Good results overall, and good to see that despite selling off both Omnichem and Biocause, the earnings growth has not slowed down. Some notes
1- During Capex cycle last 3-4 years multiple times there was doubt if the management is taking multiple risks in one shot. However now it seems that the risks taken have started paying back.
2- One can question if doing away with both JVs was right decision. But now we are past it. And I guess no one can deny that this disinvestment would help management focus on mother ship better.
3- I am confused about the decision of buy back. With 900 crores of debt on the books I still think that the right thing to do would be to reduce the debt. But then I am not an expert. All I know is that if the Crude again goes up to $80 and above ( which has happened couple of times in last few years) then even paying 3% of interest would start weighing down the earnings considerably.
4- Keeping buy back aside, I like few things company is doing - focus on free cash flow, debt reduction and pledge reduction.
5- Formulations have gradually gone beyond half mark contributing to the business. So Granules the company which provides APIs for generics is changing fast.
6- The current upthrust in topline and bottom line should sustain for next couple of years because of sales moving from EMs to regulated markets and better sweating of newly built assets. The better mix towards FDs, selling OTC drugs in US, and new drug launches should also help. After two years the Onco APIs should provide the next kick.
7- Key risks in my opinion are
- Crude prices going up
- High debt on the books. Working capital increase will make it look worse.
- Poor execution of plan including launch of Onco APIs ( tough nut to crack based on the little I know about this segment).
I am invested, and my views could be biased.