Your Company continues to focus on Vascular Access, Transfusion, Diagnostics, Renal Care and Respiratory care products. The company is also launching Dialysis Machines and some other allied equipments in current financial year.
Your Company is exploring new opportunities in Europe & USA markets. All new products recently developed by company have received EU approval (CE mark) and will be launched in select markets in next few months. The company is also expending itâs distribution network in India to expend itâs reach across tier 2 and tier 3 cities.
Phase II of IMT, Faridabad plant will be operational by November 2020 and new manufacturing plant in Mahindra SEZ,Jaipur will be operational by January 2021. These two expansion projects will further augment the manufacturing capacities of existing and new products.
Your Company is also investing more in Clinical activities and Product Trainings to further enhance its footprint in domestic as well as export markets. Also new initiatives are been taken to increase the POLYMED brand visibility.
We are planning some new product launches in coming months and there is a great customer interest around these products. Many of these new product ideas are being generated with the help of specialists and Key Opinion Leaders, which will help us to maintain leadership position in Medical technology space in coming years.
The Board has considered and approved raising of funds to the tune of amount not exceeding INR 400 Crores through new issue of equity shares by way of qualified institutions placement, in accordance with the relevant provisions of applicable law and subject to approval of the Companyâs shareholders and receipt of applicable regulatory approvals.
Many often equity dilution is considered to be concerning. The other way to look at it is - company is capitalizing on the rich valuations and would be able to accelerate growth! The sector tailwind and the fact that huge imports happen in India, does offer them opportunity to scale up, especially given that they have build their brand and distribution over the years which is a hard task in India. Isnât this similar to what cos like Dixon etc are doing?
Capex of 600 Cr is huge and much more than the current gross block company has. So what they invested in last 25 years, will be now done over next 2-3 years if everything goes as per companyâs plan.
It will be important to see the kind of investors that come in now.
It is also worth noting that this is the first equity dilution Post ipo (which happened in 1996). Also the rest of 200cr capex would be through internal accruals. Given the rich valuations, imo the QIP is a good capital allocation decision modulo implementation risks which always exist.
These are pretty good numbers on expected lines. Valuation is fair at this point for the growth. I do like the expansion plans with the planned dilution. The business has compounded well in the last 10 and hopefully can do the same for sometime in the future as well.
Had jotted this down to explain investment thesis to someone. Posting it here since I have pretty much stopped discussing individual businesses lately here.
Market size for medical devices is big
Polymed is the market leader
Renal market is completely dependent on imports for the dialyzers and the dialysis machines. India being the diabetic capital, this is a big market. Poly Medicure has invested a lot in this space and the govt. initiatives are very beneficial for the business.
The govt. is spending on dialysis, subsidizing the cost, giving PLI initiative (company is investing 400 Cr further into expanding capacity for Renal products), keeping imports out with the restrictions they have placed. To me, it canât get better than this in terms of policy.
Company has had great return ratios and has consistently compounded earnings by re-investing - this is a big, big plus.
Business is nearing 1000 Cr sales - I think this is a tipping point in general for most businesses and probably more so here, since the gross block can potentially double post dilution and capex. Have to see who comes on board though, since 400 Cr isnât a small amount.
Disc: Invested (Longer reasoning earlier in the thread).
Polymed also has some really good videos on YT regarding the state of dialysis in India and why a lot more needs to be done:
Just outlining a couple of points to excite members into watching the video:
If 100 people need dialysis today, only 10 people get it. This represents the size of the opportunity in India.
Dialysis requires a lot of medical and engineering skill. One has to customize the machine setting for each patient for the optimum benefits of dialysis to be realized by each patient.
Recent launches in the last 6 months. The continued investments in R&D should keep the pipeline going and expand from the current 130 odd SKUs it currently has.
Medical consumables have a huge growth runway ahead as a proxy play to health care and diagnostics.Covid has highlighted the need forthis sector like never before.Polymed management prudently utilizing the recent surge to increase their investment and capitalize the opportunity.Not only to the Institution but also for the retailers polymed is a long term opportunity as it has been a multi multibagger in the past decade.
disc. 7% of pf avg 240.
