Ranvir's Portfolio

Q&A: Questions & Answers Portfolio Q&A
1157

Shaily Engineering Plastics -

Q1 FY 25 concall highlights -

Revenues - 180 vs 157 cr, up 14 pc
Gross Margins @ 42 vs 41 pc
EBITDA - 36 vs 28 cr, up 30 pc (margins @ 20 vs 18 pc)
PAT - 17 vs 12 cr, up 38 pc

Segment wise revenues -

Consumer sector - 132 cr, up 10 pc
Healthcare sector - 27 cr, up 21 pc
Industrial sector - 19 cr, up 38 pc

Company has 7 manufacturing facilities, all in Gujarat

Export : Domestic sales @ 80 : 20

Machine utilisation across plants @ 39 pc. As this improves, a lot of operating leverage can flow in for the company

Have been awarded new business in Q1 for - 02 new FMCG products which are currently under development, 02 new Pen Injectors ( to develop and supply ), 02 new new Auto components for an important customer

Have received an order for supply of one of their Pen Injectors to the tune of 1 cr injectors to be supplied over next 1 yr. This order will cater to the insulin Mkt. For context, company sold aprox 1.1 cr Pen Injectors LY. This is likely to be a repeat order

As per the management, revenue growth should accelerate over the next 5 yrs vs last 5 yrs

Every pen in the market except Novo’s FlexTouch and Shaily’s Neo are mechanical pens for Semaglutide and not spring driven - others have IP challenges

Company has 22 - 23 active projects spread across - Teriparatide, Semaglutide, Liraglutide and Tirzepatide

Liraglutide, Teriparatide - awaiting launch - should launch this FY ( late this FY ). Looking at Semaglutide launch in FY 26 in India, Brazil, Canada, China. Tirzepatide launch is not expected any time soon

Exhibit batches for Teriparatide, Liraglutide and Semaglutide have already been supplied

Their UK subsidiary ( Shaily UK ), expected to grow by 30-35 pc this FY on the back of commercial projects. Shaily UK has two new projects for - Premium re-usable device and Nasal Soft-Mist Inhaler - both under development

Guiding for a volume growth of 50 pc in the healthcare segment for FY 25. Most of this growth should commence wef Q2 FY 25

Current capacity for drug delivery devices @ 4 cr devices / yr. Will go for capacity expansion inside next 2 yrs

Are developing a few consumer electronics products in the high performance engineering polymer space ( working with 6-7 customers ). The Mkt size of these products can be big. Will share more info on these once the development is complete / nearing launch etc

Ypsomed Ltd is moving away from Insulin to GLP-1 based products. This opens up more space for Shaily in the Insulin space. Have started receiving greater enquiries in this space. The 1 cr devices / yr order received is a likely indication of the likes of Ypsomed vacating the Insulin space

Disc: bought recently, biased, not a buy/sell recommendation, not SEBI registered

5 Likes
1158

Do you know what method is followed by Global fund managers to allocate portfolio? Do you know how to compute combined variance of portfolio ( Square root is standard deviation which is a measure of risk), How to create a portfolio of minimum variance without changing return on investments? Can you compute VaR ( Value at risk when portfolio corrects or falls?

1159

Alkem Labs -

Q1 FY 25 Concall and results highlights -

Revenues - 3031 vs 2967 cr
Gross margins @ 64 vs 59 pc ( huge expansion )
EBITDA - 608 vs 389 cr, up 56 pc ( margin @ 20 vs 13 pc !!! )
PAT - 545 vs 286 cr, up 90 pc

R&D expenses @ 125 cr, 4 pc of sales

Cash on books @ 3845 cr

Alkem’s rank in major therapeutic segments in IPM -

Anti Infectives - 01
Vit/Minerals - 02
Pain Analgesics - 03
GI - 03

Among the chronic therapies, Alkem is ranked 7th in Neuro, 15th in Anti-Diabetic and Respiratory, 20th in Derma and 26 th in Cardiac segments

Breakup of revenues -

India sales - 2022 cr, up 6 pc ( 67 pc of total sales )

International sales - 967 cr, down 4 pc
Out of this, US sales @ 641 cr, down 8 pc
RoW sales @ 326 cr, up 2 pc

Massive improvement in Gross and EBITDA margins on the back on sharper focus on profitability, favourable RM cost environment and cost control initiatives

