Hi @ranvir, notice that you dont have any IT stocks in your portfolio? Any specific reason? Large caps like Infosys are now around their 10 year PE levels…
Hi…@Mayank.mail …
IT sector is presently beyond my circle of competence. So … I don’t even try
FDC Ltd stock story -
India focussed maker of branded formulations and APIs
Domestic sales-83 pc
Export sales -17 pc(mostly from US - generics)
Top brands in India Mkt - Mkt share
Electral-oral electrolytes - 75 pc
Zifi-Cefixime - 24 pc
Enerzal-Energy drinks - 42 pc
Zifi CV- Cefixime+Calvulanic acid - 46 pc
Zifi O- Cefixime+Ofloxacin - 14 pc
Zocon- Fluconazole - 27 pc
Simyl MCT- Infant powder and oils - 34 pc
Amodep AT- Amlodipine+Atenolol - 7 pc
Company facilities -
Formulations plants at Sinnar, Baddi, Walnuj, Goa
Foods Plant at Sinnar
APIs plant at Roha
Top brands by yearly sales -
Electral - 350 cr
Zifi - 320 cr
Enerzal - 150 cr
Vitcofol - 86 cr
Zifi CV - 75 cr
Zocon - 54 cr
Cathrin - 59 cr
Zifi O - 53 cr
Simyl MCT - 51 cr
Amodep AT - 40 cr
International business - currently US dependent. Working hard to diversify into Middle East and Latin America with focus on Peru and Chile
Aspire to grow at 15-18 pc range (topline) for next five years. Bottomline growth may be better due better absorption of costs
Cash on books-aprox 800 cr
H1 is always stronger for the company due higher sales of energy drinks, electrolytes and antibiotics (in Q2)
As sales of Foods category+brands like Zocon grows, seasonality may reduce slowly
Management is aware of the fact that they have to reduce dependence on Electrolytes and Anti-Biotics. Now focussing on products like - Foods Division, Zocon, Opthal, Cardio & Diabetic products
Initiated a small tracking position
Inclined to add more if business performance improves / management is able to walk the talk
Narayen Hrudayalaya Q4 concall highlights -
Consolidated Q4 financials -
Revenues - 1222 vs 941 cr. India contibution - 977 cr, Caymen islands - 232 cr
EBITDA - 276 vs 172 cr, Margins at 23 vs 18 pc. India margins at 19 pc
NP - 173 vs 69 cr !!!
ROCE @ 28 pc - Industry leading
India business zone wise revenue contribution for FY 23 -
Bengaluru- 37 pc
South Peripheral - 6 pc
Kolkata - 27 pc
East Peripheral - 10 pc
West - 6 pc
North - 14 pc
Have decided to set up a Health Insurance subsidiary to provide affordable healthcare to patients
Mumbai Hospital has turned EBITDA positive in Q4 (+ 2.8 pc). Gurugram hospital’s EBITDA margins were (+3 pc). Dharamshila (Delhi) Hospitals’s Q4 EBITDA margins were 16pc. These three r relatively newer hospitals
Aiming for Gurugram and Mumbai to reach 15-17 pc margins in 3-5 yrs
Cayman Island Hospital’s new Onco block has gone live in Q1
Along with health insurance, also going to set up primary care centres in various residential areas. These are capex light centres
Capex for FY24- aprox 150 cr to acquire land parcel in Kolkata for Greenfield expansion
Plus another aprox 900 cr earmarked for capex in FY 24. 700 cr shall be from bank funding, rest from internal accruals. Debt/EBITDA to remain in comfortable zone
Cayman Subsidiary’s cash to continue to stay in Cayman. Company will work out a capex plan for Cayman separately
India business continues to have about 200 cr plus cash surplus
Cayman business running at 40 pc + EBITDA. New Onco block won’t be margin dilutive. There will be some margin dilution once the new Cayman Bay hospital comes online in Q1 next yr. Its a 50-55 bed facility
In FY 24, company heading into an election year. There may be some margin pressure and increase in receivables due company’s exposure to Govt business
International patients count at 8.5 pc of total vs 6.5 pc yoy
Cost of Debt ( for expansion ) should be around 8-8.5 pc
Bed additions in India will only happen in FY 25. In the mean time, working to improve throughput and efficiencies. There is a lot of space for improvement in these areas. These improvements will get reflected in ROCE, EBITDA, ARPOBs etc
