Indoco remedies


Cmp 62.50 market cap 577 crores.

Indoco is a small company with around 120 products across various therapeutic segments. The company is on the verge of strong growth due to its exports tie ups with various foreign firms. Company has a strong presence in the ophthalmology segment and intends to use these products to propel exports as well.


For the US markets, Indoco has tie up with Watson Pharma. Indoco has filed 13 ANDAs and 8 were filed under the Watson tie up.

It also has a tie up with Aspen Pharma for emerging markets.

It has recently tied up with DSM, a 9 Billion USD company for marketing and distribution of APIs.

Company also is in the process of alliances with different companies for Australian markets.

All these initiatives should help the company in registering 25-30% CAGR growth in exports.

The bulk of these benefits in terms of revenue growth would start being seen from FY 14.


Indoco intends to launch products in chronic therapy segments focusing on rural markets and hence take the share of chronic segment to around 20% of total revenues from the current levels of 10%.

Management expects the company to grow above industry growth rates.


There are around 9.2 crores outstanding shares of Rs 2 each. Total equity is 18.4 crores.

Debt as on Sep 12 was at 94 crores with 35 crores being long term dollar denominated debt and 59 crores short term debt being a mix of dollar and rupee debt. d/e ratio is 0.23.
















H1 fy 13



Management had earlier declared its intent to reach revenue targets of 1000 crores by fy 14. It needs to be seen whether this target is achieved. Exports should help in achieving the target.


Investing in Indoco remedies is a bet on investing in a company which is likely to be on a strong growth trajectory over next few years due to the tie ups the company has with various companies for different export markets.

Currently the stock seems to be undergoing correction due to lacklustre couple of quarters. But for someone with a view of around 1-2 years, the stock provides a good entry point.

disc: bought small quantity today and intend to buy declines.

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Great find. Even when pharma stocks are scaling highs this one is lying dormant. If you refer to Anand rathi’s report it is quoting at historically low valuations at a forward PE of 8.

It’s one of the rare Maharashtrian owned company in pharma field which had come out with an IPO few years back. Seems it has some strong brands in domestic formulations segment.

It’s an old favourite of my friend Vivek Bhauka . Will coax him to tell more.

I think DEC quarter results would be good as last year margins were below average . Overall good pick .

here is icici securities report .


Had a quick look on screener -

It throws up some concerns like - 1. Low Tax 2. Low growth 3. Low provision of interest on loan outstanding.

Also given the weak past performance, low ROEs, and the above concerns, isn’t it better to see good performance first and then invest? I feel many of the pharma cos we are tracking are much better.


Hi Ayush,

I think the concerns raised by u are genuine. In the investing world past performance of a company generally gives a good indication of things to expect in future but exceptions are always there. Our aim therefore is to try and look through the wind shield while glancing at the rear view mirror. I think the tie ups made by the company with names like ASPEN, WATSON and DSM, as brought out by Hitesh should help the company achieve better growth in future.

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You mean ajanta ajanta ajanta ?

- Link:

**In fact today by chance I came across some inhalant capsules called “karvol plus” in my home as my daughter needed steam due to cold. I was surprised to see the name indoco remedies printed on the capsules.

So yes, they have some good presence in the market and doctors are prescribing their products.**

A older report on Indoco. It mentions similar points bought up by Hitesh.

Investor Presentation Nov 2, 2012

IndocoRemediesLimited.pdf (88.5 KB)


Highlights of the Conf Call As per Capital Market:


