Any idea why the EBITDA margins are down and why is the interest going up every quarter ? Is it a cyclical business because there is no stable margin guidance on this one.
In my opinion, now a days people are not in position to believe numbers posted by such small cap companies as all are trying to inflate numbers to ride the share price.
Topline growth is indeed great! 350 Cr topline company available at 390 Cr market cap is indeed an attractive proposition. But can you please throw some light on the sustainable margin profile and why have the margins taken a hit in this quarter? Is it because they have launched some new products and are selling them at a discount to capture some market share? Moreover the short term borrowings have shot upto 100 Cr and so has the interest. Is there any pressure on the working capital cycle?
I don’t have a lot of details on these things and it would be great if you can help me with this. I have taken a position in this correction over last 2 days. But would be really keen to the business and micro and macro factors impacting it so that I can build my position size and make it sizeable.
Thanks in advance!
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The sustainable margin as per the management guidance is in the range of 11-15%.
You’re Right, The margin hit is due to the launching of new products and expanding to new geographies.
The working capital has increased and there is some pressure there.
The macro factors as they are focusing on the MENA region currently there are geopolitical issues that could be some macro headwinds along with the Red Sea crises, as far as micro it’s how far they are able to scale and transition successfully from B2B to B2C is the thing that to be watch out for.
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On face it looks good but also check inflating inventory and Receivables nos. With so much rise in profit comparing with last 2 years, there is hardly any improvement in cash flow. So will wait till the time cash flow improves
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Numbers looked amazing.
Stock has taken beating post numbers.
Seems street is getting concerned over margin contraction.
Don’t understand why company is borrowing at high intrest costs.
Fredun compensation is a ?
Results seem good at a glance on YoY basis. Don’t think it makes sense to compare QoQ results. EBITDA margin has expanded and topline has shown good growth. Only concerning part is the higher interest rates. Valuation seems to be very favourable right now. 350 Cr topline company available at market cap of 400 Cr and the pharam cycle seems to be turning. If anybody has more details on Fredun then please share. Would really appreciate it. Thanks in advance!!
I recently started tracking Fredun after it showed up in one of my screeners.
What bothers me the most is the lack of disclosures in terms of quarterly reports or earning concalls. I checked the company’s investor relations but found only outdated material. Latest one available is > 1 year old.
How is this forum tracking the company?
Pls guide.
Thanks
Where is this clipping from? I am looking for quarterly reports and concalls from the company.
1f71c592-e47a-43ac-a223-2c9926c0d2ed.pdf (bseindia.com)
Scroll down until the end of this q2fy24 result file. There is a press release.
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Hi,
Please share AGM notes for Fredun Pharma if anybody attended it. Thanks!
This is about 100 Cr raised while trading at a Mcap of 376 Cr!
It’s great that there is no short to medium-term impact on the financials as it’s a ZERO coupon* unsecured FCCB for a tenure of 10 years. FREDUN has been struggling with cash generation. Hopefully they have some plans in mind for expansion, acquisition, or even repaying the current debt, which would also be a good option.
Zero Coupon*: No interest payments throughout the tenure, rather a lump sum at the time of maturity or an equity conversion.
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What worries me the most about Fredun is the lack of operating cash flow!
Do we have any insights on why are the cash flows so dried up and when do the trade receivables hit the balance sheet? I also saw the inventory days is >200, any thoughts on this? Seems odd compared to other pharma companies.
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Q2 results out. P/l looks fine, main worry is the balance sheet and cash flows
Fredun Pharmaceuticals Enhances Production Capacities with it’s Second Italian Tube Filling Machine, Boosting Capacity by 2.9x
Still valued at < 20 PE and < 1 P/S
I could be more interested but I find no reason for dried up cash flows hence only watching for now.
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Any insights on corporate governance or management quality of this company.
Quarter after quarter they come out with good results, but cash flow is not great …now came out with expansion plans too. But nothing moves stock price for long long time… So what is the market seeing that I am unable to.
Disc : reentered recently after recent announcement.
I think negative operating cash flow is the biggest issue here.
Operating cash flow for 3 yrs: -17 cr
Operating cash flow for 5 yrs: -28 cr
Free cash flow for 5 yrs: -52 cr
One line summary based on my understanding that has kept me away from this company:
Fredun has debt to equity > 1, runs a low operating margin business, pays 40% of its operating profit as interest, debt has increased a lot recently. Promoters have diluted holdings. And the company’s operations have created negative cash flow every year in the last 5 years!
Not invested.
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