COMPANY IS AN API PLAYER WITH LEADERSHIP STATUS IN MACROLIDE
ANTIBIOTICS API. IT HAS A LEADERSHIP
POSITION IN ERYTHROMYCIN SALTS API.
CMP 143 MARKET CAP
120 CRORES.
EQUITY 4.17 CRORES.
THERE ARE 83.4 LAC OUTSTANDING SHARES OF RS 5 EACH. PROMOTER HOLDING IS
65%
DEBT NIL
CASH AND EQUIVALENTS --
25 CRORES IN MF AND BONDS PLUS
7.5 CRORES AS CURRENT INVESTMENTS IN MUTUAL FUNDS PLUS 6.22 CRORES IN
BANK FD. TOTAL AMOUNT OF CASH AND EQUIVALENTS IS 38.7 CRORES.
FINANCIALS
YEAR
03
04
05
06
07
08
09
10
11
12
H1fy13
SALES
37
55
54
80
84
114
122
173
180
229
118
NP
3.9
6
4.7
6.7
6.9
7.8
8.7
12.5
12.3
12.85
7.3
COMPANY HAS BEEN ABLE TO INCREASE SALES AT A STEADY RATE BUT
MARGINS SEEM TO HAVE SUFFERED.
COMPANY PAID OUT A DIVIDEND OF RS 5.5 FOR FY 12 AND AT CMP
DIV YIELD IS AROUND 3.7%
COMPANY HAS RECENTLY IN JULY 2012 COMPLETED SOME EXPANSIONS
WHICH WILL INCREASE THE VALUE ADDED PRODUCTS AND THIS MIGHT INCREASE THE
MARGINS.
AVG ROE FOR PAST FEW YEARS HAS BEEN 20%.
INVESTMENT THEME:
ENTERPRISE VALUE OF COMPANY IS 85 CRORES AND SINCE PAST THREE YEARS COMPANY HAS BEEN
ABLE TO NOTCH UP NET PROFITS IN REGION OF 12 CRORES. EFFECTIVE PE IS AROUND 7.
COMPANY HAS BEEN GROWING ITS SALES CONSISTENTLY OVER THE YEARS. ONCE MARGINS STABILISE AND
IMPROVE, THIS STOCK COULD BE A BIG WINNER WITHOUT TOO MUCH DOWNSIDE RISK.
How does Anuh comapres with other stocks in same pharma API space like Granules, and Shashun (especially when looking at the fall these 2 stocks have had from their peak).
I am following this company from some time and it has been huge wealth generator.They are growing well and are generous in dividend distribution.Their past track record is excellent and we can seriously consider this company for long term portfolio.As per their Ar Rs 10 invested in one share at 1989 has multiplied to 96 shares of Rs 5 each and now it’s approximately worth of Rs 12000.
The company product portfolio consists of antibiotic products like Erythromycin,Azithromycin,Clarithromycin and some other products.Exports contributes fifty percent of it’s sales to un/semi regulated markets.Company imports 90 percent of it’s raw material requirements.So rupee depreciation is the main factor for declining margins.In FY 12 even though sales grown 28 percent net profits are almost flat.May be things will improve.Here we can give that credit to management that eventhough rupee depreciated by more than twenty percent in last one or two years company posted good profits.Company completed it’s expansion so that we can hope that sales will accelerate with very good margins as rupee stabilizes now.
Some worries are also there. Erythromycin constitutes almost fifty percent of sales and is matured product now.So margins will decelerate.Company exports fifty percent of its products to semi regulated markets where there is huge competition from other unorganised players.As company imports 90 percent of it’s raw material requirements forex issues are there.
As company product consists of matured products it need to augment R&D and management take right step in acquiring R&D assets of Invent pharma based out of Navi Mumbai.
So considering very good past track record,debt free balance sheet with good cash,Completion of capacity expansion,stabilizing Rupee,generous dividend distribution and very good management ,i consider it’s long term portfolio bet .
Thanks Hitesh ji for posting this at appropriate time.
I love companies which continue to grow esp sales without taking too much resort to debt. Anuh is one of them. In fact it is a cash rich nil debt company.