  • The Staff cost is higher on YoY basis due to the increase in the field force.
  • The forex loss is Rs 2.6 crore in Q3’FY 13 compared to Rs 5.68 crore in Q3’FY 12.
  • During the quarter, the Indian Pharma Market registered a growth of 9.1% whereas the revenues of the company’s domestic formulations business grew by 11.0%.
  • The domestic formulation market grew by 18% in Q1, 14% in Q2 but growth has slowed down in the 9.1% in Q3’FY’13. However, Indoco remedies grew by 11.2%, above the market growth despite the seasonal portfolio during the quarter. Further, it expects growth to bounce back going forward.
  • The Company has launched 36 products during the nine month period. The thrust is on increasing the share of chronic therapy products to ward off the seasonality to a certain extent from acute therapy products.
  • It strategically stopped producing the Ravale 104 on account of higher overheads due to the low price and low margin.
  • The expected impact due to the New Pharma pricing policy to be minimal.
  • The growth in International Business is impacted due to slowdown in Emerging Markets (tender business) and delay in starting execution of orders for new products from AOK tender.
  • It has filed 11 products in partnership with Watson â out of which 2 are nearing approval (first shipment), 3rdone in May-June 2013 and 4th product may get approval in December 2013.
  • The first shipment to Watson, USA sent against PLAIR (Pre-launch Activities Importation Request) will be commercialized as soon as the plant approval (audited during last quarter) and ANDA approval is received. This expected to be end of the Jan 2013 or in the month of February 2013.
  • Similarly, it also received a Purchase Order from another US customer for an Anti-Diabetic product, the shipment against which will be sent as soon as the plant and ANDA approval is received.
  • It started the supply of Allopurinol tablets to AOK Germany during the quarter and have received marketing authorization for two of our dossiers in the customer’s name in Austria, Germany, Poland and Netherland.
  • Its subsidiary, Warren Generics is being incorporated in European Union to facilitate registration of its own dossiers. Further, it is ready to file 8 dossiers for this market.
  • The ASPEN deal is progressing well with addition of 4 new development projects during the quarter. The supply of 3 more products against a tender has commenced and we have won one more tender for 2 products in South Africa.
  • The revenues from the Aspen deal were 5 crore during the quarter. It expects the revenues be 20 crore on annualized basis going forward.
  • The Company filed 66 dossiers in Emerging Markets.
  • The near term growth drivers are â 1) Growth from the US market on product approval in regards to the Watson deal 2) the growth from the Europe on account of ramp up on dossier filings 3) Growth from the South Africa, Latin America and Emerging markets.
  • The R&D expenses share expected to increase to 2.75-3% (currently at 2.2-2.3%) of sales by FY’15.
  • It targets revenues to be 1000 crore by FY’15 with contribution from domestic market to be 55-60% of sales and remaining from Export market. It expects EBIDTA margins (net of R&D expenses) to be around 20%
  • The Short-term Debt is at 50-55 crore and the Long-term Debt is at Rs 50-55 crore as on 30thDecember 2012.

Hi Hemant,

Thanks for bringing out the highlights of the conference call.

Company’s performance has been very average but management’s communication is excellent. I think another quarter or two of waiting patiently and giving a chance to the management to walk the talk would be areasonable course of action.


thanks hemant for the updates on indoco.

I think investment in indoco is a waiting game. In the near term it is likely to remain under pressure/range bound.

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Highlights of the call by Capital Market:

  • The domestic Branded Formulations business grew by sluggish 4% to Rs 97.7 crore for the quarter ended June 2013. As per AWACS data, the Indian Pharma Market (IPM) grew at 7.8 % as against 17.1% during the same period last year.
  • The Slowdown in domestic market and the effects of anticipated pricing policy subdued the growth for the quarter. The therapeutic segments which performed well during this quarter are Anti-Infectives, Respiratory, Pain/Analgesics, Stomatological, Vitamins/Minerals/Nutrients and Cardiac.
  • The revenues from the Export Formulations fell by 22% to Rs 389.6 crore for the quarter ended June 2013 on the back of sharp fall in sales from Regulated markets (24%) and decline in Emerging Markets (4%).
  • The sales in regulatory market impacted by degrowth in sales from the Germany due to delays in the shipments. However, it expects Q2 will be substantially better than Q1 and expects the growth would be normal going forward.
  • The shift from the low cost contract manufacturing business to a high margin CRAMS opportunity in the short run and manufacturing against company’s own dossiers and MAs in the long run impacted international business during the quarter.
  • During the quarter, The Improvement in material cost is on account of product mix and also due to efficiency in procurements.
  • The interest cost includes forex loss Rs 3.7 crore and other operating income includes forex gain of Rs 5.33 crore during the quarter.
  • The Goa I facility is now USFDA approved and the first consignment of solid dosages will soon will be dispatched to USA against Indoco’s own ANDA. However, the company is still awaiting USFDA nod for the launch of two sterile products through Actavis (Watson) agreement. A new product has been added to the list of products signed with Actavis (Watson) taking the tally to 23. Further, it expects to file 8 ANDAs in the current calendar year
  • To facilitate approval to the own dossiers in EU, it has made an application for audit of sterile facility (Goa Plant II). This will facilitate filing and approval of its Dossiers in EU.
  • It has totally 50 products for US market out of which, 7 are already commercialized and 19 already filed and about 20 products to be filed with the US FDA.
  • During the quarter, 14 new registrations were received in the emerging markets and a few ophthalmic products were launched in Columbia.
  • The southern and western market contributes 70% of domestic sales, which were impacted by the slowdown and the Pharmacists strike in the Maharashtra during the quarter. However, it expects the growth revival, as latest primary sales indicate the good growth.
  • It clarified that total 16 products are under new NLEM pricing policy and indicated that impact would be less than 1%.
  • The revenue mix expected to be 50%-50% from domestic and Exports markets by the FY’15.
  • The ECB’s outstanding are at USD 8 million. It has hedged 25% of sales at Rs vs USD average rate of 58.50.
  • The lower R&D expenses during the quarter is one off and expects to increase substantially in next quarter as there were batches and validation under the pipeline. It expects the R&D expenses to be 3% of sales for the FY’14.
  • It is confident of achieving earlier revenue target of Rs 1000 crore by FY’15.

