still doing schuttlebutt indian dental doctoer not using this brand , but brand is known to everyone .
still in watchlist
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Spoke to a practicing dentist today in South Bangalore with 20Y experience who actively is using Prevest products. He was quite happy with the quality of their products though according to him Dentsply / 3M is still probably a step higher. Prevest is definitely cheaper (primarily due to their lower cost of manufacturing in J&K). One thing he did clearly mention was there are still a significant % of dentists who arenât aware of Prevest so their sales & marketing team have a job ahead of them. There isnât shortage of market for them to capture.
Question is can they capture and scale?
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Thanks. Could you please ask what are the products that they are using ? I tried with many Dentist in my circle none of them know about this brand in AP.
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Last few weeks, even I have been checking with my friends in dental fieldâŚthey do not know about this company or its products. That means Indian market is in the tight grip of other brands. IMO, no wonder why it commands only 0.5% market share in India in spite of being a 2 decade old company. The big questions for me is, do the management really have the vision to scale up with an aggressive marketing & sales strategy to penetrate in India ? for which, has anyone got any idea of what their head count size is in sales/marketing. For now it appears the focus and revenues are dependent on their exports.
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Agreed, that seems to be their current outlook. Same is evident from the H1FY22 conf call as well. For expected domestic market share growth (even 3 years outlook), the response wasnât emphatic considering the domestic oppty in front of them from a 0.5% base. The response was on overall revenue target.
They should have a cost advantage domestically while global established players have operational efficiency and scale advantage in India. Is there a reason why they seem to be focussing on international market more? High costs already incurred for regulatory approvals for international markets??
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@aditya14920251 , Thanks. Yeah, I see no concrete answer / strategy for this question from the management (except Confidence). Anyways, i am in no hurry to deploy money for 1600 share lot without conviction.
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Hi Aditya,
I think their focus is both on international as well as domestic. In the concall Mr. Modi has clearly mentioned that their focus is to keep ratio of 60:40 for Export : domestic.
According to him, realizations and margins are higher in exports. Please find below the excerpt.
"Mr. Atul Modi: See at present and for mainly last five years, we have
maintained a balance of 60% export and 40% domestic. We want to continue our
growth plan growth plan for the export as well as domestic because we cannot
ignore the export market. The prices are better in the export market revenue
generation and you know the profitability and the value addition is more from the
export. So, that is again a thrust area for us. We have to see all round growth, we
have to expand our business in the international market. We have to expand our
business in the domestic markets with all efforts we have seen that our business
is continuously growing in the international market also above 20%, Indian
market also it is above 20%. We are expecting that business. So, we are quite
confident that weâll be able to maintain the 60-40 ratio, because this kind of
business model is very good for our company. The 60% revenue is coming from
the export and 40% from the domestic. And 60% we get a better price and
because domestic market because India is a very price sensitive market. So, we
have to have our prices a little lower than the international market. The export
and domestic model is very successful so far and maintain same ratio of 60-40%
with 2% up and down this side that side. The growth has to continue in the
export growth has to continue in the domestic market. And our business is
growing in this financial year also we are doing very well in the export market and
very well in the domestic market. New countries, we are adding new countries.
You know, other than USA and Canada, our business is growing in the European
countries. This year, we have added new country in the Europe. So, we are
continuously, you know, in the export market also we are adding new countries,
our existing Customers, they are also growing at a better rate in this financial
year. So, they are also well settled with our products, they are our distributor for
many years. They have established themselves, they have established the
products in their countries. So, the situation now is that the company has built its
name, company has built its product range. Now, the company has to only focus
on the brand promotion and innovative product development. So, thatâs our
growth plan. So, these are the key growth drivers, the new innovative products
US FDA approval, US market, international market and growth in the domestic
market, brand promotion. So, we are going to focus on these activities. "
Hi Sameer,
I think management has started focusing on domestic front and they have already purchased an office in Gurgaon as mentioned in DRHP
"Focus on brand awareness
Going forward, we seek to allocate portion of our resources to increase the brand awareness of our dental products. We believe that
the ability to differentiate our products from our competitors through our branding and marketing efforts will be an important factor
in gaining market share. We have recently setup regional office in Gurugram, Haryana for marketing of our products to the
customers in the North Indian region. We plan to setup more such regional offices in other parts of India and intend to undertake
appropriate marketing initiatives in order to increase our viability and market share as well as to create public awareness of our
dental products. "(page no. 100 in DRHP)
Considering the size of the company and availability of resources, company has to be judicious to focus more on lucrative opportunities.
Considering the small size of the company, many question arises in our mind. But few points below stand out.