Kolkata Greenfield expansion decided upon after exhausting all other options. In Bengaluru, there is no such problem as ample land is avlb in near vicinity
Disc: holding from lower levels, core portfolio holding
Prince pipes Q4 concall -
Q4 outcomes -
Revenues at 764 vs 901 cr YoY
Volumes at 44.3k MT vs 45.3k MT
EBITDA at 148 vs 140 cr, Margins at 19.4 pc vs 15.6 pc (significant improvement)
PAT at 94 vs 88 cr
FY 23 outcomes -
Revenues at 2711 vs 2657 cr
Volumes at 157k MT vs 139k MT (up 13 pc)
EBITDA at 250 vs 415 cr
PAT at 121 vs 250 cr
Short term debt reduced from 150 to 58 cr
Inventory days at 58 vs 85 days
Working capital days at 57 vs 68 days
FY 23 performance adversely affected by steep fall in RM prices in H1 causing inventory losses
To launch One Fit and Wire Fit products in piping division to bring global technology to India
Aiming to add 35k MT capacity in Bihar(Greenfield)
Bathware launch planned in End of Q1
Company migrating to ERP from legacy systems. May have some adverse impact in Q1
Current number of production facilities - 07, Warehouses - 09, SKUs - 7200
Capex towards Bihar expansion to be around 80 cr. To commence production by Q4 of FY 25. Plus around 70 cr of maint capex
Uptick in RE industry is strong
Q1-Q3 saw significant sale losses due inventory de-stocking due RM price cuts
Q4 saw an inventory gain of apron 25 cr
Demand continues to be extremely strong in Q1 across Agri and RE sector
Channel inventory is low due strong end demand
Previously commissioned plant at Telangana operating at 40 pc
Storage water tanks sales in FY 23 @ 30 cr. Intend to double it in FY 24
CPVC is a key focus area for the company specially after the flow guard ( Lubrizol ) tie-up
Jal Se Nal is a decent revenue contributor
Company doesn’t sell directly to the Govt. Sells it through local distributors to avoid credit risk
Jal Se Nal scheme is likely to continue for foreseeable future
Ex of Q1, expect 10-12 pc volume growth in FY 24
RE (building materials) is the main focus area for the company
Agri segment helps absorb fixed costs
Advertisement expenses for FY 23 @ 42 cr
90 pc of cost for changing over to ERP system already baked in FY 23 numbers
Company procures CPVC from Lubrizol and PVC from RIL and Chemplast Sunmar in addition to imports ( in case of PVC )
Expect 14-15 pc EBITDA margins over long term
Most inventory gains/losses should even out over 4 Qtrs barring wild fluctuations in RM prices that company saw in FY 22, 23
Inventory loss in FY 23 was 125 cr
CPVC prices have also cooled off
Local players and Lubrizol increasing CPVC capacities in India - long term positive
This will make CPVC more affordable and help the top 4 players
Infra demand comprises aprox 10-12 pc of Industry today
Expecting 15-20 pc 2-3 yr CAGR volume growth going fwd
Company has early mover advantage in East India
Company’s CPVC mkt share is around 10 pc which contributes 25 pc of company’s revenues. Overall Mkt share is around 7 pc
Disc: holding
Hikal Q4 concall highlights -
Q4 outcomes -
Revenues - 545 cr, up 9 pc yoy
EBITDA - 90 cr, up 48 pc yoy, margins at 16.5 pc, up 437 bps yoy
PAT - 36 cr, up 74 pc yoy
Segment wise results -
Pharma -
Revenues - 309 vs 308 cr
EBIT - 36 vs 30 cr due lower RM costs
Multipurpose animal health plant to be operational in H1 FY 24
Other cost optimisation efforts in place
Enhanced traction from existing and new CDMO customers
Crop Protection -
Revenues - 236 vs 194 cr
EBIT - 31 vs 12 cr, due fall in RM prices
New multipurpose plant at Panoli to go live in Q1 FY 24
New opportunities in advanced stages with global innovators
Sales break up - Generics : CDMO -
Pharma - 59:41
Crop protection - 26:74
Overall for the company - 44:56
Dispute between Hiramath and Kalyani group (2 biggest shareholders) is a private dispute. Not likely to have any material impact on financial performance of the company
Pharma industry’s pricing pressures abating
8-9 generic APIs in development phase. Aim to launch 3-4 this yr
02 Pharma CDMO products likely to go commercial this yr
API plant at Panoli received zero US FDA observations during its audit
