Hi…
My watch / wish list include the following -
Axis Bank
HDFC Bank
ICICI Bank
Kopran
Nilkamal
CG Consumer electrical
CCL products
Ajanta pharma
Eris life sciences
JB Chemicals and pharmaceuticals
Saregama
Century Ply
La Opala RG
On the names that u mentioned… I am sorry I don’t track any of the names u mentioned. However, I would suggest that u have a look at Muthoot finance instead of Mannapuram due better asset quality.
@ranvir hope you are doing great! as market is falling, people are giving more depressing forecasts, what are your thoughts about market? I typically buy on the days when there is big decline, now i think wait and watch approach looks better.
Thank you.
Hi…@anekmmm…
Sorry for the delayed reply.
If crude prices don’t go up by much ( say below $ 120 ), the mkt should keep hovering around the current levels. However, if they were to fall due recession in Western economies, it should be a great tail wind for India. A recession in developed world should break the back of most commodities. And that’s really positive for India in the long run. This should provide a natural floor for the market with upward bias.
The only dire scenario that can play out is escalation of war that sends crude and other commodities like natural gas into a higher orbit.
Disc : before the Mkt started correcting in June, I had built up aggressive long positions in a number of stocks.
I had to square them off at losses.
But I am a happy man today ( looking back ) as I exited quickly. It could have turned far worse had I kept holding.
Disc: do not intend to get into margin funding and trading mindset again 
Also re-structured my portfolio during the down turn. Sold off some of non core and low conviction bets. Current portfolio breakdown -
Banking basket - ( Hoping for a credit cycle taking off from FY 23 onwards )
ICICI Bank… 4.9 %
Axis Bank… 3.9 %
Kotak Mahindra Bank… 4.2 %
Bajaj Finance… 6.3%
Pharma Basket - Holding all kind of companies - API makers, Hospitals and Pure Branded formulators. Not holding any generic makers.
Kopran Ltd… 2.5%
NGL Finechem… 1.9%
Granules India… 2%
Aarti drugs… 1%
Divis Labs… 3.1%
Syngene international… 2.6%
Fortis Healthcare… 5.2%
KIMS…3.9%
Narayan Hrudayalya… 3.9%
JB Chemicals and Pharma… 3.2%
Eris Lifesciences… 3.3%
Real estate and general economy pickup proxies -
Century Ply… 5.7%
Greenlam Industries… 3.1%
CG Consumer electricals… 6%
Kajaria Ceramics… 7.1%
TTK Prestige… 4.8%
Prince Pipes… 4%
Auto Ancillaries -
Gabriel India… 1.8 %
Retail -
Monte Carlo Fashions… 1.8%
FMCG - only fast growing ones -
CCL Products… 4.2%
Radico Khaitan… 3.8%
Chemicals -
NOCIL… 1.5%
UPL… 1.8%
Media -
Saregama India… 2.4%
Notes from AR - FY 22-23 iro Fortis Healthcare -
Turnover - 5745 cr vs 4030 cr. Hospital’s revenues at 4264 cr, Diagnostics revenues at 1605 cr.
Overall hospital occupancy - 63 % vs 55 % LY
EBITDA - 1096 cr vs 451 cr
EBITDA margins at 19.1 % vs 11.2 % last FY. Hospital’s business EBITDA margins at 15.8% vs 8.4% LY. Diagnostics business EBITDA margins at 26.5 % vs 19.3% LY
ARPOB ( avg revenue per operating bed ) - 1.8 cr, up 14% vs last FY
PAT - 790 cr vs a loss of 56 cr LY. PAT includes an exceptional gain of 315 cr.
Net Debt at 549 cr as on Mar 22 vs 849 cr as on Mar 21.
Revenues were adversely impacted in the first and fourth Qtr due Delta and Omicron waves. By the end of the fiscal, non- COVID revenues began began to grow again as patient inflow resumed to normal levels.
Strategic plans to further strengthen clinical specialities, medical infrastructure, standardisation and optimisation in procurement, ups killing and on boarding new talent are being actively pursued. **Brownfield expansions should see company add 250-300 beds each year for next 2-3 yrs taking the total bed capacity beyond 5000 beds ** Company healthy balance sheet shall enable company to look at acquisitions in its focus Markets of Delhi-NCR, Maharashtra, Bengaluru and Kolkata.
Company has invested heavily into state of the art IT infrastructure. MyFortis app is gaining popularity for booking OPD appointments.