- Low cost manufacturer( taking away market share in domestic market from MNC players),working in niche segment, growing at very attractive rate, net debt free.
- Approx 70% gross margin( And management wants to increase margin further by developing new innovative products)
- Management is firm about maintaining profitability(they discarded lower margin product, approved 5 products by USFDA and few more in pipeline) and growth(They could have waited for IPO funds for new facility, instead, have already bought the land, constructed the building and IPO proceeds will be used for only purchase of machineries, shows whether IPO would have gone successfully or not, they would have gone ahead with their plans) â same way management has bought the regional office in Gurgaon to increase their marketing efforts in North India. âIMO I do not find any reason to not believe them or why they can not increase domestic market share.
- Focus on Branding and R&D ----one of the response of Mr. Modi during concall in this regard was very interesting. He is aware about the Brand value and size of his competitors. Also, They have filed one product for patent and another one is in some final stage.(here also, they have executed before asking money in IPO for their R&D infrastructure) I think here also puck is moving in the right direction. I donât find any reason, why they can not do this.
âMr. Atul Modi: That is the reason that in spite of such a good product
range, we still have such a low business from the Indian market. Because we
are competing with the multinational Dentsply and other companies who have
more than 100 years of history and who are multinational big corporations. So,
we cannot match our resources with them. But as of now, those hurdles, those
challenges. Our business is growing in India while their business is not growing.
They are growing, but their business is not growing in India. They are doing
business, may be they have a growth of 2%-3% annually. But our company has a
growth of more than 20%. So, this speaks well about acceptability of the
products. Dentsply, if they are selling 100 crores, they will grow at a rate of 2%
every year. But our company is a small company, so we are growing at a 25-
30%. We are expecting a growth of more than 30% in this year. So, see the kind
of growth we have. But still we cannot match their business, because they are
into Indian market for ages. And their products are known worldwide. It is not
only the quality which matters, itâs the brand equity that matters. You know, you
buy a Mercedes, you buy a Tata. So, if Iâm given a choice, Ill put my hand on
Mercedes and not on Tata. This is kind of feeling everyone has in India.
Because everybody wants a German product, nobody wants Indian product. In
spite of all those challenges, weâre growing at a very good pace. Our growth is
fantastic, we are growing at more than 25%, we are expecting growth of more
than 30%. So, this kind of growth is a very satisfying growth for our company.
And we are very confident that our growth will continue to be like this in the
coming years also.â
- More than 90 international dealers and 50+ in India. âIMO to build this distribution reach in itself is very tough task for such a small player. Their products and prices must be doing lots of talking for them.
Disc . - Invested and positively biased.
Thanks,
Pankit
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I have two dentist friend in West Bengal. The outcome of the discussion were as follows :
-
Currently the market is dominated by foreign players and the dentist prefers to use the foreign made product.
Why?
Because dental fillings have to be both aesthetic and durable. A foreign made brandâs reliability is higher and dentists do not want to get into the hassle of customers coming back with complaint. " My tooth was suppose to be white, it looks yellowish." The dentistâs that I have talked with recommends to customers that can pay to use the foreign brands.
The products also do not come with any warranty and thus the risks of playing with a relatively new product can impact the dentists reputation and business. -
There are lots of fake alternatives which is 1/10th the price but will fail in durability and aesthetic aspect. Dentists who care about reputation generally avoid such brands.
-
Prevest Denpro is reliable as per them as they are used in bulk filling, So some dentists do keep them and are aware of them. There has not been much complaint regarding the quality. As an Indian brand they are of some repute.
-
Prevest Denpro 's sales and marketing teams are non existent. Foreign brand which has large market share, nevertheless provide samples to dentists and train them as well.
-
Indians on general are getting more aware and are taking care of oral hygiene.
Please let me know if any one would like to have a discussion with one of the college regarding the topic. I can arrange a call.
Regards
Gourab Paul
Disc: Not invested, but on the watch list
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Talked to the practicing dentist friend, he said its a good product but quality is not at par with MNCâs.
I donât understand their strategy to expand everywhere simultaneously, canât they focus on any one country at a time? take a dominant market share at one place then go for hunting other places, mistakes done at one place will be less costly than doing it everywhere.
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In general, based on the inputs so far from the members of the forum, the product is not at par with MNCs? If so, I think it will be daunting task for the management to change this perception amongst the dentists. Management and the team need to meet the expectations of the dentists, otherwise they will not be interested to promote the product. Also, I thought Mr. Modiâs casual approach to one of the questions on quality complain during the last investor call was not at all welcome, wherein Mr. Modi said âhe canât satisfy everyoneâ and also blaming the dentists that they donât know how to use their products.