Various cost optimisation programs running currently to improve margins
Demand for agrochemicals - subdued in Q4. Expected to remain same in H1 FY24
Witnessing increased traction in enquiries in CDMO segment in agrochemicals from existing and new customers
Seeing India as a major beneficiary of China+1 shift
Expecting significant ramp up in growth and margins in next 3 yrs on the back of increased focus on CDMO operations
Expect a challenging H1 but still better than LY. Expect significant ramp up in H2
Margins expected to be better in FY 24 vs 23 despite tepid H1
Validation Batches for Animal Health CDMO contract to start in H2. Commercial quantities to start in FY 25 end
Till then, validation batches to contribute to sales
New agrochemicals plant being commissioned (next Qtr) is for both own and CDMO products
With Panoli API plant being cleared by USFDA, company now has 02 USFDA approved API plants. Gives a lot of confidence to the customers
Total capex over last 3 yrs-700 cr. Expect asset turns of 1.5 times or so in about 2 yrs. Capex for FY 24 to be around 200 cr
Full yr EBITDA margins for FY 24 should be better than FY 23 margins
R&D spends at around 4 pc of revenues
Additional Pharma revenues to flow in this yr from the capex done at Panoli and Bengaluru over last 2 yrs
Animal Pharma business to cross 500cr+ run rate in next 5 yrs
Aim to reach FY22 end bottomline by FY24 end
FY25 should be much better
Planing to take up a tracking position
Disc: exited Angel One and Galaxy Surfactants from my personal portfolio. Both had a descent 20 pc plus kind of move in last one month. Wanted to lock in some gains
Bought : FDC Ltd and EIH Associated hotels
Disc : Initiated tracking positions in - Sula Vineyards, Hikal Ltd
Sula Vineyards Q4 and ending FY23 concall highlights-
Revenues For FY23-
Consolidated sales- 553 vs 453 cr
EBITDA- 160 vs 117 cr, Margins at 29 vs 25.5 pc !!!
Net Profit- 84 vs 52 cr
More than 72 pc sales from Elite and Premium brands vs 70 pc LY with a vol growth of 20 pc
Selling of own brands now constitutes 87 pc of company revenues vs 63 pc three yrs back. 5 pc sales come from selling third party brands. 8 pc sales from Wine Tourism
Wine tourism revenues up 30 pc for FY 23- includes stay at their resort + F & B sales
Sale from Economy and Popular brands at 27 vs of total wine sales vs 29 pc LY
Vineyard resorts - “The Source” and “Beyond by Sula” recorded 82 pc occupancy for FY 23 with ARR at 10.5k !!
Vineyard footfall at 3.4 lakh visitors
Final dividend of Rs 5.25/share
Sula’s Mkt share in Wines > Rs 700/bottle at a staggering 60 pc
Marketing expenses to go up in FY 24 to push growth. Should lead to slight moderation in margins by 1-1.5 odd pc
Grape season has been strong. Company is secure on supplies for the next 18 months
60 pc of company’s sales come from Karnataka and Maharashtra. Have taken a 5 pc price hike in these Mkts. Mkt has accepted the price hike with no moderation in demand
Wine is currently only 1 pc of total alcoholic beverages industry. May grow to be 2 pc of Industry in 6-7 yrs
FY 24 Capex projection at around 55 cr
Expecting a 15 pc CAGR volume growth in Wine Industry for next 3 odd yrs with value growth being higher than that
Plan to launch various brands in Cans format and popularise this concept just as it happened in Beers 15 odd yrs ago
Number of ppl entering drinking age in India/year > population of many developed countries. These are the primary targets for the company. Plus the women Folk, who are likely to find Wine far more palatable
Wine tourism revenue for FY 23 was 80 cr. Aiming to hit 100 cr in FY24
This is a big deal for a wine company
Export sales were about 3 pc of total. Company’s main focus for foreseeable future is domestic Mkt
Company currently has 70 odd rooms at its Vineyard at Nahsik for Wine tourism. These r simply not enough due surging demand
Putting up another 30 rooms to cater to the demand. Company not spending on Capex. Company just manages them so as to remain capital light
