Hi! I recently started following this company. Does anyone know what “training expenses” of Rs. 86.5 lakhs the company is bearing on behalf of Mr. Ahaan Nachane (son of Mr. Rahul Nachane)?
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Q2 concall notes
FY25Q2
- Operating environment is challenging, high competition and lower prices. Witnessing softer demand from Europe, and currency challenges in Africa, LATAM and Turkey + higher freight costs
- China has recovered well
- Received CEP approval (4 DMFs approved in Europe now) and will file 4 CEPs in FY25 and total 15-16 products by FY26.
- Have started sending samples to their EU customers, benefit will be seen in CY26, targeting 150 cr. revenues from EU in 3-4 years (with double EBITDA of their current runrate)
- In most of the regulated market products, NGL is the third or fourth approved supplier
- When a new molecule is introduced, real growth in only seen from third year (third to seventh year is the sweet spot)
- Capex: Phase 1 will be completed by Q4FY25, phase 2 by Q3FY26
- Operating at 90-95% utilization
- Veterinary field has seen increase in competition, both on API and formulation side
Disclosure: Not invested (no transactions in last-30 days)
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Student at Cornell … looks like the company is paying for his education 
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In all these small companies, the promoters treat the company as private pocket to short charge the investors.
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So here is my understanding of the road ahead, would like to hear everyone’s opinion here, I am not great at this would like to learn:
Capex of 160 Cr, with asset turns ~2x
Expected additional revenue ~320 Cr
I am not sure how long will it take to realize this, Mr Nachane had previously mentioed that 3-7 years window is where most business is made by new molecules. Assume the new capex will also be accompanied by several new molecules and that 2 more years will be needed to completely deploy the capex. Say in the next 3 years (5 years from now) the 2x turnover will be realized.
Current revenue ~328 Cr (FY24)
Expected revenue in 5 years ~ 640 Cr (current revenue + 2x capex)
10Y median EBIDTA ~18%
Min EBIDTA ~10%
Future is uncertain so let EBIDTA ~14% (somewhere between median and minimum)
So EBIDTA in 5 years ~14% x 640 ~90 Cr
Around ~75 Cr in PAT (given net of 10 Cr fueled by Other Income)
If valuations same as today hold, Price could be around ~2x in 5 years.
Not invested, no transactions ever. Watching.
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Washout quarter for NGL finechem.Gross margins dropped from 55% last Quarter to 46%.Pricing pressure has become much more intense.In q424,mgmt said prices have bottomed out but looks like that’s not the case.
Look into any pharma or chemical company and there is one common theme.Very aggressive chinese dumping.sometimes they are selling much below their cash cost
Disclaimer:Invested at an average price of 397.No transaction in last 30 days.
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