Q

2Q

3Q

Net Sales

678

778

784

808

3,048

813

939

958

Growth

19.9%

26.9%

28.0%

18.1%

23.1%

19.9%

20.7%

22.1%

EBITDA

155

192

150

167

664

178

219

206

Growth

101.4%

146.8%

2.1%

2.7%

43.0%

14.7%

14.2%

37.0%

Margin %

22.9%

24.6%

19.1%

20.7%

21.8%

21.9%

23.3%

21.5%

Depreciation

(31)

(33)

(34)

(37)

(135)

(40)

(45)

(48)

EBIT

124

159

116

130

529

138

174

158

Growth

153.7%

226.9%

0.1%

-2.1%

52.8%

11.0%

9.7%

35.8%

Margin %

18.3%

20.4%

14.8%

16.1%

17.4%

17.0%

18.6%

16.5%

Other Operating Income

28

18

19

10

75

15

18

16

Other Income

2

3

0

6

11

5

8

40

Interest

(14)

(16)

(20)

(29)

(79)

(19)

(17)

(28)

PBT

140

163

115

117

535

138

182

185

Growth

232.1%

255.9%

-0.8%

-12.5%

58.4%

-1.5%

11.8%

61.1%

Margin %

20.7%

20.9%

14.7%

14.5%

17.6%

17.0%

19.4%

19.3%

Tax

(45)

(52)

(31)

(37)

(166)

(41)

(51)

(66)

Rate %

31.9%

32.2%

27.2%

31.6%

30.9%

29.8%

27.8%

35.6%

Recurring PAT

95

110

84

80

370

97

131

119

Growth

213.3%

217.0%

1.5%

-13.2%

53.9%

1.7%

19.0%

42.5%

Margin %

14.1%

14.2%

10.7%

9.9%

12.1%

11.9%

14.0%

12.5%

Exceptionals

37

49

86

196

Tax Adjustment

(10)

(15)

(26)

(54)

Reported PAT

95

110

111

114

430

97

273

119


#220

My analysis of Mar 14 Annual Report and the latest results show that this company is not able to generate sufficient cash to pay CAPEX. For consecutive 2 years, owners CF is negative. We have to ignore one time income of Rs 9 cr for last year and 19 crs this year. Be cautious with your investments as this business is also capital intensive.