Balaxi Pharmaceuticals

Balaxi Pharmaceuticals Limited is a branded IPR-based pharmaceuticals Company with on-ground presence in markets within Africa, Caribbean Islands & Latin America. It is presently an ‘asset-light’ IP-based pharmaceutical company with a different portfolio across multiple therapeutic segments, stock & sell models, and supplying branded and generic medicines. The pharmaceuticals formulation business is the fundamental driver of revenue, earnings, and growth.

Company is well-established in the existing markets of Angola, Guatemala, Honduras, and the Dominican Republic. It is entering newer geographies in Africa and Latin America, specifically El Salvador, Ecuador, Nicaragua, Zambia & Central African Republic. Beyond this, the company has plans to expand in additional Latin American countries for the next orbit of growth.

It has submitted several technical dossiers of pharmaceutical products for product registration in El Salvador, Honduras, Guatemala, and the Dominican Republic – hence building a deep pipeline of registered/approved products that will eventually become a formidable portfolio. With a growing brand penetration in Venezuela, among the top three markets by size in Latin America, the Company now aims to create in-roads in this region.

The current geographic and product mix is as follows:

It has a rich portfolio of 745 pharmaceutical product registrations (646 new registrations submitted), strong distribution strength of 37 warehouses, and a fleet of owned vehicles across four countries. The Company aims to double its portfolio of product registrations over the next two years. It has plans to set up a pharma warehouse in Nicaragua, Ecuador, Zambia & Central African Republic.

Future Expansions:


Setting Up Manufacturing Facility

The Co has decided to invest in establishing in-house capabilities for researching, developing, and manufacturing differentiated formulations for Latin markets. It has acquired land to establish its first manufacturing location in the Pharma SEZ, Telangana and the ground breaking ceremony is scheduled on December 2022. It intends to establish a greenfield WHO-GMP/PICS certified manufacturing facility. This facility will be specifically focused on expanding the portfolio of differentiated branded formulations.


Standalone results:

Consolidated results:

-The company was virtually debt free now but will take debt of around Rs 40 crs for manufacturing expansion.

  • The ROE is 53%
  • Please note that results post March 2022 will be different due to merger of subsidiary.

Quarterly Performance Commentary


  • Robust revenue growth of 23.0% YoY during Q2FY23 period was led by the Pharmaceuticals business. In this segment, Latin America contributed significantly with 29% growth. Previously launched geographies of Dominican Republic and Guatemala delivered strong expansion whereas Honduras and El Salvador have also initiated business operations and hold immense long-term business potential. In addition, other countries in the region are being lined up for upcoming expansion. In Africa, established operations in Angola resumed growth within the ecosystem of previously registered products, with the Central African Republic that is likely to start contributing from Q4 FY23.


  • During this quarter, EBITDA was higher by 5.2% despite absorbing higher cost structures in several recently launched operations in countries that are likely to scale up to potential over the next few years. EBITDA declined marginally by 290 bps to 17.1% in Q2 –however, the outlook of margin expansion in most frontier markets targeted by Balaxi remains encouraging.

Profit After Tax and EPS

  • Profit After Tax: Profit After Tax grew by 28.5% YoY in Q2FY23, despite lower margins. Earnings per Share (EPS) for the quarter was recorded at Rs. 15.49 compared to Rs. 12.05 in the corresponding quarter last year.


Working capital intensive operations: Operations are working capital intensive as reflected in gross current assets (GCA) of 181 days as of March 2022 owing to inventory days of around 150 to 180 days. This is supported by moderate support from creditors of around 90 days.

Revenue concentration risks : More than 75% of revenue coming from Angola, the company remains vulnerable to economic uncertainties in the region and volatility in currency rates.

Risks related to the upcoming capex plans: The group is taking up a project to set up a New manufacturing unit in fiscal 2023 at an estimated cost of around Rs.95 crore, which will be partly funded via debt of Rs 40 crore. The balance requirement will be met through internal accruals and promoters’ contribution. Completion of the capex within budgeted costs, timely commencement of commercial operations and offtake from the same will remain key monitorables.