Aditi Kare Panandikar Managing Director addressed the call

Highlights of the meet by Capital Market:

During the second quarter ended Sept.'13, the domestic business as well as international business has performed well. Domestic formulations business recorded a growth of 10.1% much above the industry average of 2.8% and International business recorded a strong growth of 35.7% over the same quarter last year. Overall, the company recorded revenue growth of 18.5 % at Rs 195.0 crore as against Rs 164.5 crore during the same period last year.

The company might have done phenomenally well but was constrained due to external conditions.

Marketing and sales incentives have been given in September 2013 quarter.

Formulations business recorded a growth of 17.3% and API business recorded a growth of 40.4% over the same quarter last year.

The Indian Pharma Market (IPM) witnessed slowdown in the first half of the fiscal year (Apr-Sep13) due to issues concerning implementation of the new pricing policy.

The Pharma industry in the first quarter grew by 7.9% as against 17.0% during the same period last year and in the second quarter it grew merely by 2.8% which is the lowest growth recorded during the last few years.

Domestic Formulations business of our company grew by 10.1 % to Rs 120.6 crore.

International Formulation business grew by 34.4% to Rs 61.9 crore.

Regulated Markets revenues are at Rs 53.4 crore as against Rs 41.6 crore and the Emerging Markets revenues are at Rs 8.5 crore as against Rs 4.5 crore during the same period last year. API Export business grew 51.6 % at Rs 5.5 crore as against Rs 3.6 crore during the same period last year.

During the quarter, the company witnessed significant improvement in EBIDTA margins. EBIDTA as a percentage to net sales is 18.9% at Rs 36.8 crore as against 15.9% at Rs 26.1 crore during the same period last year. The operating profit as a percent age to net sales is 12.2% at Rs 23.9 crore as against 10% at Rs 16.5 crore.

The International Formulations Business recorded a growth of 34.4% to Rs 61.9 crore.

The company is looking at contact manufacturing from its Goa plant. The EU authorities will inspect the plant in November. The company is also in the process of filing its own dossiers.

Inspection of the EU authorities in the coming quarter will pave the way for ophthalmic product filings and also fetch opportunities for ophthalmic contract manufacturing in all 28 countries in EU.

Forex gain Rs 6.58 crore Forex loss is Rs 2.82 crore. Gain is reflected in other operating income and financial cost reflects forex loss.

With the minimum impact on account of the new pricing policy, its domestic formulation business is all set to improve its performance in the coming quarters.

Focus on chronic segment, better market penetration and promotion of legacy brands will help in improvement in domestic sales as well as EBIDTA margins.

On receipt of USFDA approval, the company will launch two ophthalmic products, marking

the commencement of sales in US markets through ACTAVIS (Watson) partnership.

Shipment of Indoco's own approved ANDA for solid dosages will commence in Q3FY14. Before December the company targets 7-8 ANDA filings.

The international business will record better growth rates with the ramp up of sales in Regulated markets.

In the European markets, the contract manufacturing business is being augmented with supplies/sales against own Dossiers/Marketing Authorizations (MAs) to bring sustainability and to improve the EBIDTA margins.

The API business is growing as planned and is contributing in our formulation business through backward integration in select APIs.

With strong infrastructure built over a period of time, skilled manpower and strategic alliances, the company is poised for a higher growth, improved margins and sustainable business.

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Hi Hitesh, do you still track indoco ? It seems to have broken out of it’s multiyear 50-70 Rs range and moved to 100 pretty ‘convincingly’. Not sure if this is becoming too hot. The few research reports available have pretty modest targets.

hi n sood,

Yes indoco stock price has give good move… On fundamentals side, company seems to be on the verge of the much expected export breakthrough… Next few quarters could be interesting.