Fortis hospital network -
Delhi + NCR - 08 hospitals
Punjab - 03 hospitals
Jaipur - 01 hospital
Chattisgarh - 01 hospital
Mumbai region - 04 hospitals
Bengaluru - 05 hospitals
Chennai - 02 hospitals
Kolkata - 02 hospitals
Disc: invested, biased.
Disc :
Resorted to trimming in Fortis Healthcare. Brought it down to 3.9 pc of portfolio, down from 5.2 pc. Reason - expensive valuations and high weightage in portfolio.
Initiated new position in Federal Bank @ 1 pc of portfolio. Reason - good set of Qtly numbers. Plus the bank has been showing improvements in almost all departments like - asset quality, slippages, operating efficiencies, credit growth over the last many Qtrs.
Added small quantities of UPL and Aarti Drugs… both were available at inexpensive valuations and I was already holding both. So… did a top up on both.
Notes from AR FY 21-22 iro Granules India -
Chief APIs made by the company - Paracetamol, Metformin, Methocarbamol, Ibuprofen and Guaifenesin. Revenues from API stand at 975 cr.
PFI - Pre formulation intermediates - largest PFI makers in the world. This makes Granules a preferred supplier for some of the most renowned global Pharma companies. Revenues from PFIs stand at 845 cr.
FDs - finished dosages - 52 pc of company revenues come from finished dosages @ 1944 cr.
Geography wise revenues break up -
North America - 52 pc
Latin America - 10 pc
Europe - 21 pc
India - 12 pc
RoW - 5 pc
Bonthapally ( Hyderabad ) - API - Paracetamol
Jeedimetla - multiple APIs and PFIs
Gagillapur ( Hyderabad ) - FDs and PFIs
Bonthapally ( Hyderabad ) - API intermediates
02 facilities at Paravada ( Vishakhapatnam ) - APIs and FDs
Virginia ( US ) - FDs
Sales - 2598 cr, 3237 cr, 3764 cr
EBITDA - 525 cr, 855 cr, 722 cr
Net Profits - 335 cr, 549 cr, 412 cr
ROE - 19.9, 27.4, 17.3
Cash to cash cycle ( days ) - 109, 117, 138
Gross margins for FY 21-22 at 1881 cr, a slight increase over the previous year despite steep increase in cost of solvents, RMs and freight.
Core of the company lies in its - Vertical Integration, continuous process improvements, enhancement of tech capabilities, economies of scale and stringent compliance with quality standards. Company aims at global cost leadership in select molecules.
Focus on technology - Company sees enzyme / protein engineering as an exciting future opportunity to improve cost competitiveness, manufacturing excellence, improved productivity and better sustainability. Bio catalysts are eco friendly, cost effective, allow fewer steps, easy purification and reduced capital investment vs synthetic processes.
Company is also leveraging its tech alliances to achieve backward integration for its key RMs - PAP and DCDA.
Company has completed a new FDs manufacturing block using MUPS technology ( multi unit pellet system ) with a capital outlay of Rs 240 cr. Company has received multiple approvals. Once it goes commercial, Granules would be largest supplier of MUPS capacity in the world for the approved molecules.
Last yr, company also completed submission of validation batches for various oncology products. Commercial production is likely to start as soon as the company receives regulatory approvals.
Disc : invested, biased.
Disc : resorted to mild trimming in Century Ply …after the stock price bump post the results.
Initiated a tracking position in Lux Industries.
Also trimmed CG Consumer. Added UPL.
Not a buy/sell recommendation.
Notes from AR - Aarti Drugs, FY 21-22-
Established in 1984. A significant part of Aarti group specialising in APIs, Speciality chemicals, Intermediates and Formulations with Pinnacle Life Sciences as its fully owned subsidiary. Has state of the art manufacturing plants in HP, Maharashtra and Gujarat. Has a total of 12 manufacturing plants with an installed capacity of 49000 MT. Also has 02 R&D facilities - both in Maharashtra.