I think for us it was very important to stay in the business.And when we faced the pandemic many products which were used in the hospitals the demand went down. And for us we quickly innovated and getting in to medium kids and other PET scans and a face mask. So that helped us to lead on stay in the business. And then you would take the road from there. So that was important to be you know stay in the market with new products. And we also decided to increase our foray in Dallas ISE Field and Reno Field. And we saw there was a huge shortage of products in the retail space because earlier in India there was a huge reuse of retail products. And when the pandemic hit all the regional centers started to use them one time. And that increased the demand of these products too. So thatâs where we are.
How much clarity do you have for growth going forward. Because the focus now has shifted to vaccination.
See I think what we are seeing is there is the patients are back in the hospitals all elective surgeries which will postpone earlier almost all of the hospitals in India are back to peak over levels. And we are also seeing demand also coming from international markets where 70 percent of our revenue comes from international business. And there are also we see the demand coming back as some of the hospitals have started getting patients back for elective surgeries.
Given that youâre seeing increasing demand overseas what are your plans for investments overseas. Are you perhaps looking to boost our production capabilities.
Yeah. So we just you know expanded to our facilities 121 rand life and November 2020 and the one live in February 21. So both the facilities were expanded and jet for entry the bug in India. And now we are setting up for new manufacturing plants and they should be out by early 2023.
How much are you investing abroad. I mean just say in actual monetary terms here and how much of your growth is actually going to come from overseas rather than domestically.
No I think we continue to focus on the domestic market because I think the government has just recently announced in recent budget they to invest both short on 10 billion dollars and new healthcare infrastructure push. And also they are going to invest more in the less centers. So idea who happens to be our key market and terms of investments. We are probably a close to between 60 to 75 million dollar investment in next two years in infrastructure and new projects and new manufacturing.
You know when we look at your stock itâs really outperformed the BSE healthcare index. And he munching up 140 percent or thereabouts our investors price again a move that you may be orchestrating to go up the value chain as you are with the renal side of things. Is that the deal and what are you doing in terms of going up the value chain.
See I think for us itâs important to move in an area which is like infection prevention and hospitals. And what we are doing is right now focusing on products which will help introduction of infection in hospitals. And most of these devices what we have more than 200 international partners as a company. So we are pushing those products now and we are ramping up the capacity for those products or one of them is like our people syringes or are safety devices.
So these products are we see a big ramp up in coming years.
Absolutely and vaccination as you were discussing just now as well is going to be key in the months and probably years ahead here as well.
Are you confident that the Indian government can actually inoculate a quarter of the population by August.
I think the drive is pretty much on and I think now they will get it for private sector a few days ago and now itâs 24/7 so you can go and get yourself vaccinated if your age of 60 anywhere in India and they are like twenty five thousand centers doing vaccinations. So I think that drive itself and I think already close to 10 million people over this story in last three days for vaccination. And you just go online or this yourself and then go to the nearest center and Guy Johnson IBEX. So I think that is happening. And Vermont is already among close to around six billion dollars for vaccination. Right. And in India the vaccination is of a level of actually level of around three dollars. So I think government is pretty much sure that they will have do it. The other thing is of course in the post-Cold War world when people have been immunized etc⌠How will your company look. Of course this year has been skewed by the demands being laid upon you to come up with things to prevent the spread of the pandemic etcâŚSo I think going forward as I said I think the future is about you know new products. We are designing today. The business will take off in a big way. Our infection control portfolio of devices which we think will be very useful going forward in future because every hospital will have to relook at their infection control practice and probably also ramp up capacity in the intensive care area. So many of our products are used there currently. So I think we will see a ramp up of demand not only in India but I think everyone in the world.
So so much optimism Himanshu what could be the bottlenecks.
I think bottleneck is I think regulatory framework. I think the whole regulatory landscape is changing globally and it is getting difficult and more difficult for companies to register products in Europe and U.S. and other developed countries. I think that is something that you look at more deeply. But I think today most all our products are like sea certified. We sell in European Union. Thatâs 30 percent of our revenue comes from there right now. So I think itâs kind of a wait and watch. And if you are bringing new products the waiting time has increased to do this to new products out there. So thatâs the bottleneck I see right now. But is all about ramping up capacity.