Hello Indoco followers,

Please verify if there is some bad news.why this fall?




you can go through the announcement by the company on bse…

The biggest risk for export facing companies remains USFDA sanctions and all investors need to be cognizant of these risks…

Highlights of the call by Capital Mkt:

The Sales from the Domestic business grew by 23% YoY to Rs 120.31 crore for the quarter ended December 2013. The growth was on the back of robust 22% growth in domestic formulations to Rs 114.92 crore and sharp 40% growth in API’s to Rs 5.39 crore during the quarter.

The Sales from the Export business grew by 31% YoY to Rs 67.74 crore for the quarter ended December 2013. The growth in Sales was on the back of strong 33% growth in formulation exports (Emerging market grew by 116% and Regulated markets grew by 24%) to Rs 61.96 crore and 12% growth in API exports to Rs 5.78 crore for the same period.

During the third quarter, the Indian Pharmaceutical Market (IPM) grew by 4.9 % over the same quarter last year. During the quarter, acute segment grew by 2.9% and chronic segment grew by 10%. After two consecutive declines seen in Sept-2013 (-1.2%) and Oct-2013 (-0.7%), IPM witnessed positive growth in Nov-13 (7.9 %) and Dec-13 (8.2 %). Among the key therapies, Respiratory (9.0 %), Anti-diabetics (14.7 %), Derma (13.1 %), Opthal/Otological (10.2 %) and Stomatologicals (10.2 %) reported good growth in this quarter by the Industry.

In the Emerging markets, the growth regions are Kenya and Tanzania during the quarter. Re-launch of Dental products with attractive packaging in Sri Lanka and appointment of task force in Kenya for active promotion of dental products will help in leveraging Company’s strength in this segment.

The Company has already commercialized first anti-diabetic product, approved under its own ANDA through a US partner.

It has filed 15 products through Watson and 4 products through Inodoco with US FDA as on 31stDecember 2013. It has filed 5 products with the Watson during the quarter. It has got approval for one product and launched the same during the quarter. Out of the total filed products 16 are the ophthalmic products.

It will soon commence the launch of ophthalmic products in the US market through ACTAVIS (Watson). This development is expected to take the Company in high growth trajectory.

The filings in European markets have also begun in line with its strategy to steadily augment contract manufacturing business with manufacturing against its own Marketing Authorizations (MAs) for generic companies. To further leverage its strength in sterile ophthalmic formulations, the Company has through a major European partner filed a Dossier in European Union.

The Company’s Drug Master File (DMFs) for Rasagaline filed during the quarter taking the tally of DMFs filed to ten.

With the settlement of issues faced by the Industry subsequent to announcement of the new pricing policy, its domestic formulation business has picked up and is all set to further improve its performance in the coming quarters. Focus on chronic segment, better market penetration especially in North and East region and promotion of legacy brands along with new product launches will help in improvement in domestic sales and margins.

The Q3 performance in the domestic formulation indicated derisking its position as chronic segment yielding results. Also, the acute product portfolio is also done well during the quarter. The growth in domestic market expected to continue going forward.

In the European markets, the contract manufacturing business will be slowly augmented with supplies/sales against own Dossiers/Marketing Authorizations (MAs) to bring sustainability and to improve the margins.

The API business is growing as planned and is generating revenues through sales in domestic as well as international markets and at the same time contributing to formulation business through backward integration.

With strong infrastructure built over a period of time, skilled manpower and strategic alliances, the Company is poised for a higher growth, improved margins and sustainable business.

The forex loss is Rs 2.7 crore during the quarter.

The MR strength is 2300 as on 31stDecember 2013.

It increased the trade margins to retailers last quarter.

It continued to improve its gross margins past two quarters on the back of better product mix in domestic market and business mix. It is indicated that it will be sustainable going forward.

The Febrix plus and Cyclofam are the 50+ crore brand products. The Febrix plus has potential to become 100+ crore brand.

On Aspin Deal, It expects revenues of Rs 20 crore in FY’14 and Rs 30-35 crore by the FY’15.

The R&D spend is expected to be 2-3% of Sales.

The FY’15 tax rate expected to similar FY’14.

The maintenance Capex is Rs 25-30 crore per annum

It is hopeful that approval will come soon from USFDA (despite some delay in approvals of Watson products from US FDA) and still confident of achieving Sales of Rs 1000 crore by FY’15.

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