Will continue to invest aggressively towards future growth opportunities ( basically ENZENE’s Biosimilars plant in the US which is likely to turn profitable only in FY 27. Company is spending 400-450 cr towards this facility ). These are likely to entail operational costs. Hence sticking to full yr’s EBITDA margin guidance of 18 pc for FY 25. However, if the API prices continue to remain soft and decline further, company may report higher margins

Domestic growth in Q1 is driven by volume growth of 1.5 pc, new products at 2.5 pc and price hikes of about 2 pc

US generics business is seeing price erosion in single digits

Guiding for an R&D costs at around 4.5-5 pc of sales for FY 25

Looking at single digit growth from US mkt in FY 25. Will be launching 3-4 products and filing for 8-10 new products for US in FY 25

Expecting the growth to pick up in a significant way in the European + EMs. These mkts are showing encouraging signs and company is hopeful of growing briskly and more profitably ( vs US ) here. These Mkts are a big focus area for the company. Q1 was weak because of some supply chain issues which now stand resolved. Guiding for a mid teens kind of growth from non-US International business for next 2-3 yrs. Blended margins in these international mkts are > US and < India

Trade generics contribute to around 20 pc of company’s India business

Tax rate guidance for FY 25 @ 11-13 pc

Share of Chronic therapies in company’s India business @ 19 pc. 81 pc is acute business

Medical devices, OTC products - are two business areas where the company is working hard. Will share updates with shareholders when they finally launch products in these spaces

Cash on books to be used for acquisitions / mergers etc to add value to the business

ENZENE Biosciences ( a subsidiary ), already has 07 biosimilars in the IPM. Aim to launch 05 more over the medium term. Their US facility ( under development ) will be utilised for contract manufacturing

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

1160

Hi …

No … I have no idea about how do they do it :grimacing: :grimacing:

Regards

1161

Carysil Ltd -

Q1 concall and results highlights -

Revenues - 201 vs 141 cr, up 41 pc

EBITDA - 37 vs 27 cr, up 37 pc ( slight dip in EBITDA margins due ongoing Red Sea issues and costs related to integration of their US subsidiary - United Granite )

PAT - 16 vs 12 cr, up 33 pc

Quartz Sinks capacity utilisation stood at 70 pc

The contract with Reece Australia and Howdens UK are progressing well ( these should bump up company’s revenues going fwd )

Exploring new Mkts like - Turkey, Croatia, Vietnam for Quartz sinks business

Volumes sold in Q1 -

Quartz Sinks @ 1.55 lakh vs FY24’s Qtly avg of 1.41 lakh

Steel Sinks @ 0.37 lakh vs FY 24’s Qtly avg of 0.31 lakh

Kitchen appliances @ 0.14 lakh vs FY24’s Qtly avg of 0.137 lakh

Export : Domestic sales breakup @ 82:18 vs 80:20 in last FY

Product wise sales break up -

Quartz sinks - 45 vs 52 pc
Steel sinks - 11 vs 13 pc
Solid surfaces - 32 vs 25 pc
Appliances - 11 vs 11 pc

Revenues from overseas subsidiaries -

Carysil Products UK - 31 cr ( selling steel and Quartz sinks )
Carysil Surfaces UK - 42 cr ( selling solid kitchen surfaces )
United Granite US - 21 cr ( selling solid kitchen surfaces )

Recently concluded a QIP of 125 cr. This amount shall be utilised for acquiring new moulds for Quartz sinks, expanding appliance and faucets manufacturing capacity and for brand building in local mkts

Company expects their Qtly revenues to improve going into Q2,Q3,Q4 ( vs the 200 cr clocked in Q1 ) - subject to no major geo-political disruptions

In Q1, domestic sales have grown by 16 pc YoY

If the Red Sea issue doesn’t worsen further, company’s margins should see an upward trajectory going forward

Management believes that Quartz Sinks business has a long growth runway ahead ( globally ) and the company is extremely well positioned to benefit from the same

This year, the company is expected to do 150 cr of sales from India. Aim to do 300 cr / yr of sales from India Mkt within next 4 yrs

Disc: hold a small tracking position, biased, not SEBI registered, not a buy / sell recommendation

1 Like
1162

Can you share your thoughts about the business on which you have bet the highest allocation?

