Hitesh Bhai, Just wanted your thoughts on Shilpa, It is really testing everyone’s patience. What if Q2 also turns out to be an avg quarter of partial dissapointment, I guess it may tank big time. Does it make sense to wait such longer for US FDA, if it comes it may give v high return in a very short span of time, is it the only rational for holding it for long term ? earnings need to do well in Q2. The results are on 14th. Such late results also tells that it is not going to spectacular again ?
@aware, ajanta results are out and seem to have met market expectations. Its one of the few consistent growth stories which has a high degree of predictability.
@santosh Shilpa needs to be viewed as a long term investment. These quarterly blips can occur in it but if one has a 2-3 years view, returns could be quite good. One could easily get frustrated if one has bought near the top and doesnt see the stock moving much.
I have been lately tracking ipca lab. Some bad news has resulted in decent price correction. However not going generically ., how can one find out reagrding fda issues and the impact on a pharma company.
Also ipca has a excellent past record , ethical promoters and excellent balance sheet . reminds me of the manesar plant hurdle for maruti about a year and a half back.
Can u please guide how to go about assessing ipca and ur views on it.
1). During a recent USFDA inspection, IPCA had received certain inspection observations in Form 483 from the USFDA. The FDA periodically conducts inspections at facilities making drugs and APIs for the US market and its observations are included in the Form 483. Such observations are not a ban on imports to the US or a warning letter to the company. Unless the issued observed by the regulator in the Form are addressed, the FDA will initiate stringent actions like warning letters and import bans.
2). Ipca has responded well for its Indore facility in the past
3). FY 14 sales Rs 3182 cr , sales from US Rs 296 crore( total sales to Americas Rs 420 cr) less than 10% of total sales but 20% of exports.
4). Lachman Consultants already appointed and IPCA expects to resolve in the next six months.
5). In the past, FDI warning has been a great opportunity to buy as in the case of Sun Pharma, Lupin, Dr Reddy, Cadila. Underline good and ethical managements.
6). See the MF holding as on 30th Sep 14. One can draw a comfort from them.
Numbers:
1). I expect sales FY 15 Rs 3500-3800 core with NP of around Rs 600 crore which gives a profit growth of around 25%.
2). TTM p/e as per my calculations comes to 19.79 and forward p/e of around 12.
3). Both the above pes are below the mean p/e of around 23.
4). My fair value for the stock comes to Rs 950-1000 and this value will be attained when the FDA issues are resolved and the probability of resolution is very high given the track record.
5). Mr Market has given a very good opportunity to buy , quoting about 40% discount.
The results are 10th Nov and after that one can sip in with a view of 2-3 years. The current market capitalisation discounts 11% growth rate whereas the present growth rate is 22%.( Time frame 10 years)
)- -What is your view on FDC and Unichem currently? Are there any interesting inflection points in the business which could bring out the much needed topline growth. Balance sheet for both the businesses look excellent
)- -What is your view on Ajanta Pharma after the recent runup. With EPS expected of 85 a 90 per share, is there potential for significant upsides from here?
o Market leader in macrolides with over 15 a 20% market share in its key APIs
o Reduced dependence on top 5 clients
o 65% capacity utilization, which provides significant operating leverage
o Significant margin improvement due to product mix, and possibly higher sales
o Sales growth visibility is unclear…what are the key drivers of sales growth here?
In terms of capital allocation, if you had to pick the winners from here, which would you bet on for the next 2-3 years (or a different time perspective) and what % of portfolio would you be comfortable allocating to them.
Hiteshbhai,what is your view on whirlpool ? Whirlpool manager have a vision to become a No.1 consumer durable company by 2017 (Revenue will grow 2.5 times by 2017) and growing focus on kitchen gadgets etc . They are also planning to aggressively grow its air conditioner and microwave business and expand its new businesses of ‘Built-In’ (appliances) and 'Waterâ.The company wants to hit a cumulative average growth rate of 25 percent over the next three years. This rate is vital, if it has to achieve its target of doubling its revenues from the current Rs 3,391 crore over that period.
On Q2 The companyâs net profit jumped 146 percent to Rs 40.7 crore versus Rs 16.5 crore, Y-o-Y. The companyâs net sales were up by 20 percent at Rs 709 crore versus Rs 586 crore, Y-o-Y.
Just need your view on Mayur Uniquoters, PI Industries & ENIL. I am convinced about the business but not sure, about the entry point in this counter for long term.
I am asking in terms of margin of safety, as this counter has made a good run up.
Whirlpool is a play in improvement in GDP as its sales usually mirror GDP. I dont track it closely so no idea about how valuations stack up. But looking at the sharp run up it seems a lot of people are gung ho about it.
Kanhaiya,
Mayur and PI inds are great businesses to own but one needs to be careful about the price one pays. These are not cheap anymore as they were a couple of years ago.
irshad,
Gokaldas sales growth has been good but profits have not been up to my expectations so I have exited the small trading position taken.
Awaiting your views on ipca labs. There api business is very strong and ratlam plant hurlde might be a oppurtunity in disguise. Have u tracked ipca as a investment opportunity. Also on other parameters such as corporate gov , balance sheet , capital allocation and minority shareholder friendly approach the company looks well poised. Only black swan can be the resolving of form 483 and time needed to resolve it.
@divyansh, Ipca is a fantastic company, besieged by temporary problems. The key question is about time line of the resolution of FDA issues and their impact on company’s financial performance and stock price. That is a call an individual has to take. It entails two riks
first is downside to stock price
second is opportunity costs.
One has to take a calculated gamble in these cases at a price which is comfortable.
@manish – for technicals, john murphy’s text book of technical analysis is a detailed book. Another one is edward and mcgees book on technicals. (the latter one is available on flipkart)
Is it a good entry level point in Kaveri seeds considering view of 4 to 5 Years? Stocks has been going under a correction on the news of promoters stake sale.
Hitesh bhai - let us know your views on the following pharma companies detailed below - FDC, Unichem, JB Chem, Ajanta and Anuh Pharma. Thank you very much.
