I think this price movement is due to the substantial increase in promoter’s holding, and the expected debt reduction. Moreover, Q3 results are expected to be good as Q2 results were affected by loss of raw material due to heavy floods.
My own view on the sector is that Lasa now enjoys certain advantages. It has only one competitor i.e. Sequent Scientific, which has outpriced itself in emerging markets by focussing on highly regulated markets such as the US and Europe. In the Indian market, Sequent is losing - according to their concall transcripts - and that gap must be filled by Lasa. If you go through its draft application to SEBI for rights issue - which of course did not materialise - Lasa now has approval from EU regulators for some products. Overall, I believe Lasa will do well in coming days.
I spent an hour trying to understand the last few months events around promoter holding and preferential allotment and have very few answers.
December shareholding pattern shows promoter holding has increased only by 2.2% to 36% with the open offer. However, there was also a preferential allotment of 1.78 cr shares in December which has almost doubled the equity base and increased promoter holding to ~65%
I’m intrigued why the December shareholding pattern isn’t reflecting the preferential allotment to promoter?
Was the preferential allotment of 1.78 cr shares done at a price of 18.25 / share i.e. same as open offer price or done in kind? As you mentioned in your August post,
The Letter of Offer on SEBI mentions this
Note: Preferential Allotment to be made to the Acquirer is at a price of ₹ 18.25 per Equity Share
A resolution was passed during AGM for conversion of Promoters loan into equity shares of the company. Promoter had given loan of 32-33 cr. Was this an interest free loan? If not, roughly how much will it positively impact the P&L by?
The only thing for certain is that equity has almost doubled from September quarter and expect it to be a big drag on EPS even with strong operating performance.
Still got no answers on the above, so given the expanded equity base and overall quality of business (continuously loss-making for many quarters) exited my entire holding around 32-33 in last few days at a 70% capital loss - amongst the biggest % and value wise losses I’ve taken!
With the stock at Rs. 10, was actually treating this investment as a write-off but the preferential allotment and increased promoter holding seems to have created a fancy for this stock and speculation on improving business performance - happy to have recovered some decent capital over the last month!
@gurjota sorry for your loss.
The open offer was an attempt by the owner to pick up cheap equity. Obviously very few from the Public submitted their shares.
Yes, the Promoter Loan was interest free and converting it into preferential equity is standard practice.
If you had asked, I think folks in this forum would’ve said to hold on…at least till the result which is just a few weeks away. This is about value investing and we still believe the fundamentals are in place which made us invest in the first place and I daresay the worst is behind us.
The way they have highlighted “FDA” in their press release, people will think it is USFDA but it is our Maharashtra FDA. Of-course in my opinion, it’s a marketing hype like all their other plans, recent one was some Covid medicine. Earlier they had announced some big tie-up with Chinese company? What happened to that one.
Screener shows the working capital days in the negative (-53) and days payable outstanding high (141), which happens if the company is able to buy raw materials on long credit terms. Most raw materials of the company, other than the ones it buys locally, come from China, so my interpretation is that the tie-up with the Chinese company CIDIC has worked very well so far.
Be very careful. Very few companies I know of will ever agree to over 120 days credit terms to their customers (in this case Lasa). Unless Lasa is a top 3 customer’s of its suppliers and suppliers have very low/negligible cost of capital this is highly unlikely.
Appreciate the cautious word from fellow members but wondering if there could be a real play and an entrepreneur (Omkar) finding new ways of rejuvenating his company.
The Q1 results declared by the company are a thing to cheer. Not earth shattering but at least the company has started showing profits. With the tail wind for APIs , if it is able to maintain the same momentum for the balance of the year , it will be an achievement. Has some one analysed the results ???
@phreakv6 - In your opinion is this still some kind of temporary phenomenon or do you think Lasa is firmly on its way to recovery? You had completely written the company off as a scam.
Wanted to initiate buying in Lasa Supergenerics, after reading all the history, I will wait for couple of quarters. I would like to whole heartedly thank people who added valuable information about the company since 2017.