I guess once margins stabilise/improve this could be a company which could be an interesting bet. At cmp I feel downside seem limited and once has to be patient if one has bought bcos the positive news expected might take more time than expected.
One more point i forget to mention that management shares future outlook precisely.In AR -11 they mention that they will post 233 crores sales in Fy12. They did 229 crores. This year as new products are launched in Europe and completion of expansions they expects to achieve better value addition and also profitability.Managing director states that company will grow easily by atleast 20 percent for next few years.
For the last eight years they reported consistent year on year growth in topline and net profits and dividends too.They have consistent track record of generating positive free cash flows over last several fiscals.
But one factor we need to monitor is degrowing sales in last two qy eventhough management indicated completion of expansions in july12.
I have followed this co earlier and at that time I came to know that as a group they are quite big. They are also into distribution of pharma medicines etc. They also have some prime real estate in Mumbai.
But I had got out of the co as I didn’t see them ambitious or trying to do something new. Despite being into the pharma space for so long, they haven’t tried creating something and this is why the stock trades in a PE band and probably won’t get high multiples. At that time, I came across several ideas like Poly, Shilpa etc and all of them have quite outperformed.
So yes, from bargain perspective and medium term, it does have value and may be a steady compounder.
Total Income Flat @ 65.56 Cr v/s 66.44 Cr.
EBIDTA DOWN 56% to 3.8 Cr from 8.68 Cr.
Net Profit DOWN 37% to 2.2 Cr from 3.5 Cr.
EBIDTA margin is 5.8% v/s 7.8% (SQ-12) and 13.1% (DQ-11)
NET Profit margin is 3.4% v/s 6.9% (SQ-12) and 5.3% (DQ-11)
Total Raw material costs as a %ge to Income is 86% v/s 81.1% (SQ-12) and 80.8% (DQ-11)
Employee costs to Income is 1.1% v/s 1.9% (SQ-12) and 1.3% (DQ-11)
Other expenses to Income is 7% v/s 9.3% (SQ-12) and 4.9% (DQ-11)
Tax Rate 26.7% v/s 30% (SQ-12) and 30.7% (DQ-11)
Material costs up 5.1%, Processing charges more than doubled, Power & Fuel and
other expenses too have risen more than sales, all of which resulted in steep fall in EBIDTA.
Then, Forex loss of 83 lacs v/s loss of 3.69 Cr year ago, despite that Net Profit gone down Because of steep fall in EBIDTA.
9M/Fy-13 v/s 9M/Fy-12:
Total Income up 3.5% to 183.75 Cr from 177.48 Cr (Fy/11-12: 226.09 Cr)
EBIDTA DOWN 14.6% to 15.64 Cr from 18.32 Cr (Fy/11-12: 21.02 Cr)
Net Profit DOWN 4.2% to 9.51 Cr from 9.93 Cr (Fy/11-12: 12.85 Cr)
Can anyone let me know, if the Sales / Net Asset figure of Anuh is high or comparable with other players in same space? From Q4 report and 31 / 3 / 14 BS it seems Rs. 266 cr sales is being generated from a 12 cr net asset. Their WIP Asset is minuscule… Is it OK for this industry and product ranges?
Or is it a trading company with 40 - 45 days WC need? Didn’t check last 2013 AR yet.
Their BS is really uncluttered on the face of it…
In addition to the above note, on a cursory review it seems Pharma companies like Granules, SMS, FDC, Shasun etc have Sales / Asset ratio of about 2- 4 … How can Anuh has it at 22+ … ??
Those who know about the nature of this company — please respond …
Q1 results have been spectacular, sales up 40 %, PAT 90 %.
It isstill undervalued or reasonably price@ 14 PE.( zero debt, ROE 20 %)Are we missing a silent story. The last two Q have shown stellar performance. Request some commnets. I leanrt that due to lower margins Mr M gives it lower PE and also unrelated business of group, real state etc.
I have not as pro as Hiteshbhai in this stock or sector, but have been broadly tracking it as I know the company through some family friends, it is doing really good and they have a vision to reach a sizeable revenue in coming few years. Management is very down to earth and simple and are genuinely pursuing their business. I have been holding it and shall keep holding it. It is a classical grahamian stock, gd dividend, reasonable PE, decent growth, and good ROCE%…