Aarti drugs is the largest manufacturer of following drugs in the world -
Fluoroquinolones group like - Ciprofloxacin, Levofloxacin, Ofloxacin etc ( all anti biotics )
Tinidazole ( anti protozoals )
Celecoxib ( NSAID )
Nimesulide ( NSAID )
Metronidazole Benzoate ( anti biotic )
One of the Leading producer of Metformin
Ketoconazole ( anti fungal )
Produces a total of 50+ APIs. 37% of revenues is from exports. Out of a total of 12 facilities, 10 are dedicated API facilities. Brownfield expansion of Tarapur Speciality Chemicals facility is complete and scale up batches have started from May 22. Production is likely to be scaled up by end FY 23
Last 5 Yrs financials -
Sales - 1245, 1563, 1808, 2159, 2500 cr
EBITDA - 200, 210, 263, 442, 341 cr
EBITDA margins - 16 pc, 13.5 pc, 14.5 pc, 20 pc, 14 pc
PAT - 82, 90, 141, 280, 205 cr
Debt to equity - 1.19,0.89, 0.58, 0.38, 0.52
ROE - 16.3, 16.7, 20.6, 35.8, 21.1
Management agrees that China + 1 factor is playing out to their advantage in the API sector.
Current Sales break down -
APIs - 80 pc
Formulations - 11 pc
Intermediates - 5 pc
Spl Chems - 4 pc
Capex spending for FY 21-22 stood at 152 cr. For this year, Capex plans are to the tune of 250-350 cr. For FY 21-22 API volumes increased 10 pc owing to strong growth in chronic therapies due fresh commissioning of anti-diabetic capacity and ongoing expansions. Speciality chemicals and Intermediates also grew by 28 pc each. Over next 5 yrs, company intends to spend 600 cr on Capex. This expansion will encompass backward integration for APIs and formulations to reduce costs. Product wise capex plan for next 5 yrs -
Anti - diabetics - Aim to be the largest Metformin player in the World. Aim to launch Gliptins to further strengthen this therapeutic category.
Fluoroquinolones - further 40 pc brownfield expansion for these anti-biotics.
Ant-Protozoals - Further consolidate leadership in Indian Mkt with existing tech and Chinese JV. Plans to further backward integrate and apply for PLI
Vitamins/ Anti-Inflammatory - Multi purpose facility under construction.
Cardiovascular - Aim to double the existing capacity.
Anti-fungal - Further consolidate world wide leadership.
Speciality Chemicals - Incremental expansion of multi purpose chloro-sulphonation line in existing block
Disc : invested, biased.
Notes from AR iro Eris Lifesciences for FY 21-22 -
Oral diabetes care - 32 pc
Cardiac care - 26 pc
Vitamins, Minerals,Nutrients - 20 pc
CNS - 7 pc
GI - 6 pc
Gynae - 4 pc
Pain - 2 pc
Others - 3 pc
Disc : invested, biased.
Notes from AR iro NGL Finechem for FY 21-22 -
A prominent animal healthcare company in India with a global footprint. A leading manufacturer of animal APIs, advanced intermediates and finished dosage forms. Has 3 state of the art manufacturing facilities in Maharashtra - two at Tarapur and one at Navi Mumbai.
Current product portfolio of 21 animal APIs, 02 human APIs, 04 intermediates and 10 formulations. Revenue breakdown -
Veterinary APIs - 82 pc
Human APIs - 7 pc
Intermediates - 9 pc
Formulations - 3 pc
Geography wise revenue breakdown -
India - 24 pc
Europe - 28 pc
US - 3 pc
Asia Pacific - 30 pc
RoW - 15 pc
Company has 50 pc plus mkt share in top 3 of its products.
Veterinary APIs grew 26 YoY in FY 21-22
Revenues increased to 318 cr from 258 cr
EBITDA at 69 cr vs 77 cr
PAT at 53 cr vs 55 cr
EBITDA margins at 21 pc vs 30 pc
Aim to launch 3-4 products per year. Currently have 5 molecules in pipeline, each with multi step synthesis. These products are likely to be margin accretive. Their newly launched poultry molecule has shown wide acceptance and is clocking in good sales. Company completed expansion at Macrotech’s plant ( subsidiary ) in the FY 21-22. Also added capacities with brown filed expansion at Tarapur.
Disc : invested, biased.
Notes from JB Chemicals AR for FY 21-22 -
Rantac ( to treat heartburn, indigestion ), Rank- 45
Cilacar ( to treat high BP ), Rank- 52
Cilacar-T ( to treat high BP ), Rank - 203
Metrogyl ( to treat bacterial infections ), Rank- 194
Nicardia ( to treat high BP ), Rank - 240
Sporlac ( probiotic used to treat gas and diarrhoea )
Lobun ( prebiotic used to treat chronic kidney disease)
Oxalo ( probiotic to treat constipation, diarrhoea )
Nano-Leo ( capsules to improve male sexual health )
Pubergen ( Injectable hormone to support pregnancy )
Gynogen ( Injection to treat infertility )
(e) Beyond India, SA and Russia are company’s strong markets. JBC was the fastest growing company in SA last yr. Company is ranked 15 in SA. Russian demand remains stable despite geo-political headwinds.