Disc: looks like a very interesting opportunity to me. Initiated a tracking position Yesterday
Mankind Pharma Q4 and Year ending FY 23 concall highlights-
FY 23 outcomes-
Total sales- 8750 cr, up 12 pc
EBITDA- 1913 cr vs 1991 cr, Margins @ 22 vs 26 pc
PAT at 1310 vs 1453 cr
Domestic sales at 97 pc of total
Cash flow from Operations at 1813 cr
Cash on books- 1366 cr
Q4, FY 23 outcomes-
Revenues at 2053 cr, up 19 pc yoy
EBITDA at 419 cr, up 45 pc yoy. Margins at 20.4 vs 16.8 pc
PAT at 294 cr, up 52 pc yoy
Rank in domestic mkt- 4th
Share of sales from chronic therapies at 35 pc vs 32 pc in FY 20
No of MRs - 11540
Sales/MR- 6 lakh/month
No of brands with sales > 100 cr at 20 brands vs 13 brands in FY 20
Consumer healthcare business -
Sales at 692 vs 590 cr for FY 23
Leading brands with category ranks-
Manforce, #1
Preganews, #1
Gas O Fast, #2
Unwanted 72, #1
Health OK, #8
Acne Star, #1
Export sales at 296 vs 187 cr for FY 23
Focus is on differentiated filings for exports
New integrated API+Formulation plant to go commercial in H1 FY24
Capex spends for FY 23 at 832 cr
Had acquired Panacea Biotech’s domestic formulations business for 1808 cr in FY 22
75pc of all of Mankind’s formulations are made in-house
For FY23, Mankind’s domestic sales were up 11.5 pc vs IPM growth of 8 pc
Standout growth in-
Cardiovascular@ 17 pc
Gynaecology@ 27 pc
Anti-Infectives@ 13 pc
FY 23 EBITDA margins at 22 vs 26 pc YoY due high RM costs in H1
Medium term targets - to grow at 1.3-1.4 times IPM and maintain EBITDA margins in the range of 24-26 pc
11 of Mankind’s brands clock annual sales>200cr
Mankind’s total Mkt share at 4.5 pc, No4 in IPM
Gross margins should improve to around 69 pc vs 67 pc in Q4 due price hikes
Cash on Books to be used for inorganic acquisitions
IPM projected to grow at 10-11 pc CAGR for next 3-5 yrs led by Cardiovascular, Derma, Gynae and Anti-Biotic therapies
Most of the high cost RM inventory out of the system. Should start to see benefits of lower RM costs from Q1
Panacea business was underperforming during most of FY 22,23. Its now picking up, wef Q4. Expect good growth in Panacea’s portfolio in FY 24
H1 vs H2 revenue share for the company stays at around 53:47. Hence, H1 generally has better EBITDA margins than H2
Tax rates to remain in 22-23 pc range for next 2-3 yrs
Broad thumb rule for Organic capex - 85 pc vs 15 pc for growth vs maintenance capex
Currently, the capacity utilisation across company’s plants are low vs industry standards. More benefits shall flow in as this improves
Very bullish about Panacea’s product portfolio going forward. The integration phase is over. The growth should be clearly visible wef Q1
Disc: initiated a tracking position in the last 2 days
Aditya Vision Q4 and year ending FY 23 concall highlights -
Total of 110 retail stores in Bihar+Jharkhand+UP
50 pc mkt share in Bihar ( source - Crisil )
Avg Store size - 4000 sq ft
Zero store closures since inception !!!
Last 2-3 yrs, gross Margins ranging between- 12-15 pc, Net Margins between 3-5 pc - Very healthy for an electronics retailer !!!
Aim to reach 150 stores by FY 25 end. That would be a 6X store expansion over FY17
Rough Qtly breakup of sales-
Q1-30 pc
Q2-18 pc
Q3-28 pc
Q4-24 pc
FY 23 outcomes -
Sales- 1322 vs 900 cr
EBITDA- 133 vs 83 cr, Margins @ 10.1 vs 9.2 pc
PAT- 64 vs 35 cr, Margins @ 5 vs 4 pc
RoE- 28 pc, RoCE- 60 pc !!!
Aim to grow topline by 20-25 pc CAGR over next 3 yrs
Q4 outcomes-
Sales- 306 vs 260 cr
EBITDA- 28 vs 29 cr
PAT- 7 vs 8 cr
Most of the Debt on books as on 31 Mar is due to inventory build up for the upcoming summer season. Long term debt is aprox-3 pc of the total debt
Current No of stores in Jharkhand- 17, UP(East) - 05 - both culturally similar, under penetrated Mkts where Aditya’s brand is strong
Have set up a customer care help line - ‘Aditya Seva’ to address customer complaints
Avg store breakeven time- 6 months, Payback time- 03 yrs
Have entered into a lease agreement for 20 more stores. This will take the store count to 130
Same store growth for FY23 at 33 pc !!!