1163

My higher allocation bets ( > 3 pc ) include -

Neuland Labs
Eris Lifesciences
RPG Lifesciences
Mankind Pharma
Zydus Lifesciences
Windlas Bio
Innova Captab
Wockhardt

Senco Gold

HDFC AMC
Nippon Life AMC
Karur Vysya Bank
Federal Bank

Dodla Dairy

Garware Hi Tech Films
Shaily Engineering Plastics
Time Technoplast
Usha Martin

I would be a buyer in all the above mentioned stocks at prices 5-7 pc below CMP ( except for Neuland Labs maybe ). If u want to ask me about any particular stock / stocks among these, I ll be happy to reply

I hold about 25 more stocks. But allocation in those would be around 1 pc each

9 Likes
1164

Somewhere on May 6 post, I read you were not holding “Innova Captab” stock. Anyways, they are increasing capex, 2023 F.A. - 183 and 2024 F.A. is 358 + CWIP - 341.

So it is looking more promising as a valuable buyer mindset.

1 Like
1165

Why have you bought RPG Life sciences and Wockhardt ?

1166

Not my place to reply sir, but Wockhardt pharma is my first multibagger(110%).

There were critical drug trials in the antibiotic segment which recently reached the last stage of patent too.

Attaching a news piece: Wockhardt’s investigational antibiotic shows significant effectiveness in global Phase 3 trials - BusinessToday

1 Like
1167

There is a complete thread on Wockhardt Ltd on this forum … listing out their innovation achievements, their future potential and innovation pipeline. I recommend u to read through it

On RPG Life - its a clean, high return ratios, non complicated - India focussed formulations business. India focussed formulations business ( if the execution is good ) generate free cash and return ratios like FMCG companies but are available at almost half the valuations. That’s why, I am always inclined / temped to buy into these companies. Others include - JB Chemicals, Alkem Labs, Eris Lifesciences, Mankind Pharma. I keep monitoring their performance on a Qtly basis. And I am generally inclined to buy them ( and sometimes trade in them ) whenever the Mkt corrects

Regards

5 Likes
1168

Insecticides India -

Q1 FY 25 results and concall highlights -

Revenues - 657 vs 640 cr, up 3 pc ( volume growth was 15 pc, lower topline growth is due to fall in RM and end product prices )

Gross Margins @ 27 vs 21 pc YoY ( pure generic products have a GM of around 15 pc )

EBITDA - 72 vs 46 cr, up 57 pc ( margins @ 11 vs 7 pc - massive improvement YoY )

PAT - 49 vs 29 cr, up 68 pc

Product wise sales breakup -

Insecticides - 33 pc
Herbicides - 61 pc ( doing very well vs LY )
Fungicides - 4 pc
PGRs - 2 pc

Channel wise sales breakup -

B2C - 71 pc ( vs 66 pc LY - good improvement )
B2B - 26 pc
Exports - 3 pc

In B2C category, 60 pc of sales in Q1 FY 25 came from premium products vs 57 pc LY vs 51 pc in FY 23 ( company calls them Maharatna and Focus Maharatna products ). These r higher margin products vs pure generics. At the company level, they contributed to 42 pc of sales. Gross margins in these products are > 40 pc vs around 15 pc for pure vanilla generics

The monsoon distribution has been good this season + the reservoir levels are healthy. This makes the Industry outlook positive

Company is working with Nissan Chemicals on half a dozen products ( these tech - transferred products obviously have higher margins )

Products launched after 2020 are already contributing to > 500 cr on the topline ( this is a very encouraging sign )

Q2 looks promising across India. Should exit the FY25 with double digit EBITDA margins

For most of the new products that the company is launching, AIs ( or technicals ) for them are made In-House

At present, company has 11 Focus Maharana products. These r high growth, high margin products ( mostly with Pan India presence ). Aim is to keep graduating more products from Maharatna to Focus Maharatna category. Maharatna products are currently smaller with regional presence

Pricing pressures continue to remain in B2B and Exports mkt. Reversal of this scenario may take some more time

Will be launching 04-05 new products this FY. All these will be differentiated products in the Maharatna category

Company is guiding for volume growth of > 15 pc with a value growth of around 10 pc for FY 25 ( due price corrections in finished products ). Should be able to do an EBITDA of around 220 cr for FY 25