It is promoted by Mr. Ashish Maheshwari and family. Mr Ashish is CA by qualification and 1st generation entrepreneur. He started this business selling white labelled products to customers in Africa. Together with him, his wife and son are running the company and is typical family run business. There are professionals heading various business verticals whose detailed profiles are in AR.

Latin America Pharmaceutical Market
As per the Magma Information Centre research report, the Latin America Pharmaceutical Drug Delivery market was valued at $62.2 billion in CY2020 and is projected to reach $160.5 billion by CY2030, growing at a CAGR of 9.97% from CY2021 to CY2030. The oral drug delivery segment
was expected to be the highest contributor to this market, with $23.2 billion in CY2020, and is anticipated to reach $49.5 billion by CY2030, registering a CAGR of 7.86%. According to statistics, the generic drugs market in Latin America currently has a value of $37.1 billion. It is expected to reach a value of $50.6 billion, growing with a CAGR of 6.4% between 2021 and 2026. ACCORDING TO A PROJECTION FROM COHERENT MARKET INSIGHTS, the CMO (Contract Manufacturing Organisations) pharmaceutical market in Latin America will increase from $15 million in 2020 to more than $39.7 million by 2027. This represents a CAGR of 14.7% over these seven years. The Latin American over-the-counter drugs market is growing significantly: it’s set to post a robust CAGR of
8.64% between 2021 and 2026 and an increase in volume from US$11.4 billion to US$17.3 billion, as
per projections from Market Data Forecast.
The Central American region is a subset of the Latin American Market and comprises seven countries: Belize, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and Panama.

The estimated combined population size of the region is ~49 a million people, and its combined Gross Domestic Product (GDP) is estimated at ~$275 billion. The country with the highest GDP in the region is Guatemala – ~$78.5 billion, and the country with the lowest GDP is Belize – ~$1.8 billion.

Stock specific information:

Currently only ~8% of company is in hands of public. MGC Fund and Elara India opportunities fund are both holding 9.5% stake. Promoters having 73% holding.

The valuation is 11 times earnings with market cap of Rs 610 crs. I think its nearest competitor in terms of geography and product mix is Caplin Point. The PE of Caplin is 17.8

Disc: Invested and biased. Not registered analyst. Information for education and not for recommendation.


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I attended their Q1FY23 concall and am sharing my notes.

FY23Q1 concall

  • Top 3 in Angola
  • They define market share as addressable market share in products going from China + India. Based on this, they are #1 in Dominican Republic, #2 in Guatemala
  • African competitor: Shalina Healthcare, Prince Pharma (both are Indian cos)
  • LATAM competitor: Caplin Point
  • From Jan, Angola has been consolidated with business. So Q1 nos are not strictly comparable
  • Volume growth of 45-50% in LATAM
  • Higher gross margins in this quarter due to cross currency benefits which are one-time in nature (3.28 cr.)
  • New formulation facility will cost 85 cr. and will span from Sept 2022 - March 2024. 35 cr. will be incurred in FY23 and balance in FY24. This will combination of debt + fund raise
  • Existing geographies: Angola, Guatemala, Dominican Republic, Honduras
  • New geographies: Nicaragua, El Salvador, Ecuador, Chile, Zambia, Central African Republic
  • Focus will continue for next 5-years on these frontier markets, no plans to go to other markets for now
  • Current suppliers: WHO GMP certified suppliers in China, India and Portugal
  • Gross margins are higher in Angola but also expenses are higher. So at EBITDA level, LATAM markets are more lucrative (>4%)
  • Projecting sales of 500 cr.+ by FY25 with same margins
  • 40% sourcing is currently from China
  • In LATAM, company is distributor and sell to wholesalers (working capital cycle ~ 230 days)
  • Angola working capital is 150-160 days
  • What is the cost structure for marketing in LATAM? Very lean cost structure vs Angola. Central warehouse (2 in Dominican Republic, 1 in Guatemala). Staffing 4 expats from India in each country. Marketing & promotion costs in Guatemala are higher because company is still new in market
  • What is your network of wholesalers? LATAM – 80-85, Guatemala – 60, Angola – 1000 retailers. Angola is core market and company has direct relationship with retailers
  • Projecting high single digits (8-10%) sales growth in Angola
  • Expenses out all registration costs (no capitalization)