Avg Capex, Inventory for a new store- 50 lakh, 2cr
Mar 23 was unexpectedly weak due unseasonal rains affecting Q4 performance
Huge inventory build up towards 31 Mar also because OEMs want to liquidate their inventory and retailers like Aditya get very good deals on these items
Confident of clocking > 20 pc sales (minimum) growth in FY 24 despite unseasonal rains in Q1
Stores in UP, Jharkhand doing well
Avg selling price / product trending up as ppl are shifting towards buying more premium products
Margins unlikely to go up from here
Total Cash+Equivalents at 82 cr
National retail chains are also present in Bihar. Aditya Vision has been doing well despite their presence
Very Old and Mature stores>20 yrs old, still delivering Mid Single digit same store growths
Advertisements for FY 23 at aprox 1pc of sales
Newer stores are generally bigger than older stores
Disc: not invested, planning to take up a tracking position soon. Quite impressed by management commentary and numbers
Broadbrush Voltas Q4 FY 23 highlights -
Q4 outcomes -
Sales- 2957 vs 2667 cr
EBITDA - 190 vs 232 cr ( margins @ 6 vs 9 pc )
PAT at 143 vs 183 cr
Company incured a one time loss of 243 cr due termination of contracts in Dubai and Qatar because of which, the full year profitability was suppressed. Legal proceedings against the main contractor have been initiated to recover these amounts, however provisions have been made as a matter of prudence
Cash and cash equivalents on books as on 31 Mar at aprox 2600 cr
Seeing huge demand for inverter ACs. Have introduced window inverter ACs too
Witnessed healthy demand for water coolers, commercial freezers and water dispensers in Q4
Voltas Becko brand witnessed a volume growth of 36 pc in Q4 !!!
There was an inventory build up with channel partners towards the end of March due unseasonal rains. Same as getting liquidated as summer is progressing
High single digit margins to continue in the medium term wrt Unitary cooling business
Company believes that competition is indulging in unsustainable pricing. This should correct at some point in time reversing the Mkt share losses for Voltas
Capex guidance for next 18 months at 350-450 cr - for expanding commercial AC and refrigeration facilities
Compressor manufacturing - looking to set up own facility for self sufficiency ( backward integration ). Looking out for right kind of partners
Some competitors are trying to gain Mkt share by making losses in AC segment. Despite the loss in Mkt shrare, Voltas is still the leader in AC category
Total AC volumes for FY 23 was > 14 lakh units
Total turnover for VoltBek business > 1000 cr
Don’t see a repeat of extraordinary losses in electro-mechanical projects division going fwd ( like the ones witnessed this year ). May even see a
reversal in these losses in 18-24 months as the legal process unfolds
Federal Bank Q1 highlights -
Deposits at 2.22 lakh cr, up 21 pc yoy
Advances at 1.83 lakh cr, up 21 pc yoy
RoA at 1.30 vs 1.10 yoy
RoE at 15.73 vs 12.70 yoy
GNPAs at 2.23 vs 2.69 pc yoy
NNPAs at 0.69 vs 0.94 pc yoy
Total branches at 1366, opened 12 new branches this Qtr
NIMs at 3.15 vs 3.22 yoy
Cost/Income at 50.87 vs 52.68 pc yoy
NII at 1919 vs 1605 cr yoy
Fee Income at 535 vs 441 cr yoy
Other income at 732 vs 453 cr yoy
Net profits at 854 vs 601 cr yoy
PCR at 70vs 65 pc yoy
Cost of deposits at 5.32 vs 4.20 pc yoy ( big jump )
Yield on advances at 9.21 vs 7.94 pc yoy
High margin segments like credit cards, personal loans, CV/CE loans, MSME loans, Gold loans, Micro finance now constitute 34 pc of the book and growing faster than the bank
Credit cost at 0.41 vs 0.41 yoy. It was 0.19 in Q4
Aim to grow advances and deposits at 18-20 pc for FY 24. In Q1, achieved the same
Credit demand remains good well into July
Withdrawal of Rs 2000 notes did help the bank on garnering additional deposits
Uptick in retail slippages is due to the retail restructured book coming out of a 2 yr moratorium in Mar 23. But the same is on expected lines. Seeing no special stress in the retail book