Company’s new Technicals facility at Dahej is expected to start production in 1-2 months time ( awaiting Govt approval ). Company has spent around 150 cr on this plant. This plant has a revenue potential of around 250 cr ( realisable from next FY ). However, if the company chooses to use this plant for captive consumption to lower the costs of its formulations, this revenue potential may come down but the company level margins may increase

Company intends to keep improving the contribution of Maharatna + Focus Maharatna products in its overall revenue pie for the foreseeable future. Hence, there should be continuous margin improvement going fwd - in the medium term

Disc: holding from lower levels, biased, not SEBI registered, not a buy / sell recommendation

2 Likes
1169

Sir first of all thank you so much for providing such a concise concall summary of various companies.I just want to know that why don’t you bet big 7-8% of your portfolio to a company when you see valuation is good and Growth is ahaed? and second on the similar lines- why you hold so many stocks and how you manage to track such numbers of stocks,(are you a full time investor or do something else as well?)

2 Likes
1170

Zydus Lifesciences -

Q1 concall and results highlights -

Revenues- 6207 vs 5139 cr, up 21 pc
Gross Profits- 4621 vs 3465 cr (margins @ 74 vs 68 pc)
EBITDA- 2084 vs 1505 cr, up 38 pc ( margins @ 33 vs 30 pc )
PAT- 1419 vs 1101 cr

R&D expenses @ 392 vs 323 cr ( @ 6.3 pc of sales )
Organic Capex @ 301 cr
Net Cash on books @ 1892 cr
Company deleveraged its balance sheet by paying down the entire debt on books

Geography wise business breakup -

US - 51 pc of sales, up 26 pc. Launched 07 new products. New launches include second 505(b)(2) product - Zituvimet - should be a meaningful product for next 3-5 yrs

India formulations - 23 pc of sales , up 13 pc. Launched 10 new products ( including line extensions ) with 3 - first in India launches. Retained leadership in Nephrology, remained fastest growing company in Oncology

Share of Chronic portfolio in India formulations @ 42 pc ( up from 38 pc - 3 yrs back )

9 brands with sales > 100 cr
11 brands with sales between 50-100 cr

India Consumer wellness - 14 pc of sales, up 21 pc - driven by 17 pc volume growth

Europe and RoW formulations - 10 pc of sales, up 9 pc

APIs - 2 pc of sales, up 2 pc

Two of company’s Injectable facilities in Gujarat are under OAI classification by US FDA - a key monitorable

Q1 was exceptionally good Qtr wrt EBITDA margins. Looking to clock 28-29 pc EBITDA margins for full FY 25

Management is confident of delivering high teens topline growth in FY 25

Guiding for a full year R&D expenses of around 8 pc of sales for FY 25

Revlimid sales in US in Q1 were higher vs Q4. Also, there was a ramp up in the base business as well

Expecting to launch 25 new products in US in FY 25

Aim to use the cash on books towards building a speciality business in both US and India

Company is confident of clocking double digit revenue growth with increased / enhanced profitability in the Europe + RoW business for next 3-5 yrs. Aiming to enter more geographies and introducing new products here

Hopeful of launching Saroglitazar in US sometime in FY 27. Along with Saroglitazar, company hopes to acquire another commercial NCE asset ( in the orphan drug space ) which can be launched along with Saroglitazar so that the company’s front end can be be used effectively

Company believes that their product line up and some product settlements that are lined up in next 1-2 yrs, should allow them to keep growing even in FY 27 ( once the Revlimid opportunity is over at the end of FY 26 ). If the management is able to grow the business in FY 27/ 28 ( despite Revlimid opportunity in the base ) - that would be a big achievement - IMHO

Disc: holding from lower levels, biased, not SEBI registered, not a buy / sell recommendation

1 Like
1171

SEAMEC Ltd -

Q1 concall and results highlights -

Revenues - 223 vs 224 cr ( flat YoY )
EBITDA - 81 vs 61 cr, 33 pc ( margin @ 36 vs 27 pc - massive expansion, does not include the exceptional gain on sale of one of the bulk carriers )
PAT - 50 vs 26 cr ( includes an exceptional gain of 9 cr )

Company is net debt free. Has net cash on books @ 92 cr

Company profile - Owns and operates 05 state of the art DSV ( Diving support vehicles used to support offshore work like - maintenance and inspection of mobile platforms, pipelines etc ) and 03 OSV ( Offshore support Vehicles- these are also used to support offshore work ) and 02 Bulk Carriers ( used to carry dry bulk cargo like - coal, iron ore, grains etc )