My reading of the above scuttlebutt feedback is not necessarily a gap of quality but a gap of value that needs to be bridged. They do not have many sales & marketing folks across the country to take and show samples, get it tested with various folks and orgs which is what will drive adoption.
Sometimes if value is clearly articulated, a lower cost item need not necessarily be seen as lower quality. Currently from the feedback, dentists do not seem to classify them as a âpremiumâ product org and hence fall back to foreign orgs. Investing in sales & marketing might help establishing value.
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For some reason I have a strong feeling that their market in India is academics not the general practicians
If anyone of you has access to speak to some dental colleges that would be more useful. In colleges you have to use such products in bulk quantity. Why I am saying this is their sales are pretty flat after these many years.
One more thing we have to keep in mind is if any of the external players who are selling in India decide to setup their own base then how that will impact. Overall this is not a big market in terms of value.
Even in the total treatment cost what is the cost of product is used for treatment ?
For example a filling , root canal etcâŚ
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beg to differ sir, in dental college pt is mostly is low socio economic person ,dentistry somehow come in cosmetics area, i had done lots of schuttle butt and still doing, not get very response for this company , might be old companies at had built thier moat llike switching cost. still in watchlist not invested.
This is where I also feel the gap is
Gap of value have to be bridged and for that marketing and sales have to improve
Good part is Company acknowledged this part and working on it.
While I dont expect company to grossly improve on market share but Just grabbing small pie of increasing pond while keeping own markets secure can do the job for us as investors.
Switching cost is there wrt other established brands and that why this story may take some time to play out. May be a year or two.
Once it reached inflexion point, then spread will be much faster as Pond size is increasing with people spending on cosmetic dentals increasing per year
Valuation wise --Stock price CMP 413 â stocks look priced attractively if one believes that company doing right things
This company is in existence for 20 years and itâs domestic market share is still 0.5%. That speaks volume about companyâs products, its quality, its promoters and their aspirations. Unless something changed drastically (like change of promoters or next gen taking charge), I am not ready to believe that just because company started doing investor outreach (presentations, concalls etc etc), company has changed a lot⌠It seems more like they have hired a smart consultant who have told them tricks to play the booming stock market and gullible investors are jumping inâŚI would prefer to be very cautious and wait to see real changes on the ground before investing in such companies. Those of us who have spent more than a decade in stock market have seen such companies come and goâŚ
Disclosure - in the watchlist.
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Exactly. I live in Jammu and Kashmir and from what I could gather, even local dentists here are not using their products frequently. My advice would be to wait for the numbers to match the narrative.
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I agree with this point of view. The problem is perception among dentists. But by giving analogy of Mercedes and Tata, management has clearly acknowledged where they are and where they need to work on.
The question is even if they try to build Brand, can they be successful in changing the perception among dentists? Apart from brand, we need to check out also how incentives are stacked for dentists. I am not sure how this industry operates when it comes to give incentives to dentists, but if someone can help to find out the margins or discounts given to Dentists to recommend their product to patients, how different MNCs give incentives, will be helpful. We need to form opinion on whether Prevest can match or increase incentives while staying cost competitive, so that they can increase market share?
Also, as it is not a one time spend, will the management be able to consistently spend on brand building, marketing year on year? Will they be able to spare resources? IMO current margin profile and growth projection may allow management for the same.
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Giving incentives in pharma sector is a very common practice. End of the day Doctor do not want to take a chance with something that is low in value in the total cost of the treatment.
What are the basic treatments ?
Scaling (once this is done doctor do some polishing and filling )
Tooth Extraction
Root Canal Treatments
Bridges
Type of Services
The general dentistry market is further segmented by type of service into
a) Dental Implants
b) Orthodontics
c) Periodontics
d) Root Canal- Endodontics
e) Cosmetic Dentistry
f) Laser Dentistry
g) Dentures
h) Oral and Maxillofacial Surgery
g) Smile Makeover
A good report on Indian dental market
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@Pankit , IMO, no dentist of repute would risk his reputation in the market (for the sake of incentives) with a product that is below par Vs MNC. I think quality is critical here as the patients look for durability. Therefore, management should put efforts with the help of their R&D to match their quality with MNC products and change the perception of dentists.
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@sameernics
I agree on that. Matching and exceeding quality vis a vis competitors is always a must for sustained success. Many certifications, USFDA approvals for few products, exports to European countries and many other countries point that they are progressing in right direction. Maybe they still will have a lot to work on. That we will have to see how the journey unfolds.
But to me more daunting task seems to be changing the perception/brand image among dentists and increase in market share even after achieving desired quality. Here I think incentives could play a role and leeway to give more incentives can help company grab more market share.
Thanks,
Pankit
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