Ranvir's Portfolio

Q&A: Questions & Answers Portfolio Q&A
1277

Posting my current portfolio breakdown ( I know … the number of stocks are way too many :grimacing: :grimacing: ) - however, I believe that I am currently in a stage / age where I need to maximise my learning by reading up ( and tracking ) about as many companies as I can even if I have to sacrifice a few percentage points on returns.

Healthcare and Pharma -

Advanced Enzymes - 0.5 pc
Alkem Labs - 1.16 pc
Ajanta Pharma - 0.76 pc
Alembic Pharma - 0.33 pc
Aarti Pharmalabs - 1.05 pc
Ami Organics - 0.8 pc
Cipla - 1.68 pc
Zydus Lifesciences - 1.40 pc
Dr Reddy Labs - 1.24 pc
Eris Lifesciences - 2.69 pc
FDC - 0.47 pc
Glenmark Life - 1.30
Glenmark Pharma - 1.01 pc
Innova Captab - 1.31 pc
Indraprastha Medical - 0.54 pc
JB Chemicals - 1.32 pc
Kopran - 0.84 pc
Abbott India - 0.43 pc
Laurus Labs - 0.75 pc
MANKIND PHARMA - 0.83 pc
Neuland Labs - 6.98 pc
Piramal Pharma - 1.48 pc
Rpg Lifesciences - 1.21 pc
Shalby Ltd - 0.64 pc
Supriya Lifesciences - 2.44 pc
Sun Pharma - 1.09 pc
Star Health - 0.24 pc
Wockhardt - 1.22 pc
Windlas Bio - 0.81 pc
Yatharth Hospitals - 0.67 pc

Financials -

ABSL AMC - 0.58 pc
HDFC AMC - 1.37 pc
NIPPON Life AMC - 2.11 pc

Bajaj Finserv - 1.67 pc
Chola Investment and Fin - 1.95 pc
IIFL Finance - 0.88 pc

Karur Vysya Bank - 1.64 pc
Federal Bank - 1.04 pc
Kotak Bank - 1.51 pc
Axis Bank - 0.95 pc

Agri Inputs -

Dhanuka Agritech - 1.97 pc
Insecticides India - 0.64 pc
Godrej Agrovet - 0.86 pc

Building Materials -

Cera Sanitaryware - 1.10 pc
Prince Pipes - 0.56 pc
Carysil - 0.32

Retailers -

Electronics Mart - 1.56 pc
Aditya Vision - 1.12 pc
Senco Gold - 0.81 pc

MISC + Manufacturing -

Garware Hi Tech - 1.65 pc
Time Technoplast - 1.27 pc
Technocraft Industries - 1.45 pc
XPRO ltd - 1.13 pc
Shaily Engineering - 0.99 pc
SG Mart - 0.51 pc
Mayur Uniquoters - 0.53 pc
Updater Services - 0.85 pc
Usha Martin - 1.48 pc

Metals and Mining -

Hindustan Zinc - 0.81 pc

Hospitality -

Benares Hotels - 1.46 pc
EIH ltd - 1.75 pc
Kamat Hotels - 1.23 pc
Royal Orchid - 1.05 pc
SAMHI Hotels - 0.80 pc
TAJ GVK - 0.73 pc
Wonderla Holidays - 0.99 pc

FMCG -

ADF Foods - 1.56 pc
Zydus Wellness - 1.45 pc
Dodla Dairy - 1.32 pc
Dabur India - 0.54 pc
Emami - 0.68 pc

Automobiles -

Maruti Suzuki - 0.92 pc
Bajaj Auto - 1.80 pc
Hero Moto - 1.27 pc
Sandhar Auto - 1.06 pc
Lumax Auto technologies - 0.61 pc
Pix Transmissions - 0.70 pc
Popular Vehicles - 0.89 pc
RACL Geartech - 0.58 pc
Steel Strip wheels -0.71 pc
HBL Power - 0.88 pc

There was a steep runup in some of my portfolio holdings in the last 1-2 months because of which I reduced their portfolio weights. These include -

MANKIND PHARMA
RPG Lifesciences
Piramal Pharma
Senco Gold ( additional reason in case of Senco Gold was industry wide pressure on stud ratios because of falling demand for natural daimonds )
Windlas Bio
Innova Captab
Ami Organics

Prince Pipes, Kamat Hotels and Royal Orchid Hotels continue to be laggards. I am hopeful of good recovery in both Kamat and Royal Orchid Hotels ( going by Q2 trends ). Price Pipes may be in for extended pain because of increased aggression from Mkt leader - Supreme Industries

I continue to be bullish on Indian CDMO + API companies - because of the American Biosecure Act and the China + 1 effect playing out in this sector

Dabur and Emami are recent opportunistic bets - anticipating a bottoming out of consumption cycle ( as Govt spending accelerates in Q3, Q4 )

17 Likes
1278

You seem to hold 81 stocks in your portfolio. Even the Nifty 50 has only 50 stocks.