Services provided by the company -

IMR ( inspection, maint, repair ) Operations - for Sub Sea infra
ROV ( remotely operated vehicles ) - facilitating safe and unmanned sub sea operations where human presence is unviable
Sub-Sea construction
Sub Sea fire fighting
Sub Sea pollution control

Major clients -

ONGC ,L&T, Aramco, POSH, MERMAID, ZAMIL, James Fisher, Kreuz Subsea

Current Portfolio of vessels -

DSVs, Gross Tonnage, Year of procurement -

Seamec - II, 4503, 1993
Seamec - III, 4327, 1993
Seamec - Princess, 11121, 2006
Seamec - Paladin, 5648, 2021
Seamec - Swordfish, 5732, 2023

OSVs, Gross Tonnage, Year of procurement -

Seamec - Diamond, 1922, 2024 ( acquired in Apr 24. Deployed with ONGC for 3 yrs @ $ 8750 / day. That translates to aprox 16-18 Cr / yr … assuming 270 days of deployment )
Seamec - Glorious, 8950, 2021
Seamec - Pearl - Delivery expected in June 24 ( again expected to be deployed with ONGC at similar rates )
Delivery of another OSV - Nusantara - is expected in Sep 25

Bulk Carriers, Gross Tonnage, Year of procurement -

Seamec - Gallant, 32289, 2017
Seamec - Asian Pearl, 27989, 2020

The DSV/OSV work has much higher margins due to the specialised nature of work vs margins earned by Bulk carriers

Confident of growing the business profitability @ 15-20 pc rates in the medium term. Acquisition and deployment of vessels this yr and DSV - Nusantara should ensure growth for FY 25 and FY 26. Even going fwd, company will not shy away from procuring more DSV / OSV assets in order to keep the growth engine running

Revenue enhancing triggers lined up for next 1-2 yrs include - repricing of OSV - Glorious, DSV - Swordfish, Deployment of Nusantara, Deployment of another OSV

Areas of concern - They pay 4 pc of their revenues to the promoter entity as consultancy fee. This looks excessive to me. In addition, they spent Rs 150 cr to set up a corporate office in London !!! This again is an area of concern for me

Disc: holding, biased, not SEBI registered, not a buy / sell recommendation

1172

I used to do that pre covid ( ie high allocation in top 5-7 stocks ). However, in those days … my circle of knowledge was limited to Banks, NBFCs, FMCG, retail and Auto sector

Post COVID, most of these sectors have been laggards and I had to work hard to develop new areas of knowledge like - Pharma, Hospitals, Diagnostics and Manufacturing companies. That took time and I was not sure of placing bigger bets

Now that I think I have worked on a far larger variety of sectors, I think I need to start consolidating again ( ie … having 5 pc kind of portfolio weight in at least top 10 of my bets )

Ur feedback is welcome and I am gonna start working towards concentrating my bets … surely ( the time has come ). The only portfolio stock where my holding is > 5 pc is Neuland Labs

Some prime targets where I Intend to take my holdings higher include -

Group -1 - ( higher confidence ) -

Senco Gold
Nippon AMC
HDFC AMC
Mankind Pharma
Eris Lifesciences

Group - 2 - ( will wait for continued execution before going full throttle ) -

Usha Martin
Alkem Labs
Garware Hi Tech Films
Zydus Lifesciences
Shaily Engineering plastics
EIH
Dodla Dairy
Innova Captab
Xpro India

To answer ur last query - Yes, I am a full time investor. I quit my full time Job about an year back

18 Likes
1173

Sir thank you so much for your detailed reply.Sir i am from a maths background,i learnt economics and investing all by myself through reading various books on investing, accounting, following some good youtubers like- SOIC, Smartsync etc.,reading businesses, PPT and concalls of various sectors etc.Sir i also want to expand my knowledge to other sectors,i read concall and businesses in sector like- Infra, Pharma, Chemicals etc but haven’t got the conviction yet to bet reasonable amount.my question is how you learnt and understand these sectors, if you suggest any resources or anything.At last thank you again sir for expanding my knowledge through your concall summaries.

Recently qualified NISM Research Analyst exam through self study.