Currently, 45 pc of the total deposits come from outside Kerala …growing faster than Kerala Mkt
Percentage of retail deposits ( out of the total deposits ) currently at 86-87 pc
Avg cost of funds in Q2 to go up from 5.2 to 5.3 pc but the yield on advances will increase by more than 10 bps and hence margins are likely to expand
NIM compression has bottomed out. Should start to expand going forward, starting Q2
Momentum in fee income seen in Q1 likely to continue in the rest of the year as well
Bank seeing robust momentum in NRIs deposit mobilisation in last 45-50 days
Seeing intense competition in the home loans segment wrt rates
Guiding for a full FY 24 NIMs to be at 3.30 levels which means descent NIM expansion going fwd
Expect Opex also to moderate slightly going fwd
Total restructured book at around 2500 cr. Holding a provisions of aprox 25 pc against the restructured book
Expect to hit RoA of 1.35 by end of FY 24 and 1.42 by end of FY 25
Disc : holding from 115 levels. Don’t intend to add/reduce
Added - tracking positions today in -
Elin Electronics
Royal Orchid Hotels
Jamna Auto
Kajaria Ceramics -
Guiding for 14 odd pc volume growth in FY 24 with 14-16 pc EBITDA margins. Q1 volume growth was 6 pc. Guiding for a really punchy second half
Exporters from Morbi are doing really really well as many countries have imposed anti dumping duties on Chinese tiles directly helping Morbi players. This is also good for the likes of Kajaria, Johnson and Somany otherwise Morbi players end up dumping in India
Gas prices ( key RM ) are down to normal levels helping the entire Industry
Somany Ceramics -
Kajaria’s commentary makes me like Somany Ceramics at CMP … A back of the envelop calculation reveals a good possibility of 2800 cr top line with 280 cr EBITDA. Their current mkt cap is 3100 cr
Disc: will initiate a tracking position on Monday
UPL Q1 concall highlights ( also explains the stress in agrochemical sector ) -
UPL’s Q1 numbers were bad due to price and volume contraction
Price correction due oversupply in generic products from China. In non-generic products / seeds, pricing is holding up
Volume contraction continues. Started last Qtr. Should end by end of Q2
Correction-due over stocking that happened during COVID and Russia- Ukraine disruptions
Gross Debt lower by aprox 1250 cr YoY but is up QoQ as Q1,Q2 usually have inventory build up at company level. Same gets liquidated in Q4
Guiding for strong double digit growth in H2 FY24
Jump in Finance cost due consolidated rate of borrowing going up from 3.5 to 6 pc YoY
Debt/EBITDA to remain below 1.5-2 for FY 24
Company still performing better than most other formulations based agrochemical players
To cut costs by 800 cr in next 2 yrs, 400 cr this yr
Expect some recovery in Q2. Full recovery by Q3,Q4
Farmer level consumption is not affected at all
EBITDA in Q1 is down by 32 pc. Still guiding for 3-7 pc EBITDA growth for FY 24. Management believes that they have factored in all types of scenarios to arrive at this guidance
H2:H1 - revenue breakup is generally 60:40. If company grows in H2, it can achieve a lot of catch up
Volumes to catch up from Q3 onwards. Pricing to normalise only in Q4
Disc: holding
Shalby ltd Q1 concall highlights -
Consolidated revenues at 240 cr, up 17 pc yoy
Hospital business revenues at 216 cr, up 20 pc yoy
Implant business revenues at 16 cr, down 38 pc yoy
EBITDA at 48cr, up 8 pc yoy
PAT at 21 cr, up 4 pc yoy
Consol Debt at 109 vs 141 cr yoy
Occupancy at 50 pc vs 45 pc yoy
ARPOB at 38k, up 8 pc yoy
Signed franchise agreement at Ranchi (60 beds) under Shalby managed model
Business Infra-
09 Hospitals across western and central India
06 Hospitals under franchise model through Shalby managed / operated models
Franchise hospitals mostly concentrating on ortho and joint replacements
Implants business -US based hip and knee implant manufacturing facility. Approved by US FDA. Aim to ramp up sales to 800 cr in 5 yrs time !!
