Kopran Ltd. - Has its time finally come?!

Pranshinv · March 21, 2021, 4:34pm

They have already filed for Azithromycin in DMF .

DMF#	STATUS	TYPE	SUBMIT DATE	HOLDER	SUBJECT
34852	A	II	5/13/2020	KOPRAN RESEARCH LABORATORIES LTD	PREGBALIN USP
34853	A	II	5/21/2020	KOPRAN RESEARCH LABORATORIES LTD	AZITHROMYCIN DIHYDRATE USP
34903	A	II	5/30/2020	KOPRAN RESEARCH LABORATORIES LTD	METOPROLOL TARTRATE USP
35110	A	II	8/20/2020	KOPRAN RESEARCH LABORATORIES LTD	METOPROLOL SUCCINATE

2.Expansion has filed for environmental clearance and they also have an intent in investor presentation that in the current quarter they are planning to expand capacity.
In the coming investor presentation we may get a clarity on expansion completion .

Pranshinv · March 24, 2021, 2:56pm

Production Linked Incentive Scheme (PLI) for Pharmaceuticals. - Notification dated 03.03.2021

Rate of Incentive: The rate of incentive on incremental sales (over base year) of
pharmaceutical goods covered under Category 1 & 2 will be 10% for FY 2022-23 to FY 2025-26,8% for 2026-27 and 6% for 2027-28.

Category 2

Active Pharmaceutical Ingredients / Key Starting materials / Drug Intermediates

Tenure of the Scheme: The duration of the scheme will be from FY 2020-21 to FY 2028-
29. This will include the period for processing of applications (FY 2020-21), optional gestation
period of one year (FY 2021-22), incentive for 6 years and FY 2028-29 for disbursal of incentive for sales of FY 2027-28.

Kopran shall benefit from the PLI scheme ,which will increase the profit by further 10% from the incentive amount for initial years.
Gazette Notification of PLI scheme for Pharmaceuticals_03.03.21.pdf (1.3 MB)

DEEPAK_AGARWAL · March 27, 2021, 2:29am

@RajeevJ and others experts whose name I may not know but please comment if possible .

RajeevJ · March 27, 2021, 5:18am

I am in agreement with the tweet that one should do ones own research & use ones own brain before making any investment, which also means that when I’m wrong, something that has happened often, I take responsibility for my decisions & try to learn from my mistakes.

More specifically on Kopran, only time will tell how this story unfolds. I have been adding in this correction. The mgt. is on record saying that despite the plant shut down for expansion in March / April, the Q4 numbers will not be impacted. I’m expecting Sales of about 125 crs in the current quarter (Q4). I expect Sales in the vicinity of about 600 crs in 21-22, after the ongoing expansion that completes in April. Expecting about 750 crs in the subsequent year after the Panoli plant goes on stream.

HIMSHAH · March 27, 2021, 5:45am

I am tracking kopran since many years. See till today date I have not found any serious red flags . company was lagging as their wasn’t any noticeable growth. Since few quarters tide has turned and market still don’t believe so we better wait and watch.

barathmukhi · March 27, 2021, 6:01am

As per Alembic Pharma’s mgmt, Azithromycin isn’t a very lucrative opportunity in the US because of existing players there. At least that is what I understood from Alembic’s Q1 FY21 concall. And this is despite Alembic having been in that molecule in India for a couple of decades.

RajeevJ · April 22, 2021, 6:01pm

Kopran closed 20% upper circuit on heavy volumes today, closing perhaps at all time high of Rs. 163.55/-, Hopefully, the retail continue to stay invested in this story. Even though it has gone up 5 times in the last year or so, there still continues to be a sense of disbelief about the Company. This perhaps is what is propelling the stock higher. The last 5 day surge had seen the stock up 50%, coming after it did after a 3-4 month period of consolidation which may have shaken out the weaker hands.

One needs only to focus on the financials here & ignore the price movements to stay invested.
A fellow Kopran investor sent me the following note which put things in some perspective.
“ KOP’s latest shareholder list shows 32% of the equity is held by some 34,000+ individuals holding an average of 400 shares each while some 75 people each hold 50,000+ shares.I can’t figure out what this conveys except that the Management will get the blessings of thousands of ordinary individuals if they (finally) manage to deliver the results expected of them !!”