(f) In US, company to focus on low volume, high value products with own APIs as backward integration.
(g) Company’s CMO business, specially Lozenges represents an area of excellence with company being among top 5 companies globally. Aims to maintain the same. Also aims to focus on immunity based products here, beyond cold and cough products to improve growth rates.
Sales - 1413, 1643, 1775, 2043, 2424 cr
EBITDA - 217, 305,378, 560,543 cr
EBITDA margins - 15pc, 19pc, 21pc, 27pc, 22pc
Disc: invested, biased
Better than expected results from UPL Ltd.
Disc : invested. Biased.
Disc: Sold JB Chemicals, Eris Lifesciences, Granules India and Aarti Drugs.
Reason : the draft policy of GoI on mandating doctors to prescribe medicines by generic names and not brand names. Although the policy is yet to be finalised, it still remains a significant source of risk.
Continue to retain Kopran Ltd due very cheap valuations and NGL Finechem as its in Animal Pharma space. Also continue to hold Divis because of its cost leadership in APIs and Syngene for its potential to convert some of its development stage molecules into commercial stage.
Bought the following -
Rushil Decor ( company looks like turning around )
KIMS, Narayan Hrudayalya ( I like the economics of Hospital business )
Greenpanel ltd
Balkrishna Industries
Axis Bank ( added to existing position )
Monte Carlo Fashions ( added to existing position )
Regards,
Ranvir Dehal
Disc: added tracking positions in HDFC Bank and Royal Orchid hotels.
Reasons -
HDFC Bank -
One of the few Banks bucking the trends of Corporate loans slowdown in Q1.
One of the few Banks that’s on a branch expansion spree when most others are going slow on the same.
However, lack of fresh updates on Technology updates in Q1 concall was a dampener.
Royal Orchid Hotels -
Great turn around in profitability in Q1.
Management has guided that they are likely to exceed Q1 profitability for rest of the Qtrs this year. That translates into an yearly profit of aprox 45 to 50 cr. The company’s mkt cap at the moment is just 550 cr. That translates into a FY 23 PE of 11-12 which looks cheap to me for a company running aprox 80 hotels in India.
Management is confident of taking the total Hotel count to 100 in the next 01 year. Most of these shall be managed properties where in investments from the company shall be minimal.
Regards,
Ranvir Dehal
Posting the Q1 investor presentation of Royal Orchid Hotels. Company seems to be turning around. If the results sustain over next 2-3 Qtrs, this has the potential for a lot of value creation.
On valuation matrix, trading at extremely cheap valuations ( on a PE, EV/ EBITDA basis ) vs the likes of Lemontree, Indian Hotels, EIH etc.
Disc: holding a tracking position. Will avg up if the performance sustains.
Latest management interview. Management indicating that occupancies are around 80 pc in Aug 22!!!
August is a lean season for leisure tourism. Clearly business/corporate travel seems to be picking up. This is a very positive sign.
Disc: invested.
Disc: resorted to mild trimming in Axis Bank and CG Consumer. Initiated tracking positions in Acrysil, Karur Vysya Bank and IDFC First bank.
Reasons -
Acrysil - Company’s MD is guiding for FY 23 sales > 700 cr with 20-22 pc EBITDA. Company should end up making a PAT of around 85-90 cr for FY 23. The current market cap is around 1900 cr. On a one yr fwd basis, its trading at 21-22 times EPS.
KVB - Has been a big underperformer over the last decade. However, their incremental slippages for the last three Qtrs have been less than 1 pc ( on an annualised basis ). Plus the total SMA book is also less than 1 pc of the total outstanding loans. Their GNPAs and NNPAs are showing a rapidly improving trend. Management is also guiding for a 15 pc loan book and NII growth. The bank is trading at 6 times expected earnings of FY23.
Idfc First bank - Their superlative NIMs , CASA > 50 pc and credit cost guidance of 1-1.5 times got me interested in the bank. If these things sustain for another 2-3 Qtrs, the mkt may finally re-rate this stock.
Disc:
Trimmed Axis bank.
Sold NOCIL.
Added - KVB, IDFC First Bank ( for reasons mentioned in the previous post ).
Bought - RIL ( new position ) - have been really impressed by the strides they are making in the retail business.
