Contract manufacturing listed companies India

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Hi everyone,

Can someone pls help me in getting a list of Contract manufacturing companies in India? Ideally listed companies pls.To begin with i have one name: Hindustan Foods. Wanted more names please.

Many Thanks,
Regards,
Shweta

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There are too many companies in the contact manufacturing space,some prominent ones are:

Divi’s,Syngene,Suven Pharma,Varun Beverages,PI Industries,Aarti Industries,Alkyl amines and Balaji,Navin Flurine,Transpek,Galaxy Surfactants,Atul,Fine Organics,Dixon,Amber,Moldtek packaging,Polyplex,Essel propack, Shaily Eng. etc.

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Wow…Thank you so much Krishna…made my day!!! :pray:t4:

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What 's your thought process in collecting these companies ? could you share. Thanks.

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Hi Sameer,

Sure. Thanks for asking. So yesterday i attended a zoom call with Mr Nilesh shah (KOTAK AMC) and amongst the key things he spoke about, one was sectors he sees as upcoming:One of them was contract manufacturing. I have not researched much about this sector and wanted some names to start off with. Hence the query.
Hope that helps.
Thanks

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Thanks Shweta for the heads up. Well, I think the list could be really long touching across several sectors. Also it is quite difficult to narrow down to names of listed pure contract manufacturers (of course there are exceptions like Varun Bev (Pepsi Co), Page (Jockey)), as their operations may not be 100% contract manufacturing alone. However, one sector which is pretty much exposed to CM is Pharma.

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Thanks for ur input Sameer. So you think Pharma is the sector whose CM can be looked at? Thanks will have a look. In those i find natco and divis good bets.But as of now not very keen on Pharma. 2 reasons:

  1. I don’t really understand the sector to the finest details so can’t nit pick and thus, never have full confidence in the names I know.
  2. Feel they are running up quite fast and not too sure what might happen once corona settles down and FDA approvals against start taking their own sweet time.
    Thanks
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Hi Shweta, I am still struggling to understand as to what Mr. Nilesh told you (in what context) and what sector you are chasing for investment. There is no such specific so called CM sector. So need more clarity as to what is that you are exactly expecting and how do you think that only CMs will fulfil your investment goals.

As regards to Pharma, the call is yours !! However, from my experience, the way COVID things are panning out all over the world, investors should ride with tide. Today the tide is in favour of Food, Pharma and Speciality chemicals (all thanks to China). This theme in India should continue for next few years or more as China is proving to be risky to many in the world.

What matters for investment is, selecting rock solid high quality companies within these sectors. Btw; don’t fall in love with a particular sector. When the tide settles, exit the sector !!

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Hi Sameer,

Thanks much for your feedback.Will keep your inputs in mind. Thanks. I wish i had access to him to elaborate on what he meant by Contract manufacturing, but i am just trying to gather info based on my interpretation of it. :slight_smile: .

Thanks and Regards,
Shweta

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Here is the question to Nilesh Shah in which he mentioned that Contract Manufacturing could be the next big theme which can give birth to many multi-baggers.

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Nilesh shah is referring contract manufactures in consumer durable segment - Home appliances(Fridge, Washing machine etc), Consumer electronics ( TV, mobiles etc).

some of the contract manufacturers in this space are Dixon, Amber enterprises etc

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Hindustan Foods is contract manufacturer to FMCG/Homecare/leather wear companies.

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Regarding AMBER I think it is not as diversified as Dixon
Its business is seasonal n caters to one segment ACs

It needs to diversify to other business to minimize lumpy earnings.

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The thing most dangerous about Contract manufacturing firms is that all have razor thin margins (except the Pharma related contract manufacturing firms)… Any insight related to this is most welcome. Was just reading about Dixon the other day, razor thin margins and extreme valuations even though it operates in a very volatile Electronics consumption market.

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Hi, I am new to the forum. I like the contract manufacturing space and have made six investments in this space over the last six months DIXON, DEEPAKNITR, HINDFDS, ATUL, PIIND,POLYMED. The last two were recent and are slightly down from where I I invested but the others are way up. I invested with a fiver time frame as I think manufacturing has to grow in India. GST,PLI, tax breaks are all going to help. I am looking for auto ancillary names that may expand into EV, areospace etc but am not sure as to which names one should look at which will double in 5 years ( 15% CAGR)

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A few of the contract manufacturers that I thought might be Missing in this thread:

  1. Neuland labs
  2. Neogen chemicals
  3. Dixon
  4. SeQuent scientific
    5 . Astec life sciences

Disc: I hold 1,2,4,5 in my PF.

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I feel in pharma the best contract manufacturer is Syngene International.

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i bought Ador Multiproducts Ltd @92 for long term.

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Hindustan foods, Associated Alcohol beverages, also does contract manufacturing in their respective sectors. Any more we can think of.

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Gud morning all esteemed folks on this forum…I have to say all firms listed here have given stellar results…and i personally own syngene and Hindustan foods in this space…I have a few questions to ask:

  1. Why is Hfoods one of the only CM(contract manufacturer) in food and FMCG space? Is it because entry barrier is very high and front ended costs.
  2. Why are all these companies like Dixon and now Hfoods commanding such high valuations( ~150)The valuation bit i find very tricky as they are in different sectors, and for Hfoods i don’t find any peers that i can draw comparisons with?
    Can anyone help with this? Can these kind of price points be sustained?
  3. Any other players that are in the FMCG contract manufacturing space or planning to enter?
  4. Is it fair to expect such valuations to sustain in the long run?
    Much appreciated any thoughts anyone would like to share on this subject.
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