I would just like to reiterate what Buffett said…invest in basket of pharma companies, because its really difficult to pick a winner.
Ajanta and a few other pharma companies provide good businesses to invest in considering the growth trajectory, returns on capital employed, low/no debt/equity, management quality and in certain cases, attractive valuations along with dividend/cash on the books. In the long term, such basket is very likely to grow at 25% or more CAGR. As such, instead of reducing positions from one growing pharma company to increasing position in other growing pharma in a loop is an activity meant only for experts or those who cant sit tight and have to churn their portfolios.
A bunch of such small and large quality pharma stocks, if locked inside a box today and opened after 10 years would have outperformed the market by an adequate margin. (unless we are in a bubble where “anything pharma” will be skyrocketing, but of course thats not the case today and thats why we have opportunities like ajanta, fdc, etc. available at reasonable valuations)
I guess its all about market perception assigning a PE to the stock in question.
Unichem is going at 15 PE probably due to some reasons:
firstly its considered to be a sort of turnaround candidate with explosive growth in profits.
secondly it has a much better presence in the US markets as compared to ajanta.
thirdly it is practically debt free and probably has better cash flow profile.(u need to check on this one, donald)
Polymedicure i guess is where it is bcos the business it is in is considered to be having long term visibility with very little competition in India. currently its suffering from temporary problems like higher tax payment (after having enjoyed lower tax payments for a long time), forex problems etc to name a few. Ideal time to buy it would be when it takes a severe beating during a particularlly bad quarter.
Another oncology play could be natco pharma.
Back in june 09 I had posted details on TED on following link
at cmp, ajanta still looks a good buy with little downside. i guess everyone is waiting for the second correction post the earlier one which it had after posting high of 800 with a lot of froth. (stock then went down to around 570 levels and bounced right back. now it seems stock just refuses to come down partly bcos of the excellent first quarter reuslts.
Agree with Hitesh and the major differentiator would be cash flows and debt position. Poly Medicure looks at 19 PE due to the one time items…otherwise its at 12-15 PE with sort of a monopoly, business leadership and 25-30% growth prospects.
Now over 1000cr mcap company. A psychological figure has been hit now. Looking at the mcap figures in the past few days and the fact the stock is in a free territory, it won’t be incorrect to assume that Jesse Livermore would have approved the stock reaching 1000cr sooner than later
this is what i could find on the hedging policy from the AR,the company enters into forward contracts for hedging purposes and not for trading purposes.the unhedghed foreign currency exposures as on march 31,2012 are about 87 cr in recievables and about 97 cr in payables.They earn about 60% revenues from export markets.if there are experts here ,how do we know the forward contracts they have entered into and the likely impact on revenues,this is a general question on impact of fx hedging and i just couldnt understand this when the debate on PI industries was going on,they were continuously making mtm losses in fx hedging despite being a net exporter and a depreciating rupee.
Haven’t heard anything bad news for Ajanta. Seems like irrational fear of pharma stocks post govt plan for regulated drug pricing. To me seems like a golden opportunity to grab this an attractive rate; may be waiting for a little longer for further downside if you are little bit greedy.
Ajanta has major revenue source from export, and hence will be marginally effected by govt policy at max. Going by the consistent track record of the management, one can easily extrapolate the expected EPS, and hence the stock price 1-2 years down the line. This is a company which has the genetic quality to reach the level of Lupin as per me.
In past (Jun’12) ajanta’s stock price had crashed from 400+ to 310 in a month or so, and again reached 443 within 2-3 month time. Seems like the same story will get repeated again (wait for 25th of Oct, it will report another 60% growth in EPS YOY, and the stock will starts its northward journey).
No doubt Hiteshjee has increased it to 10%+ of his portfolio.
not much negative on ajanta. I still maintain that is a routine correction and since it is happening before results which are due on 25th oct it makes sense to load up bcos results are bound to be good going by the first quarter results.
as subash mentioned, its a secular growth story available at very attractive valuations.
Not able to find any good source to confirm this. Btw, I initiated a small position in J B Chemicals and next day, J & J issue pops up. Same with Ajanta, initiated small position yesterday and today this news :D. Time to keep myself shut for some time.