Hopefully the retail gets full value for their long held investment.

RajeevJ · May 6, 2021, 4:59pm

The Kopran re-rating story continues unabated with the stock breaking the 200 barrier!

Based on its operating margins of about 17% & an RoCE in excess of 27% in the last year (20-21), despite investments made in the ongoing expansion, it compares favourably against many more esteemed names! The market is clearly excited & looking ahead to its numbers in the current year (21-22) post expansion & the year ahead (22-23) when the full impact of the expansion will play out.

Wolf · May 15, 2021, 12:40pm

Firstly a big thank you to Ranjeev who has given tremendous clarity on Kopran. My sense is the results should be above expectation. If we say 600 crore kind of topline and good growth in the following year I see no reason why this stock should trade less than three times sales. I don’t see too many pharma companies with the same product profile and available at this kind of market cap.ROCE is superb. I would not be surprised to see further re rating here.

RajeevJ · May 17, 2021, 4:22am

Kopran to consider a final Dividend along with Q4 results on May 27th. This has come as a surprise, albeit a very pleasant one! It was generally expected that the interim dividend of Rs. 1.50 would be taken as the final dividend as it was a maiden dividend in the last 20 years.

Considering a final dividend in addition to the interim one means that the Co. as of this moment (Mid May) is confident about its numbers / growth in the current year. Given that the expansion was to have been completed in April, so things must be on track. A good Q4 is pretty much on the cards. It will be interesting to see the investor presentation post the Q4 numbers. Perhaps it’s time for the Co. to seriously consider an investor con call now.

kashish24 · May 27, 2021, 8:18am

Kopran posted good numbers

12years · May 27, 2021, 8:27am

Dividend of Rs 1.50 per share

humbleInvestor · May 27, 2021, 9:26am

Some results highlights:

Decent jump in Q4 sales runrate , 140 cr !!( appears that the expected rampup is indeed happening )
EPS for FY 21 is 14.24
Approx 60 crores cash flow from operations ( FY 21)
CWIP 37 crs, so some capex is ongoing as indicated in last presentation shared by kopran management
long term debt now stands reduced to just 21 crs
1.25 per share dividend
Profit before tax margins are approx 14 % ( for this quarter )
The company has been doing a sustained PAT for 15 cr for last 4 quarters !

I am eagerly waiting for the management presentation to track their pipeline progress ( hope they continue giving one and perhaps a concall as well ?)

Discl : Invested heavily recently , looking to add on dips as I feel the kopran story has some steam left in it still

shah_murari · May 27, 2021, 5:06pm

Kopran has posted good number only point to highlight is the Margin for this quarter.

Posted good top line growth 360Cr to 492Cr YoY.

QoQ Margin reduce to 14% compare to Dec-20 19% any details on this ??

One thing I can see is under head change in inventory.

Regards,
Murari Shah

humbleInvestor · June 4, 2021, 5:07am

Credit rating upgrade for Kopran

humbleInvestor · June 11, 2021, 6:10am

Quarterly Investor presentation
Kopran continues to give excellent visibily on it’s planned product pipeline as well as panoli plant timeline(which seems to have been delayed by a quarter or so … ) .

Comparing the Q3 presentation against this one gives a fair idea on all the moving parts !

ranvir · June 11, 2021, 11:48am

@humbleInvestor …

If I am not mistaken, I havent seen any Qtly investor PPTs from Kopran…before this one.

If that is true, I guess this is a good sign that the management may finally be opening up wrt greater shareholder communication.

Would like to hear …ur thoughts on this.

12years · June 11, 2021, 12:15pm

I have seen atleast 2 Qtrly PPT’s.
kopran-inv ppt-feb2021.pdf (1.5 MB)

RajeevJ · June 11, 2021, 3:53pm

Kopran is beginning to come on the radar and is being covered by a few brokerages now. The note/ update below is from one of them- Sunidhi.

