Gujarat Terce Laboratories

Gujarat Terce Laboratories is a pharmaceutical company into manufacturing and marketing of branded generics. They are also doing in-licensing and CRAMS. The company has a basket of 50 Brands (180 products over 10 therapeutic areas) with 180 SKUs, covering multiple dosage forms like Tablets, Capsules, Oral Liquids, Ointments and Injectables.

They are available at a network of 43500 + Chemists. The distribution channel split is 86% from retail, 8% from hospitals and 6% from doctors.

They have a fully automated manufacturing facility at Chhatral in Gandhinagar, Gujarat. Most of the revenue is from domestic sales; export is negligible.

Some of their brands are:

Aziter and Ferlit are also their brands. Some of their brands are among the top 10 in their respective segments.

They have two segments- acute (around 80% of revenue) and chronic (around 20% of revenue). Acute diseases are those that occur suddenly and last for a short time, while chronic diseases are those that occur over a period of time and last longer. Rising share of chronic (potentially) could be a thesis pointer, as one generally observes repeat sales (recurring revenue) since patients need to consume these medicines repeatedly for a long time.

Out of their top 4 brands, 3 are in acute segment while one is in chronic.

Geography wise data:

The company is among the top 200 pharma companies in India, and are aspiring to reach within top 100.

In FY20, they also launched healthcare and wellness products, which saw a good response from consumers.

On 28th October 2021, Mr. Aalap Prajapati (next generation) took over position of MD and CEO from his father Mr. Natwarbhai Prajapati, who became company chairman. They have started uploading investor presentations since then.

They also did their first-ever investor meeting.

He is 34 years old.

He also bought shares in the open market.

They are planning to enter new geographies, and launch new brands (especially in chronic segment).

They are also focused on improving productivity (per capita per month sales).

They are also hiring experienced professionals.

An accident had occurred in the factory in 2020

They earlier had a metal division which was discontinued

The annualized RoCE for Q2 and Q3 FY22 was 15.8% and 18.4% respectively.

Key anti-thesis as per me is that it might be difficult for them to create a brand recall, and getting doctors to prescribe their brand (given that they operate in highly competitive segments) may be a challenge. Also low promoter holding (36.2%)

My thoughts: 1) This level and granularity of disclosures in investor presentations from such a small company is quite unique; 2) Gross margin of 62% for FY22 suggests there might be something unique

Disc- I have a small tracking position


GPM of 52% not 62% as of March 22. Its a microcap.

  1. " Despite posting what I thought were rather mediocre Q4 numbers, the stock is hitting upper circuits with 100% delivery "

The stock is in T2T category and hence intraday is not allowed so delivery will always be 100%.

  1. Gujarat Terce Laboratories Ltd Products List | 1mg most of the products are showing not available/sold out

  2. the stock jumped 5x in last 1 year. Did we see any capex coming live, new patents? What factors apart from the new found management vision and confidence makes it a buy here at 5x last year’s price.

  3. Very less promoter holding. (36.2% as on 31/3/2022)

  4. Profitable companies with higher brand recall are available at cheaper valuations.


Was looking at nanocaps when I came across this company, Looked interesting.

  1. From the P& L for the year ended 31 Mar 2022, Out of the total income at Rs.4043.97 Lakhs Employee cost occupies a large chunk at Rs.1582.9 Lakhs. Considering the total employee count at 365 (From the latest AR), Is the total count necessary to be kept high? Is such a huge workforce necessary with respect to our revenue? Or is the field so labor intensive?
  2. Apart from the working capital/term loans taken for business needs, There are four vehicle loans that look like personal vehicles. Wanted to clarify whether the same is for commercial uses or if they are indeed used by the directors.
  3. Under Note 4, Where loan advances by the company are discussed. The nature of the advances (Like permitting trade credit to suppliers/purchases) or for any personal purposes and also Shri Ketan N Shah and Ms. Dipal J Desai has been granted interest-free loans.
  4. The company shares are freaky in nature (Either at UC or at LC) an operator’s paradise.
    Seems like a proprietorship- company, But its reports/disclosures are not like something of a nanocap. They are ambitious aiming to enter a couple of new states this year, I’ve called them asking queries but have not yet received replies. I will let ppl know if something good/bad comes out. Kindly share your research too.



The loss in Q1 was something hard to explain. That said, they seem to have put in a lot of work on the current year’s annual report which is at a different level as compared to previous years. From what I understand from the annual report their strategy is to expand their network in 2 other states this year and the increase in workforce was probably due to that. The AR reveals that they are focusing on changing the product mix towards higher margin products and if you compare like for like sales of its products as per details provided in the investor presentation it does seem that there is a major change taking place in the product mix. There may be something here but i think it is still very early days and a lot will depend on how they execute under the Promoter’s Son. I darw partial comfort from the low debt equity ratio which will give it some leeway until they achieve a turnaround (if any)