Gennex Laboratories ---> is it a Hidden Gem?

faiz_akram · January 19, 2024, 4:49am

Today i found this stock in my screener.
Gennex engaged in the business of manufacturing of Bulk Drugs and intermediaries, covers customers in both domestic and international markets.

Name : Gennex Laboratories Ltd.
Sector : Pharma
CMP ₹ 17.7
Market Cap ₹ 314 Cr.
Book Value ₹ 4.87
Debt ₹ 21.9 Cr.
Cash Equivalents ₹ 23.0 Cr
Debt to equity 0.25
Return over 3 years 53.1 %

Red Flag :
Pledged percentage 34.1 %
Promoter holding is low: 23.6%

My observations:
1. Financial Health: The company has a market capitalization of ₹314 Cr. with a debt-to-equity ratio of 0.25, indicating a relatively low level of debt.

2. Profitability: The return percentages over various periods (3 months, 6 months, 1 year, etc.) show positive growth, suggesting the company’s profitability is improving.

3. Balance Sheet: Reserves and equity capital have been steadily increasing. The company has both short-term and long-term borrowings.

4. Cash Flow: Positive cash flow from operating activities is a good sign. However, the negative cash flow from investing activities may need further investigation.

5. Sales Growth: The company has experienced fluctuations in sales growth, with a notable decline in the most recent quarter.

6. Expense Analysis: Material cost as a percentage of sales has been fluctuating, and employee costs have seen variations as well.

Conclusion:
While the company shows positive signs with improving profitability and a healthy balance sheet, fluctuations in sales growth and expenses need careful consideration. Further analysis, especially regarding the recent decline in sales growth and cash flow from investing activities is recommended.

Any valuable insights or observations from experts specializing in the Pharma sector are welcome.

Donald · January 19, 2024, 1:37pm

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