3 Likes
1279

Hello @ranivir,

Great to see the detailed work and coverage of so many stocks from different sectors. While the jury is still out on the right number of stocks to hold in a portfolio and we have examples of famous fund managers holding thousands of stocks, but they were also managing corpus running into billions of dollars. For investors starting on their wealth creation journey what has really worked is the concentrated betting on you top conviction ideas. For most folks it is one or two big winners that paves the way for their wealth accumulation journey.

Once we start building a bigger corpus for the point of risk mitigation, people want to spread out the bets and look for a slightly bigger portfolio, but 81 stocks looks to me like over diversification.

I would request you if you can pursue a thought experiment going back to you investment thesis in each stock, and looking at the list of stocks from each sector to pick your highest conviction bet (one or two stocks from each sector) with the maximum valuation comfort at present, and then have that stock (or two) carry the allocation for that whole sector.

Track this new concentrated “virtual” PF return vis-a-vis your present PF, and this would be an interesting finding in about a year or more timeframe.

7 Likes
1280

Wonderla Holidays -

Q2 FY 25 results and concall highlights -

Currently operational amusement parks -

Kochi ( since 2000 ) - 94 acres, 56 rides
Bengaluru ( since 2005 ) - 82 acres, 60 rides
Hyderabad ( since 2016 ) - 52 acres, 52 rides
Bhubneshwar ( since 2024 ) - 51 acres, 21 rides

Company makes 30-40 pc of its rides - in house, has a talented set of technicians for the same. Rest are imported

Q2 financial outcomes -

Revenues - 67 vs 75 cr ( down 10 pc )
EBITDA - 2.6 vs 26 cr ( down 90 pc ). Company incurred a one time launch cost for the Bhuvneshwar Park @ 4 cr in Q2. Also had to incur additional hiring costs for the Bhuvneshwar park which further compressed the EBITDA margins

PAT - 15 vs 13 cr ( due deferred tax reversals )

Park wise footfalls, revenues in Q2 -

Kochi @ 1.39 lakh. Revenues @ 19.8 vs 24.7 cr

Bengaluru @ 1.96 lakh. Revenues @ 28.4 vs 31.6 cr

Hyderabad @ 0.92 lakh. Revenues @ 13.5 vs 16.1 cr

Bhuvneshwar @ 0.24 lakh. Revenues @ 5.3 cr

Heavy rains in South India in Q2, landslides in Kerala did impact the footfalls

Added multiple rides to the Hyderabad park in Q2. Spent 15 cr on the same

New Park @ Chennai should go live in Q3 FY 26

Raising 800 cr via QIP - in order to fund expansions in future ( it ll be a mix of Equity 600 cr and Debt of around 200 cr - roughly ). This should be enough for company’s expansion for the next 5 - 7 yrs

A new - large size park in a city like Mumbai / Delhi should cost around 700-800 cr. For a tier 2 city like Mohali / Indore, it should cost them around 200 cr

Intend to add a min of 3 / max of 5 parks in the next 5-6 yrs

Saw encouraging footfalls in the month of Oct 24

Aiming to hit > 3 lakh footfalls in the first full year of operations @ Bhuvneshwar Park

It takes a min of 18 months to set up a park from scratch ( post all the clearances )

Company has surplus land in all their current parks. Company will keep adding rides to their existing parks to utilise the same

Current ticket : non ticket revenues are 75:25. Aim to drive it towards 60:40 in next 4-5 yrs

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

3 Likes
1281

After reading few stock list I left it. But I am curious to know , with close to 80 plus companies stock. What is your XIRR or CAGR you are making? This year or last 2 years. I am keen to know if it is worth to take so much of pain.