Kopran Ltd (CMP ₹189, M. Cap ₹8bn): - Expanding wings

Company Update

Kopran is a Mumbai-based integrated Pharma company that generates ~ 58% of revenue from APIs and 42% from the formulation business (9mFY21). The exports of APIs and formulation together contribute ~80% of its revenue. Its formulation business is operated through Kopran Ltd and APIs vertical is run by a WoS- Kopran Research Laboratories Ltd (KRLL). The company has shown strong performance during recent quarters on the back of a larger products portfolio, focus on niche segments and geographical expansions. It has built dedicated and versatile facilities for Atenolol, Pregabalin, Cephalosporins (non-sterile & sterile), Macrolides, Sterile Carbapenems, which are witnessing healthy growth worldwide. The strong performance of company may sustain going forward on the back of an attractive products pipeline backed by up-gradation of facilities and a larger presence in the US and Europe. An improved business outlook (focus niche products and regulated markets) augur well for growth of the company over near to medium term. The stock is currently trading at 12.5x/10x FY22E/FY23E EPS.

Strong pipeline in API vertical to drive revenue and margins: Kopran’s API business grew at a CAGR of 25% during FY19-21 on the back of new products, geographical expansions, and focus on niche segments. It has fast expanded its products portfolio (4 DMF filed in FY21 itself out of a total 9 US-DMF) for bigger markets like the US and Europe. The company got a strong fillip in the US after a recent launch of Atenolol and it aims to gain market share in the next two years. Besides, it holds 4 CEPs for the European market, 2 product filings in China, and multiple registrations in emerging markets. However, its pipeline in Carbapenems (5 new products to be rolled out during FY22 & FY23) and foray into next-generation anti-diabetic drugs also provide strong growth visibility going ahead. The company also built a pipeline in anti-coagulants and anti-thrombosis. Koprans’s API business is expected to reach Rs3.87bn in FY23 from Rs2.87bn in FY21 (CAGR of 16%), even after building lower sales in Azithro.

Expansion in key API facilities: The Company has been expanding and upgrading its facilities in a calibrated manner over the past couple of years and currently it is undertaking the up-gradation and expansion of 3 blocks at the Mahad facility to cater to the increasing demand of existing and new products. Besides, it is also developing the Panoli site as an intermediate facility, which is expected to be operational by Q3FY22.

Formulation business to see faster growth post normalization on COVID-pandemic Kopran has dedicated facilities for penicillin and non- penicillin-based formulations which mainly caters to the African continent (~80% of formulation business), wherein it participate in local tenders. Its current basket includes 20 dossiers in Africa & French West Africa, 11 dossiers filed in South East Asia, 25 dossiers filed in Latin America. The performance of this vertical is expected to improve after the normalization of the pandemic. The company is eying to expand business in UK and Canada through contract manufacturing opportunities.

Focus on a niche and larger products basket to help improve EBIDTA margin
Kopran reported an EBIDTA margin of 16.6% in FY21 from 11.6% in FY20, thanks to favorable pricing in some of the products like azithromycin and higher offtake. Although the pricing in some of APIs may see softening going forward, niche products- especially carbapenem and anti-coagulants and next-generation anti-diabetic drugs may help sustain EBIDTA margin in FY22 (16.6%) and FY23 (~17%).

Multiple triggers for growth and improved financial performance
A strong products pipeline in API space focus on better margin products and expansion in regulated markets are some of the elements which should lead to the improved financial performance of the company in the next 2-3 years. Its sterile API facility is currently approved mainly for RoW markets, though the company aspires to get into regulated markets. The regulatory approvals of its sterile facility by the US regulator would be a key milestone for the company for future growth opportunities. The stock is currently trading at 12.5x/10x FY22E/FY23E EPS.

Pranshinv · June 12, 2021, 12:16pm

Product Segment Update

March 21 Summary.pdf (436.5 KB)

The Company is evaluating further expansion of its capacity under newly launched PLI scheme and the same shall be finalised by July.
PLI Scheme will further increase margins and profits for the company.