2 Likes
1174

Aarti Pharmalabs -

Q1 FY 25 results and Concall highlights -

Revenues - 555 vs 458 cr
EBITDA - 96 vs 85 cr, up 14 pc ( margins @ 17 vs 19 pc )
PAT - 55 vs 47 cr, up 18 pc

Revenue breakup in Q1 -

Xanthene derivatives - 54 pc ( seeing strong demand and sales in this segment despite the Chinese competition )

API + Intermediates - 44 pc ( 55 pc of this came from regulated mkts and the rest from RoW / unregulated mkts )

CDMO / CMO - 2 pc ( in Q4, it was 19 pc. This business generally picks up in Q3,Q4 ). Currently the company has 27 commercial projects and 26 projects are in various stages of development. Confident of growing this business by 25-30 pc in FY 25

Expect to complete the Xanthene brownfield capex by Q1 FY 26

Atali expansion ( for manufacturing of APIs + Intermediates + CDMO ) is expected to be completed by end of Q4 FY 25

Expansion of intermediates manufacturing facility at Vapi is expected to be completed by Q2 FY 25

Solar power plant that the company is in the process of setting up is likely to be commissioned by Q3. This will cater to 1/3rd of company’s needs and help reduce manufacturing costs

Company is seeing greater traction / enquiries for their CMO / CDMO work and are also seeing a shift away from China

Company’s Gross Margin profile generally fluctuates between 50-52 pc

Company’s CMO/CDMO projects are currently small. Expect project sizes to become bigger as the business scales up over medium term. All of company CMO / CDMO projects relate to patented molecules ( early stage and late stage intermediates )

LY the company did 175 cr of CMO/CDMO business. Expect to take it to > 220 cr this FY

Company agreed that the bio-secure act passed in US will act as an added tailwind for the company’s business

Lower GMs in Q1 is due to lower CMO/CDMO sales in Q1. As CMO/CDMO business picks up, gross margins should improve

Company is seeing greater traction / enquiries for their CMO / CDMO work and are also seeing a shift away from China

Company’s Gross Margin profile generally fluctuates between 50-52 pc

Company’s CMO/CDMO projects are currently small. Expect project sizes to become bigger as the business scales up over medium term. All of company CMO / CDMO projects relate to patented molecules ( early stage and late stage intermediates )

LY the company did 175 cr of CMO/CDMO business. Expect to take it to > 220 cr this FY

Company agreed that the bio-secure act passed in US will act as an added tailwind for the company’s business

Lower GMs in Q1 is due to lower CMO/CDMO sales in Q1. As CMO/CDMO business picks up, gross margins should improve

My Hunch - company may outperform its guidance on CMO/CDMO business and hence on overall company level margins. CMO/CDMO business is seeing a lot of tail winds for the Indian players

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

4 Likes
1175

Dr Reddy -

Q1 FY 25 results and concall updates -

Revenues - 7627 vs 6738 cr, up 14 pc

Gross Margins @ 60.4 vs 58.7 pc - due favourable product mix and operating leverage

EBITDA - 2130 vs 2068 cr, (margins @ 28 vs 31 pc) Margins contracted due increased investments in new business initiatives, higher freight costs, business integration costs

PAT - 1392 vs 1405 cr

Net surplus Cash on books @ 6730 cr

R&D expenses @ 620 cr @ 8.2 pc of sales - reflecting increased investments in Biosimilars pipeline and Novel Oncology assets

Geography wise sales -

North America - 3850 cr, up 20 pc YoY - mainly due increased volume in the base business, contribution from new launches, partially offset by price erosions

Europe - 530 cr, up 4 pc YoY ( Germany sales @ 280 cr, UK sales @ 160 cr )

India - 1330 cr, up 15 pc YoY - mainly on account of new product launches and newly in-licensed vaccine portfolio

Emerging Markets - 1190 cr, up 3 pc YoY ( Russia sales @ 550 cr, Sales from CIS region @ 190 cr, RoW sales @ 440 cr )

API + Pharma services - 770 cr, up 14 pc YoY. During the Qtr, company filed 11 DMFs globally

Company acquired World’s no 2 Nicotine Replacement therapy brand portfolio of - Nicotinell, Nicabate, Thrive & Habitual from Haleon PLC ( for sales across the world except US ) for a total consideration of Rs 5200 cr. It generated global sales of Rs 2300 cr for FY 24 ( across formats - gums, patches, lozenges ). Dr Reddy expects the brand to clock an EBITDA margin of 25 pc by FY 26. Deal is expected to be completed by Q3 FY 25

