FRESENIUS KABI ONCOLOGY -FK ONCO
The company was the oncology division of Dabur Pharma and was then taken over by Fresenius Kabi Germany. Fresenius had 90% stake post the takeover but in month of Oct 12, to comply with SEBI norms the company sold stake in the market and brought down the stake to 81% currently.
Companyâs main focus area is oncology formulation and to a lesser extent APIs. It has formulation facilities at Himachal Pradesh and APIs facility in West Bengal. Capacities in both facilities have been enhanced recently. Formulations like injections, tablets etc contribute 88% whereas APIs contribute around 12%.
Currently company has around 40 formulations in form of IV and oral dosage forms.
GROWTH DRIVERS
Cancer drug demand is growing at 12% in US and around 16% in India.
Company has entered into contract manufacturing agreement with FK Germany.
It has disinvested its stake in FK Onco UK to FK Onco Germany.
It has entered into agreement with FK India pvt ltd to sell and market its products in India.
It is planning to enter the tough Japanese markets.
FINANCIALS:
Outstanding shares 15.82 crores of Rs 1 each.
Market cap at cmp of around 91-92 is 1450 crores, book value is 40.
Debt â long term debt at 95 crores and short term debt at 52 crores. Total debt is around 147 crores.
Last few quarters results
Qtr |
Sales |
Pbidt |
Int |
Pat |
Dec 10 |
114 |
16.8 |
3.5 |
6.18 |
Mar 11 |
90 |
-12.4 |
4.82 |
3* |
June 11 |
115 |
22.9 |
5.38 |
9.9 |
Sep 11 |
159 |
18.7 |
1.9 |
8.18 |
Dec 11 |
128 |
13.6 |
1.6 |
1.4 |
Mar 12 |
121 |
11.68 |
3.67 |
4.88 |
Jun 12 |
133 |
22.3 |
0 |
13 |
Sep 12 |
164 |
48 |
7.3 |
27 |
Looking at half yearly figures and full year figures,
Period |
Sales |
Pbidt |
Int |
Np |
H1 fy 13 |
297 |
70 |
7.3 |
40 |
H1 fy 12 |
274 |
41 |
7 |
18 |
Fy 12 |
524 |
65.9 |
18 |
51 |
fy 11 |
412 |
73.6 |
18 |
49 |
Till now the company seemed to be in a consolidation phase preparing for next phase of growth. The FY 12 annual report shows the management in a very optimistic mood along with some developments which might trigger good growth in the future. Last two quarters seem to be validating the management talk of being ready for growth. Majority of companyâs revenues come from exports. With the company partnering FK Germany as a CRAMS partner, there is likely to be a steady stream of revenues . Company is likely to report steady earnings bcos the agreement with the parent company is on a cost plus basis and company does not have any risk of any litigations etc which other companies face in their business in US and other export markets.
TECHNICALS
Since Nov 2009, the stock price has been taking support around the 80 levels. Resistances have been in the range of 145 and 175. Currently stock has taken support at lower end of channel at around 80 levels and is consolidating. RSI indicates positive divergence as shown in the attached charts.
If the positive developments mentioned above play out, the stock at cmp offers a very good risk reward opportunity.
disc: starter position taken.