Disclosure: Not invested (no transactions in last-30 days)


Saw the interview of Mr. Ashish Maheshwari the chairman & MD. Sharing my notes.

  • There are 2 limitations which the current exporters from India face, 1. They don’t control distribution in other countries 2. They concentrate their exports to the finished dosage forms for which they have factories. Like they would be concentrated in either tablets or capsules or injectables but no one really provides everything. Balaxi disrupts that by exporting in all dosage forms in sufficient quantities.

  • There is just 1 other listed & 1 other unlisted company having similar business model. There is a high entry barrier because you need good human resource management, cultural integration, product registration & infrastructure in countries to which you export.

  • Till now, 100% of their production is outsourced to WHO GMP compliant factories in India, China & Portugal. They are in 7 regulated markets currently where WHO GMP is the norm. After 4-5 years, they plan to expand in CIS countries, South east Asia where WHO GMP is not the norm. Instead, you need a EU GMP factory.

  • WHO GMP factories do contract manufacturing at very reasonable prices but EU GMP factories charge a lot. That’s why they are setting up their own EU GMP factory because there are 2 other advantages too. 1. They would be able to control the quality & would be manufacturing their best sellers of Central America in their own factories. 2. The EU GMP produced medicines have higher efficacy (ability to produce the desired result) than WHO GMP medicines. So, people will get better medicines at the same price which would further help the company grow their sales.

  • Before setting up stores, the company has to register its products with the government which takes time like 2 or 3 years which also is a pretty decent barrier to entry. Another advantage of having an EU GMP factory is that you can given priorities for the product registration if you have them. EU GMP is slowly becoming the new norm.

  • They will probably start production in the EU GMP plant by April 2024. They would make tablets, capsules & injectables there while still outsourcing liquids, ointments & infusions. It would give backward integration to them as well to help them expand.

  • They also started selling biscuits in Angola pre covid in 2020. The demand has been decent. The opportunity they saw was that India is one of the biggest exporters of biscuits with Angola & Dominican republic being our top 2 importers. With the company having a great presence in both of the countries in the pharmaceutical segment, they had a nice brand recall which would probably help them. Currently the margins in this business is thin but they plan to setup a plant after the sales reach a certain amount which would then shoot up the margins by 60-70%.

  • His son & daughter would be next in line to run the businesses. His son currently handles the Central American business while his daughter handles the FMCG business.

Disclaimer :- Not invested, tracking the company.

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Stock has appreciated 10% post this news.

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Their average weekly traded volume appears low (~2600)(source: Does this raise any flags?

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Recently, huge (all-time high) volumes on this counter. Can’t find any bulk, or block trades either. Mixed Q3 FY24 results. Are the conditions in Angola getting better or something else?

Few developments:

  • Raised capital through preferential allotment for capex - formulation plant, manufacture of tablets & capsules. Will have a WHO GMP certificate and the product will be untouched by human hands till packaging. 32 Cr for phase-1 which will be completed in 1 year time. Funding secured for this. Link for Capex update
  • 15 Cr for phase-2 which will double phase-1 capacities. This will be secured by incremental warrant conversions.
  • Incorporation of a step-down subsidiary in Chile and acquisition in Ecuador. Will help in expanding in South America.
  • Announced 1:5 Split. For every 1 share investors will get 5 shares. Link

Anyone tracking Balaxi Pharma?