Earlier in Jan 24, company had acquired MenoLabs in US which owns a portfolio of 07 brands for treatment / management of menopause and pre-menopause

Company aims to have a worldwide OTC business with sales of $ 1 billion / yr in next 3-4 yrs. For that they intend to keep acquiring more brands

Inaugurated 70k Sq Ft state of the art Biologics facility in Genome Valley Hyderabad. Aim to commission manufacturing capacity by end of FY 25. This new facility will be targeting CDMO opportunities in the Biologics space

Company is confident of sustaining good growth momentum in their US business ( despite the price erosions ) on the back of continued new launches and reliable customer support and service that the company provides

Expect India growth to further pickup wef Q2

Disc: holding, biased, not SEBI registered, not a buy / sell recommendation

1176

Sandhar technologies -

Q1 FY 25 concall and results highlights -

Revenues - 913 vs 829 cr, up 10 pc
EBITDA - 90 vs 75 cr, up 19 pc ( margins @ 9.85 vs 9.10 pc )
PAT - 29 vs 22 cr, up 35 pc

Geographical breakup of revenues -

Standalone - 74 pc
Indian Subsidiaries - 13 pc
International Subsidiaries - 13 pc

Product wise breakup of revenues -

Locking and Vision systems - 24 pc
Cabins and Fabrications - 14 pc
Sheet metal components - 18 pc
Aluminium Dye castings - 26 pc
Assemblies - 10 pc
Others - 8 pc

Segment wise breakup of sales -

2W - 60 pc
PV - 18 pc
OHV - 15 pc
CV - 2 pc
Others - 5 pc

Schedule for beginning of mass production of EV components -

Motor controllers -
250 W - Aug 24
2000 W - Sep 24
6000 W - Dec 24

Battery chargers -

550 W - Sep 24
750 W - Started in Jul 24

AC-DC converters -

180 W - Dec 24

Company is localising a lot of the parts that go into these EV components. In medium term, company expects margins in these EV products to be as good or better than company level margins

Q1 is typically the slowest Qtr for the company

All of company’s JVs have turned EBITDA positive wef Q1 FY 25 ( including their plants in Barcelona, Mexico, Romania )

Company’s new plant at Pune for making Cabin and Dye Castings to start commercial production by Sep 24. This segment of company’s business is growing rapidly. Hence this capex was urgently required to keep meeting the customer demands

The EV products that the company intends to commercialise this yr should give them 5-10 cr revenues this year. Ramp up in revenues is only expected wef FY 26

The high inventory levels in the system that exist in PVs these days is not the case with 2-Wheelers. The offtake and volume growth in 2 Wheelers has been much better

Company expects revenues from smart locks ( new product line ) to start flowing in from Oct, Nov 24. Company will start supplying Suzuki and Honda. Content per vehicle in case of smart locks is much higher ( each unit should cost @ around Rs 4-5k )

Net debt on books @ 550 cr vs 592 cr on 31 Mar 24. Aim to reduce debt to below 500 cr levels by end of FY 25

In Q1, there was a slowdown in construction equipment segment. From Q2 onwards ( as this segment picks up ) there should be better topline growth for the company

Capex lined up for FY 25 is aprox 250 cr. Capex intensity is likely to reduce wef FY 26

Aim to increase EBITDA margins to around 10.5 pc in FY 25 and 11 pc by end of FY 26

Company expects the number of 2 Wheelers with smart locks can be in double digits in terms of Mkt share over a 2 yr period

Sandhar’s Mkt share in 2 Wheeler locking system stands at 70 pc in the domestic mkt

32 pc of company’s revenues come from TVS, 19 pc from Heromotocorp, 8 pc from JCB. These are company’s top 3 customers. Other important customers contributing 4-5 pc of sales each include Honda, Bosch

Expect the smart locks EBITDA margins to be in line with the mechanical locks business ie @ 13-15 pc EBITDA levels. But the value of business per lock is expected to be 6X to 10X

Opinion : business momentum looks strong. Should result in good to great topline and bottomline growth

Disc: holding, not a buy/sell recommendation, biased, not SEBI registered

4 Likes