1 Like
1282

Thankfully, my last 10 yrs XIRR is > 24 pc ( I started investing in 2014 )

Last 2 yrs have been exceptionally kind ( XIRR > 30 pc )

Most of the portfolio gains pre - COVID were led by Bajaj Finance ( I bought at split adjusted price of 300 and exited at 2700 before the COVID fall ), Zydus Wellness ( made a 5 X on it ) + Steady compounding in Dabur, Marico, GCPL, HDFC twins, Nestle ( from 2014 -20 ). In those days, I used to own 15-16 stocks at a time ( because I used to feel far more comfortable with FMCG stocks )

Post covid gains have been led by Piramal Pharma ( up 3X ), Laurus Labs ( up 4X ), Neuland Labs ( up 8X ), Wockhardt ltd ( up 3X ), RPG Life ( up 4X ), Ami Organics ( up 2X ), Royal Orchid Hotels ( up 2X ), Garware Hi Tech ( up 2X ), Glenmark Pharma ( up 2X ), KVB ( up 2X ), Aditya Vision ( up 2X ), Narayen Hrudalaya ( up 2X ), KIMS ( up 2X ) and some more ( that I don’t remember off hand :grimacing: :grimacing: )

Basically - it has been a very rewarding journey

21 Likes
1283

RPG Lifesciences -

Q2 FY 25 results and concall highlights -

Revenues - 172 vs 153 cr, up 12 pc

EBITDA - 48 vs 39 cr, up 22 pc ( margins @ 27.8 vs 25.5 pc ) - highest ever EBITDA margins

PAT - 31 vs 26 cr, up 19 pc ( this is adjusted PAT - not accounting for 27 cr of transfer charges as the same is going to be nullified in Q3/Q4 post completion of land sale deal )

Segment wise performance in H1 ( Q1 + Q2 ) -

Domestic formulation sales @ 216 vs 196 cr, up 10 pc YoY
International formulation sales @ 66 vs 56 cr, up 16 pc YoY
API sales @ 52 vs 46 cr, up 14 pc YoY

Domestic MR productivity @ Rs 6 lakh/month

H1 growth driven by 10 pc volume growth ( which is an extremely healthy number considering poor volume growth for IPM )

Company has sold its surplus land holdings located near Navi Mumbai for 144 cr

Actively looking for M&A opportunities in both formulations and API spaces in order to utilise the cash on books ( which post the land deal should rise to above 250 cr )

For domestic formulations business, the breakup of in-house : outsourced manufacturing stands @ 70:30

Currently 35 scientists are working in the company’s R&D center at Navi Mumbai. They intend to add a few more in near future. Currently working on expanding their Immuno-supressants portfolio so as to cement their position in this niche therapy area. Also working on a few molecules in the CNS and Cardio therapy areas. In all - working on 12 molecules

Going fwd - company intends to keep clocking gains on EBITDA margins. Although the gains hereafter should be gradual and not as steep as last 4-5 yrs

Wrt acquisition strategy for APIs - looking for small volumes, high complexity, niche molecules so as to avoid competition from bigger players. In the formulations space, looking to acquire brands in the chronic therapies

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

1284

This is great considering the amount of scrip in your portfolio. But last 2 year I would say you lost the opportunity to make it big with concentrated portfolio. In any case still you have far better returns in long run. I really like reasing some of your analysis in other thread.

Only advice I can give is make stronger conviction and build portfolio size of not more than 15 or 20 max.
I will keep following you here.

3 Likes
1285

Great performance, Ranvir. There’s no right answer here and one should stick with what’s working best for oneself.

One should always measure this against their true opportunity cost, and for active investors your benchmark should ideally be stable PMS’

3 Likes
1286

Dahnuka Agritech -

Q2 FY 25 results and concall highlights -

Revenues - 654 vs 618 cr, up 6 pc
Gross Margins @ 42 vs 40 pc
EBITDA - 160 vs 142 cr, up 12 pc ( margins @ 24.3 vs 22.9 pc )
PAT - 118 vs 102 cr, up 16 pc

Guidance for FY 25 - revenue growth of aprox 15-16 pc over FY 24. EBITDA margin improvement of 100 bps ( 1 pc ) over FY 24. Earlier they had guided for a 20 pc topline growth for FY 25 - basically have made a downward revision to their projections

Continuous / Excess rainfall in Aug/Sep resulted in farmers skipping sprays in many crops ( specially insecticides ). Sales return from Q1 also had an adverse effect on the topline growth