Currently, Anthroplasty and Orthopaedics contribute 53 pc of the revenues
Another MoU signed for Shalby operated franchise hospital at Rajkot ( 30 beds )
Implant business currently supplying primarily to US and India. Indonesia launch to happen shortly
Aim to open 50 more Orthopaedic franchises in 30 cities in India
Next in line - Malaysia, LATAM launch iro implant exports
Aim to exit FY 24 with mid single digit EBITDA margins from the implant business. Currently has negligible EBITDA
New Shalby franchise hospital at Ranchi has multiple specialities, bed capacity of 60 extendable to 100
Company is extremely cautious before selecting a franchise partner so as to not damage the brand reputation
Most Ortho surgeons availed leaves in Q1 resulting in reduced surgeries and sale of implants. Same happened post they finished the COVID backlog in the preceding months
Also made some design changes to the implant products which led to delayed production of newer designs
Implant business should pick up pace from Q2. Expecting very good Q3, Q4. Confident to grow 50 pc over LY (93 cr)on the back of new product launches !!! This despite a weak Q1
Company runs a small home care business. Provides physiotherapy, pharmacy, doctor on call and diagnostic services at home. Currently contributes 1 pc to the Hospital business’s topline. Growing rapidly. Company aims to make it 5 pc of topline in next 3 yrs
Most of Shalby’s implant business senior and mid level management has been hired from J&J’s orthopaedic implant division - hence hare really experienced
Aim to start the new hospital at Nahsik by Q1 next yr
Hospital business’s EBITDA in Q1 was 23 pc, likely to go up going fwd
Mumbai hospital to come up in 3-4 yrs. Capex for that would be in the range of 150-200 cr
Residual capex for Nahsik hospital @ 50-70 cr
Current bed capacity at 1300 beds. Nahsik and Mumbai will add 300 beds. Current capacity utilisation at about 50 pc
Rest of bed addition - via franchise route - Shalby managed or Shalby operated
Disc: initiated a tracking position @ 190 levels
Neuland Labratories - Q1 concall highlights -
Financial outcomes ( YoY ) -
Sales - 356 vs 221 cr
EBITDA - 99 vs 29 cr ( margins 27 vs 13 pc )
PAT - 62 vs 10 cr
Net Debt at 24 cr vs 160 cr YoY
CMS segment-sales led by commercial molecules. Significant contribution from in the pipeline molecules too
Speciality segment-growth led by Apixaban (anti coagulant)and Paliperidone (anti psychotic)
Prime segment-growth led by Mirtazapine (antidepressant) and Labetalol(BP med)
EBITDA expansion due - improved business mix, lower RM costs and kicking in of operating leverage
Working capital cycle down to 118 vs 141 days YoY
02 NCEs have gone commercial in the recent past (these have improved the company’s growth trajectory)
02 more NCEs are likely to go commercial in next 12-18 months
Receiving increased enquiries from global companies to partner with Neuland for CDMO work
Business to remain lumpy on a Qtr to Qtr basis
Company believes that they have sufficient capacities for next 2 yrs
May have to go for major capex after that, like setting up a unit IV etc
Going fwd, there will be more focus on speciality vs prime molecules
The demand of 02 new NCEs that ve helped company improve its performance in past few Qtrs, looks stable in for the foreseeable future
Disc: core holding. Biased
Laurus Labs Q1 concall highlights -
Financial outcomes (YoY)-
Sales - 1182 vs 1539 cr (-23 pc)
EBITDA - 168 vs 454 cr (-63 pc)
Margins @ 14.2 vs 29.5 pc - due operating de-leverage
Net Profit - 25 vs 250 cr (-90 pc)
Gross margins at 50.6 pc, down 700 bps YoY, up 90 bps QoQ
Segment wise sales -
FDFs - 285 vs 349 cr
APIs - 597 vs 583 cr
CDMO - 250 vs 577 cr
Bio - 50 vs 30 cr
FDF demand firming up, expected to go up in near term
API sales are up 2 pc but down 16 pc QoQ. Expect to rebound from Q2 due CMO opportunities in Non ARV molecules
CDMO had a large base in Q1 FY23. Otherwise, business is tracking well
Signed first agrochem multi yr manufacturing contract in Q1 - commercial supplies in H2 FY 25
Dedicated animal health manufacturing to go commercial in Oct 23
Bio business growth continues due CDMO orders
API sales breakup -
ARVs - 68 vs 65 pc
Onco - 9 vs 11 pc
Other APIs - 23 vs 24 pc
Basically, Non ARV APIs had a soft Qtr
