NGL Fine-Chem (Animal Health + Human Health + Vet Formulations)

NGl Fine Chem is in the business of manufacturing of APIs and intermediates for usage in veterinary and human health.

It’s portfolio consists of Animal health APIs and human health APIs. Animal health APIs forms major part of the portfolio.

The company has posted good results in FY14-15, Net profit was up 85% and OPM was up from 13.88% in FY13-14 to 16.23% in 14-15.

The company has a ROE of 20.33 and last three years profit growth of 30%.

Found this link posted on Omkar Speciality thread about NGL fine chem Capitaline
Management expects operating margins to be around 15-15.5%, the company exports to unregulated markets and hence trade receivables stand at 4 months.

Company is waiting for environment clearances for its Tarapur plan where it intends to spend Rs.15 crore to increase its capacity by nearly 33%. It doesn’t plan to raise any equity or dilute stake over the next two years, All the expansion will be funded by debt and internal accruals

For FY16 company plans to do 105 crore topline and expects margins around 15.5%, which translate to Operating profit of 16 crore for the year. Market cap of company is 130 crore which is 1.23 times sales. Sequent Scientific trades at 7 times sales and Hester Bio sciences also trades at nearly 6.5 times sales.

If the company continues to grow at a decent pace, I believe there may be some re rating in the valuations of company…

Human health APIs division is very small in size but looks promising. It has 3 APIs in the human health segment:

  • Nitazoxanide, ANDA for this API is filed by Romark Laboratories for their drug Alinia(Used to treat diarrhea due to ceratin intestinal parasitic infections). Lupin acquired a license in 2013 to promote and disribute Alinia in US.

Major producers of this API are Suven Life Sciences, Lapicor and Industriale Chimca.

  • Atovaquone , used to prevent or treat pneumonia , ANDAs filed by GSK, Glenmark, Amneal, Mylan.

API producers: USV, Cadila, Glenmark, Mylan, Excella, Rolabo, Zhejiang.

  • Lumefantrine , ANDA filed by Novartis for its Coartem Drug which is used to treat acute uncomplicated malaria infections.
    API producers: Sequent Scientific, Calyx Chemicals, Micro Labs, Cipla, Ipca Labs.

Disclosure: Not invested, tracking.


Hey buddy,

Yes, 105cr top line can be achieved if the company is able to go at the current run rate. But whats more important is whether they can grow 15%-18% in top line in FY17 and FY18?

If they have capex plans which can take their revenues towards 135-150cr by FY18, then it will be a big winner.

If we consider top line of 105cr, we get approx EPS of 25rs which would value the co at less than 10x in forward multiple at current price of 230rs.

Do you have any idea on their growth plans? This certainly looks interesting.


Disclosure - Not holding, but considering.

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The company is waiting for environment clearances in its Tarapur plant and intends to spend Rs.15 crore to increase its capacity by 33%. According to management this capacity will be used in FY’17. Capex for FY’16 is stated at Rs.5 crore which should have been completed by June’15.

Management says that the growth for FY’17 will depend on environmental clearances, otherwise they expect the revenue growth to be 12-15%.We can hope that management receives environment clearances and revenue growth is higher than stated.

The company has 4 new APIs in pipeline , so 150 crore top-line for FY’18 is possible. Management guidance of 15% OPM gives a 22.5 crore Operating profit for FY’18. Using a multiplier of 15 times Operating Profit, this gives a valuation of Rs.337.5 crore for FY’18.

The company doesn’t provide much information about its products and expansion plans in its Annual Reports, but this company was featured in Forbes India Best Under a Billion list. For the list compilation they screened 17000 companies in APAC with sales between $5mn and $1bn.

According to Forbes, the resulting 200 companies produced highest sales and EPS growth for both the most recent fiscal and three year period, and strongest five year Return on Equity.

Forbes excluded companies with worrisome accounting, management, ownership or legal troubles. So we may conclude that things are fine on management and accounting front.


Find enclosed list of companies in previous study which turn out as disaster. There is no substitute to hard work and please do not believe blindly in study numbers. BUYERS BE AWARE applies most to the stock investment. I could get only 2010, 2011, 2012 and 2015 from public domain. 2015 is too early to say. My analysis not exhaustive and based on my limited knowledge. But that shall be sufficient to bring the point


I agree with you that the list guarantees nothing, but we are also trying to look at this company besides the list. The list just brought the stock to my screens, rest, we have to do all the hard work. I like Valuepickr’s style of collective analysis, that’s why I posted it here to get a collective view from my fellow VPians.

The list also features Avanti Feeds, Caplin Point Labs, Kaveri Seeds and Premco Global which have been discussed at length on this forum. I didn’t mean to post it just because it’s on that list, company looks interesting otherwise too :smile:

Appreciate your Reply and also other information you shared on the thread.

Only concern was about the enclosed comment

I thought it would be important to highlight past problem in Fobres List.