There was a continued pricing pressure on product prices ( to the tune of 4-5 pc ) resulting in lower topline growth

Three of company’s newly launched products - Purge ( Japanese herbicide for Groundnut and Soybean ), Lanevo ( insecticide for horticulture crops ) and Myco Super ( biologic - for soil health ) - are doing exceedingly well in the marketplace and exceeding even the company’s expectations. Both Purge and Lanevo are in-licensed from Nissan ( Japan )

Product wise sales breakup in Q2 -

Insecticides - 43 pc
Fungicides - 21 pc
Herbicides - 17 pc
Others - 19 pc

Region wise sales breakup in Q2 -

North - 29 pc
South - 31 pc
East - 12 pc
West - 28 pc

The patented products ( that the company in-licesnces ) from Innovators - contribute to aprox 600 cr of company’s topline at present. Have tie-ups with 10 leading agrochemical companies across the world in order to tap into in-licensing opportunities

Company is currently serving aprox 1 cr farmers through a network of 41 warehouses, 6500 distributors, 80k + retailers

High water levels in reservoirs should support a strong Rabi season this FY - augurs well for the company

Company did not share their launch pipeline for next FY

Company new AI plant at Dahej generated revenues of Rs 8 cr in Q2. Did operate at negative EBITDA levels { aprox (-) 4 cr }

Sales return in Q2 were due to late onset of monsoons and excessive rains. Sales returns were aprox - 100 cr, mostly in the herbicides category ( general levels of sales returns in Q2 are around 50-60 cr )

Volume growth for Q2 was 10 pc. Price growth was (-) 4 pc

Not expecting any significant sales returns in Q3

High inventory build up at the end of Q2 is also due to increased sales returns. Company expects the same to normalise by end of FY 25

Company has been able to hold onto and improve their gross margins is because of good / great performance from their in-licensed speciality portfolio. Price erosion in generic products has been much higher

Zanet ( another in-licensed product launched LY - fungicide used on Potato, Tomato crops ) is also doing very well

All 4 products - Zanet, Lanevo, Myco Super and Purge are exclusively with Dhanuka. The same is likely to continue for medium term

At present - company derives 33 pc of its revenues from In-Licensed products

Company makes 10-15 pc extra gross margins on these exclusive - inlicensed products. Generally, company starts with 3-5 yrs exclusivity agreements with the innovators. The same is extendable after that

Looking for Contract manufacturing opportunities from the Dahej plant. Nothing has fructified as of now. Aim to do a 250 cr revenues from the Dahej plant by end of FY 27

Other big brands from company’s stable include - Targa Super ( herbicide ), Caldan ( insecticide ), Sempra ( herbicide ), Mortar ( insecticide ) and Decide ( insecticide ). However, the company did not specify these product’s annual sales except that Targa is the only > 100 cr brand among these. Others have the potential to reach that milestone in medium term

Should start to break even from Dahej once revenues from the facility cross 150 cr

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

1 Like
1287

I feel that having concentrated portfolios make it easy to track companies and one have develop much better understanding of a lesser number of companies.

The advise of concentrated portfolios needs to be pushed back - as there are realities and trade offs of the real world.

  1. Tradeoff between deploying new money - within in your portfolio whose valuations are good to hold but not to enter - versus adding a new stock which one likes. In a bull market this is very common situation. It may be better to add a new stock than sit on cash.
  2. What is the risk of ruin (losing a lot on high conviction bet) one can take - 3%, 5%, 10%, 15%. For each person this is different.
  3. Inability to differentiate between some bets. In that case why not make an index of 2-3 stocks than pick one of them.
  4. Should one count the stocks which are on the way out of one’s portfolio?
6 Likes
1288

How many stocks should be there in a portfolio?

Lets, look at some data first before coming to any conclusion.

One of the most famous fund managers, Peter Lynch held more than 300 stocks for most part of his career, across cycles for 13 long years when US economy was not really doing so well consistently (1978-1991 period even had 02 recessions). Still, his return was one of the best that we have ever seen in such a long time frame.

Even Warren Buffet had bought more than 300 stocks in his life. To reach to 01 coca cola he had to buy shares of 50 different companies, later to realise that the others were not worth holding. Everyone knows what titan did to Rakesh Jhunjhunwala, but how many no. of stocks he already owned the day he bought Titan? And how much allocation he made to Titan in terms of % of his total networth at that time? No matter how good an investor you are, finding a multibaggar like Titan also involves a factor of luck, because investing is not a precise science, there are unlimited variables which come into picture that you can never be sure about any particular analysis. That is the precise reason we dont put all our money in our single best investing idea, rather we all own a portfolio of multiple companies.

