Indoco remedies

[ranvir]

Indoco Remedies Q2 concall summary -

Sales - 482 vs 433 cr
EBITDA - 72 vs 88 cr (margin@ 16 vs 21 pc)
PAT - 35 vs 50 cr

Sales break up -

Domestic formulation @ 228 cr, up 9.5 pc. Ophthalmology and Stomatology did well in Q1. Due late rains, season for Anti- Infectives, Respiratory therapies has been pushed into Q3

International formulations @ 195 cr, up 12 pc. Regulated markets revenues @ 147 cr, rest from emerging markets. Emerging mkts revenues grew by 72 pc @ Rs 47 cr

APIs @ 36 cr, up 95 pc

Contract research and analytics @ 6 cr, up 74 pc

Goa formulations plant inspected by US FDA in 3rd week of Oct. Plant has received 04 observations

Indoco’s rank in IPM @ 32nd position with Mkt share of 0.65 pc

Management is guiding for H2 growth of min 15 pc in Domestic formulations business

There was some overstocking of a few of company’s products in Europe due to COVID. The inventory has now normalised. Expecting good growth from Europe in Q3, Q4. Guiding for 400 cr kind of annual sales from Europe in FY 24

Expect descent margin recovery ( 2-3 percentage points, min ) in H2. Had one time expenses wrt remedial actions at Goa, Site -2 in the second Qtr

Company’s product portfolio in India has a very heavy acute therapy bias

Focussing more on therapies like Opthalmology, Stomatology to reduce dependence on Respiratory and Anti-Infectives

Have realised some profit share on the sale of Brinzolamide ( used to treat high pressure inside the eyes ) in US. Same is likely to continue in Q2 as well. Company makes its API in-house at its API facility

Full FY R&D guidance at 5-5.5 pc of sales

Disc: hold a tracking position, biased, not SEBI registered

Hoping for a descent turn around in H2. That should be a nice tail wind for the stock price

[Raj_Praj]

indoco didnt reach 2.2 PB during march 2020. unlikely it will reach now. please check screener data

[simplyabhay]

Indoco remedies’ Price to Book breaches 10 year low reaches 1.66

[buffet]

It is piling on debt and it will be on this journey for few more quarters. They are trying too many things at once. In India trying to establish a D2C in dental care, in USA injectables business where there are regulatory issues, in Europe they dont have many products to sell. They are doind a CAPA measures now in their Goa plant which will take another 1 year to get a regulatory clearance. Don’t go by this P/BV interest will eat into it. Let them clear the audit after that products approvals will roll. So it is a 1.5 year story.

[astha.arora23]

Market is almost always forward looking. You price in doomsday scenarios many investors who know the sector well would know the intrinsic value if it turns around.
Goes without saying, position sizing turnarounds is also important. And owning 1/2 turnaround bets is not a bad idea on an overall PF level

[buffet]

Yes market is forward looking when it comes to large companies where information asymmetry is small and it spreads fast via analyst community. That is the reason why stocks also are less volatile as they dont get perturbed by noise. Not in this case, also in addition to crowds behavior my point is leverage will limit their options to take new risks, their current bets are not paying off in D2C and sterile. Usually when your bets are not paying off is not as bad as when interest expense eats into your cashflow. That is where I disagree with you, there are turnarounds where businesses are taking time to grow but leverage is not killing them case in point is NATCO, CCL products, Advanced enzymes. Laurus labs falls into the bucket of indoco incase their cdmo projects get delayed or any left tail event from regulator same issue leverage. Dont put 1/2 in turnaround bets where there is a leverage angle. Most of times it won’t work.