Not that P/E matters so much here as compared debt levels, Return ratios etc. But just for the sake of discussion, Dishman is quoting at a P/E of 6.7 based on trailing 12M EPS of 14.04. At this price and P/E level, I guess a lot of negatives are factored in.
Do not look at the standalone numbers, only look at the consolidated figures. It is more like a 2-3 year contra call. The markets use to value this much higher before the Carbogen acquisition, and if the management plays smart they can recover part of their lost glory, in the future CRAMs boom.
I quoted the wrong pe number by mistake. But my aim is not to discuss the pe of dishman pharma. My aim was to discuss the danger of investing stocks with promoter pledged shares.
Agreed. But for portfolio stocks, I look towards stocks more as a vehicle to ride a particular theme which here is CRAMs space.
I would generally avoid the large debt, pledging in Infra, real estate or similar capex heavy businesses. But here I am more interested in the contra play on CRAMs. So think on those terms and choose the vehicle of your choice.
We need not ride the same vehicles, but we should reach our destinations (investment goals) by riding the themes.
one only has to hear the promoter speak to lose all confidence on management capability. Aur ab to balla bhi bolna band ho gaya.
The land sale was valued by the promoter at 600cr six months ago, then at 450 cr in dec and now at 350 cr . Still no buyer is willing to pay so no one knows when and what price deal will happen if at all. (Only goes to show the property is worth anything only when it’s sold)
Pledging disclosures every week are sure to put off any chances of recovery at all. I’ve sold the last chunk of my holding after the current pledging disclosure. This might well be the bottom but I dont really care anymore.
In the end, although optimistic picture does provide a good upside, will reiterate Hiteshji’s views for the potential downside ( or lack of upside and hence opportunity cost).
To me prudent investing is reducing risk and maximizing return. When similar kind of expected return can be obtained with taking much less risk, why invest in risky, out-of-favour, not-so-successful turnaround story, with increasing promoter share pledging stock?
I find all of valuepickr core portfolio stock way way better investment opportunity (less risk, more return as compared to dishman).
The Carbogenemics has soft Q3 due to the Christmas and few of the batches also will be delivered in Q4. Historically Q4 is strong for the Carbogenemics and 30-35% sales will come in Q4 only and trend will continue. The Carbogenemics expects to be very strong next year and has order book of the USD 60 million. The margins in the Carbogenemics are improving over quarter by quarter and targeting 21% for the next year.
The China facility posted loss for the 9M ended December 2013 and expects to reduce the losses in Q4'FY14. Further, it anticipates revenues of Rs 40-50 crore with profit of Rs 1-2 crore for the FY'15.
The 4 ANDA's were signed for supply of its API's
The Esprosartan sales expected to be Rs 100 crore for the FY'14.
The Dishman Netherlands not good in terms of margins in Q3 and expects to improve going forward.
It has restructured the operations at the Bavla facility. The utilization level is at 25% and expects to jump to 85% from the next month as there are two projects (one for UK and one for US). This expected to be reflected from the next financial year.
The order for the benzothonium chloride decreased but expects to grow well in the next fiscal. The order book for FY'15 already has of 40-50 tonnes and may go up 100-150 tonnes.
The Company expects Consolidated Revenues of Rs 1300 crore for the FY'14 and PAT of Rs 110 crore for the same period. It expects 15% growth in top line and robust bottom-line growth for the FY'15. The EBIDTA margins expected to be 26-27%.
It expects the robust growth for the Dishman Pharma in the next 2-3 years.
The tax rate expected to be 21-22% for the FY'14.
The Gross debt (including working capital Rs 370 crore) is at Rs 900 crore and cash and cash equivalent is 10-15 crore as on 31stDecember 2013. The average repayment of the debt is at Rs 20-25 crore for every quarter. The debt repayment is Rs 86.24 crore for the nine months ended December 2013.
The Promoters have started freeing up the pledged shares from last year and small percentage remains.
The company has started moving out of Vitamin D segment which was competitive and started concentrating on Vitamin D analogues and Cholesterol products which are providing higher EBIDTA.
Update on CRAMS-
There are 13 products which are moved in Phase III and the management expects to get 2-3 products to get commercialized in next 12-18 months according to Nirmal Bang report.
Will try to provide more info. The stock is gaining momentum from last one year.
The company is reducing its debt last year 80 crores and this year they are planning to reduce 100 cr debt
Also they are converting their debt to dollar denominated from rupee denominated, which will reduce some interest burden
They are focussing on improving the bottomline by changing the product mix like they have started concentrating on Vitamin analogues which has higher margins instead of Vitamin D which was lower margin high competition product
There are 13 molecules in phase III out of which they are confident of getting at least 2-3 molecules for commercialization
They have got their facilities in China, Switzerland and India(Bavla) GMP certified so they can do the production at any of the locations
They are planning a small capex 40-50cr at Carbogen Amcis as they have reached maximum capacity utilization
The promoters had pledged their shares, now they have started freeing up those pledged shares
These were positives. Its really easy to get out positives if you are biased towards the stock:smile:. Now I will try to list some risks.
The promoters again start to pledge their shares
The company again starts to take huge loans for the new expansions
The products in Phase III do not get timely approvals or no approvals at all
I think seeing number of late phase 3 and phase 2 molecules, we are sitting on earning explosion from 2019.THey will have to manage capacity utilization well as most of the plants are running at 100% except china.If China plant gets clearance meanwhile it will give big boost to earning expansion.Also after the merger book value is close to the current market price - I fail to understand earlier as well amics was subsidiary - so how the book value changed now compared to earlier?
This stock seems to be beaten down over last few quarters barring minor jumps here and there. Haven’t seen any activity in this thread - while QoQ results seems to be decent esp on Bottomline front and current TTM PE would be less than 20, management seems to be walking the talk and sounds practical and conservative - are any fellow boarders invested in this and have any insights? do share your thoughts. Also seems HDFC has given a Buy with 380 price target - almost 80% upside from here.