Just did more study on NGL…everything looks good but the cash flow from operating activities is SUSPECT! They are just not generating any cash from operating activities.

Which leads to the fact why they do not declare any dividend!!


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Company’s trade receivables stand at 4 months because company exports mainly to unregulated markets and they are spending nearly 3 crores every year for maintaining and balancing their existing capacities. They plan to declare dividend when they achieve scale and size, management plans to achieve this by FY’17.

The results are in line with management expectations, 2.78 crore PAT on sales of 24 crore. OPM is healthy at 19.2 % however management has guided OPM around 15-15.5%.

Read from some where : Of the total turnover while exports are around 75%, most of the exports are to non regulated markets. Although EU, accounts for 40% of exports, the final destination of the API is not EU, as it will be further exported to some other non regulated markets, hence country approval etc are not required.

Is it true ? Because in annual report they are not mentioning about export as 75%.

That’s my understanding. You can check the link below it says the same thing


Yes. I also read similar things from some other blog too. But as per the annual report, they export very less as 10%. Not sure which one is correct

ICRA Upgrade the NGL rating from A3 to A3+

ICRA ratings for Indian debt instruments-Aug 26

NGL Fine-Chem Ltd ST: Non-FB A3+ 35.5 Upgraded from A3

Everything is good…but the company has no cash flow from operating activities which I find very ‘putting off’. How can we invest if there is no cash flow from operations?

They are taking debt to fund everything.

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Find enclosed link which map short term rating to long term rating. As per the link, A3 and A3+ both are falling in long term rating of BBB, which is just a borderline investment grade rating. In fact, in my opinion, it is very delicate credit profile based on proposed rating. What best we can say it has improved marginally from borderline but still on long path of strong credit.

In short, is it good rating to have it or it is ok ok kind ?

Fy15 cash flow statement based on moneycontrol

Net Profit Before Tax 12.86
Net Cash From Operating Activities 7.50
Net Cash (used in)/from
Investing Activities -2.59
Net Cash (used in)/from Financing Activities -3.78
Net (decrease)/increase In Cash and Cash Equivalents 1.14
Opening Cash & Cash Equivalents 0.73
Closing Cash & Cash Equivalents 1.86

Nothing is negative. It’s 1.14 Cr


I was talking about March 13 and March 14.

March 15 numbers look encouraging…atleast its positive now.

Hello All,

I attended the AGM of NGL Fine y’day and here are my key takeaways,

  • The co. is not looking to add products aggressively,will commercialise two products its been working on for almost a year,one each in Human API and Vet API.
  • End-use of Vet APIs is targeted towards Cattle.
  • The co. is focused on products that’ve a small market size,it doesn’t want to focus on areas where biggies would enter. It’s happy to have 15-20-25% type market share in products with market size of 15-20-25 or roughly 50 crs. One of its products contributed 20-22.5 cr sales out of total sales in fy15 and the rest was from other 10-12 products. It has maximum 6-7 competitors in each product category and the market size along with competitive structure has remained static.
  • New products are also selected on the basis of small size that would discourage biggies to enter and that belong to chemical family of existing products,not on the basis of opportunity size or scope for higher margins.
  • The co. faces competition from China in Animal API space apart from Sequent (Alivira) and Omkar (Lasa) in India and a couple of other small players. The co. is unfazed about yuan devaluation.
  • Pricing for some products is done on contractual basis and some products are priced as per prevailing prices in the market. Margins would be in the range of 13%-18%,the range indicating worst and best times.
  • Top 10 customers contribute around 40% of the revenues,Top 5 contribute around 25%. All sales of co.'s products are to non-regulated markets directly or may be routed through a distributor based in another country. LatAm,Africa,SEA and neighbouring Indian countries are main end-user markets,the co. exports to 35 odd countries in total. Co. sells to 4/10 top Animal Health formulations cos. Majority of sales done in India are for Human APIs.
  • The co. plans to do a CAPEX of 20 crs. in 1-2 years to install an R&D facility and expand capacity by 40%. Current R&D facility has 10 employees,2 PhDs,needs new facility to do more work.
  • Management doesn’t like to think in terms of long-term vision or goals,thinks in terms of 1-2-3 year time-frame. It expects to grow at around 15-18% types rate at best. The co. became big in last 10 years due to expansion in market size of its products which were very tiny at that point in time. Further,growth will not come from expansion in market size of existing products significantly but by addition of new products,which the co. plans to do slow and steady.

Overall,I found the Management quite conservative,looking to maintain existing position more than growing.

P.S. - The management also intends to develop a new product for paints industry,its entered into a tripartite agreement with two British cos,the product is just a gamble on some regulatory change envisaged in near future,will be a new line of business if things work and will put up separate capacity for the same but at the moment its just a wild bet. Missed knowing if the product is being developed for international or local market.

Disc. - No investments in the co.


This is one the Asia’s top 200 under USD 1 billion growing company. The stock has corrected substantially from 350 to current 250 despite of showing awesome results quarter on quarter.