CDMO - 60 active projects ( Ph- I,II & III ). Commercial supplies for 10 projects ( 4 APIs, rest intermediates )
FY23 sale contribution of ARV API+Formulations at 37 pc vs 73 pc in FY 18
Infused Rs 80 cr into Immunoact. Laurus now holds 34 pc stake. Fast tracking Ph-II,III trials for scalable manufacturing of CAR-T cells treatment
Company believes its API and FDF business will return to normal levels from Q2
Steep fall in Onco API sales in Q1 due execution of a large order in Q4 LY
Demand for Cardio, Diabetic APIs should pick up going fwd
Formulations revenue breakup- 188 cr ARVs, 97 cr non ARVs
Expect ARV FDF sales to peak out at around 1200 cr/ yr. All the incremental sales to come from non ARV FDF. Expect good orders from Europe and strong approvals from US
FY 25 growth to be led by animal health, crop protection contracts and ramp up of large volume generic APIs
The agro chemicals product to be supplied by the company is under patent protection
Confident that Onco API sales will bounce back from Q2 based on orders at hand
For Q2, ARV FDF order book is also strong
Positive impact of RM softening to be avlb to company from Q2 onwards
Hence Q2 margins should be much better
The agrochem CDMO contract is medium vol, complex chemistry contract hence the margins should be good
Expect to hit FY 23’s topline in FY 24 as well. FY 25 to be the growth year when full effects of animal health CDMO will also kick in
Company continues to be extreemly bullish on human CDMO business
Don’t expect any significant price erosion in ARV business this year. Also expect volumes to go up this yr. LY, price erosion was steep
Disc: hold a tracking position
Eris life Q1 concall highlights -
Successfully integrated Oaknet into Eris’s mainstream business
Capacity utilisation ramp up happening at second formulations facility in Gujarat (at 14 pc utilisation now)- started in Mar 24
Derma block expansion underway in the a/m facility
8-10 launches lined up for remainder of FY 24. Entering paediatric dermatology in Q2
Have a pipeline of 10 new FDFs in diabetic, GI, neurological space-these will be first in the Mkt combos. To be launched in FY 24/25
Derma insourcing wef Q4 FY 24 to further improve margins
Injectable diabetic revenue tgt for FY 24 at 50 cr. To launch Glargine and Liraglutide by Q4. Aim to achieve EBITDA breakeven here by Q4 FY24
Q1 Fin outcomes -
Revenues - 467 vs 398 cr, up 17 pc
EBITDA - 169 vs 129 cr, up 31 pc ( margins up 400 bps )
PAT - 94 vs 93 cr
PAT hit by higher amortisation and interest costs, lower treasury income
Reduced debt by 102 cr in Q1 to 672 from 774cr on 31 Mar 24
Current brand strength -
4 brands with > 100 cr revenues
6 brands with > 70 cr revenues
5 brands with > 50 cr revenues
Added 200 MRs in FY 23
Oaknet’s EBITDA margin at 35 pc vs 24 pc LY vs 10 pc at the time of acquisition
Diabetes injectable revenues were at 17 cr in FY 23 with EBITDA loss of 20 cr. Expect to hit 50 cr sales in FY 24 with EBITDA break even
Depreciation+Amortisation to continue at 40 cr/qtr this FY
Aim to reduce debt below 400 cr by end FY24
Aim to have EBITDA margin of 35 pc for FY24. Moderation to happen in H2 vs H1 due marketing spends on new launches
Organic portfolio (excluding Oaknet + brands acquired from Dr Reddy and Glennmark) grew 400 bps higher than the IPM
The 10 new brands (new FDF combos) to be launched in next 12-18 months to contribute min 8-10 cr in revenues each after first yr of launch. Thereafter, it depends on the product’s strength and mkt conditions
Confident of even better organic growth for the remaining part of FY
No capex (except maint) planned this yr
Yield per MR at Rs 5 lakh/month
PAT growth to accelerate next yr due to even higher topline and reduced debt
Not looking for fresh acquisitions in near future
Company believes, it should clock 700-720 cr EBITDA this yr vs 540 cr LY
Most of the cash generated to go into debt reduction
Topline expected to hit 2000-2100 cr this yr
Q1 has been weak for the IPM for last 2-3 yrs in a row. Growth generally picks up post Q1. Hoping for the same this yr too
Q2 is the best Qtr for derma mkt due fungal infections
Disc: holding from 630 levels
IMHO : being a pure play branded India formulations player, it should command better valuations. But - that’s only an opinion