On the other hand there are many highly successful investors i know who have very concentrated portfolios and they too have build phenomenal wealth (the number is as less as 2-3 stocks for some of them to 7-8 for others). There are many such type investors on valuepickr as well whom we all can follow and learn from. Few examples are @Anant, @hitesh2710, @phreakv6

Ranvir dehal is someone who is on the other side of the curve wherein he practices extreme diversification and yet quite successful. Forget last 4 years, if you see his returns over a longer time frame than his returns are also phenomenal. I think all of us at Valuepuckr are lucky to learn from so different, yet so successful investors from both sides of the curve when it comes to constructing portfolios. I think rather than advicing these investors as to how many stocks they should have in thier portfolios, as per our own liking, inclination or biases, we should simply try to learn and understand the pros and cons of different strategies and then follow tje process which suits with our investment temperament.

I am somebody who has been lucky to have been personally mentored by Ranveer Dehal for more than a decade now, and today i am also his analysis partner. Ranvir is a full time investor now, after he took voluntary retirement from a government job. And now he dedicates, all his effort in knowing new new business ideas.

Having said that it’s important to understand which phase of learning curve an investor is in currently. The ultimate aim is to find that 1 Titan, or those 2-3 life changing multi baggars. But currently we are in that grind phase where we are ready to put in all our efforts. Currently we read about lot of businesses and we simply buy it if we like it. Our selling framework is very simple, we only sell when data starts indicating towards deterioration in fundamentals or the valuations have become so high that they have started factoring in everything that can happen in next 4-5 years including all the optionalities. My understanding is that what will remain in the portfolio 10-20 years down the line will have a Titan type outcome. Rest all will keep weeding out for new ideas. The portfolio may still have 40 names but few positions will become large enough and rest others will become insignificant to influence the overall outcome, hence they wont matter. Though i believe the no. of stocks will keep reducing as we keep moving forward in the learning curve.

I also carry out one more exercise to determine how many stocks i should have in my portfolio. After end of every financial year i arrange all my stocks in decreasing order of allocation (largest position at no.1 in the list) and then write down the returns i have got in all the stocks i own in front of them. Then i analyse which stock gave me how much return. For eg if my top 3 return stocks are at no. 21st, 26th and 38th stock, then i am not yet ready for a concentrated 10 stock portfolio. it means even the 38th stock has added value to my portfolio despite having a low allocation. If i wud have owned only 20 stocks then i wud have missed all 3 top performers of my portfolio. The day i start getting best returns in approximately top 10 positions, i will reach a level where i am comfortable having a portfolio of only 10 stocks. The day i reach a level where consistently my highest returns have been in top 3 positions, i will be comfortable making a concentrated portfolio of only 3 stocks.

Conclusion: No rule fits all. Having a bias or inclination regarding having no. of stocks in a portfolio without undeterstanding an investor’s complete thought process is a fallacy.
Regards.

Disclosure: I am a novice and writing it here for the purpose of my own clarity rather than trying to teach anyone.

30 Likes
1289

Very few people have the courage to go against the standard norm (ex- 15-20 stock PF) and to test new things.Among them, very few people have the courage to openly discuss all these things.Massive respect for you sir, i learnt alot from you.Thank you and keep educating us.

3 Likes
1290

JB Chemicals -

Q2 FY25 results and concall highlights -

Revenues - 1001 vs 882 cr, up 13 pc
Gross margins @ 66.2 pc - flat YoY
EBITDA - 285 vs 251 cr, up 13 pc ( margins flat yoy @ 28.5 pc )
PAT - 175 vs 151 cr, up 16 pc ( due reduction in finance costs from 10 cr to 2cr due sharp reduction in gross debt )

Gross Debt @ 82 cr vs 357 cr on 31 Mar
Cash on Books @ 421 cr
Capex spends for H1 FY 25 @ 49 cr

Breakdown of Q2 revenues -

Domestic formulations - 588 cr, up 22 pc ( excluding the Opthal portfolio acquired in Jan 25, YoY growth was at 12 pc vs IPM growth of 7 pc ). Domestic business now constitutes 59 pc of revenues vs 55 pc at the end of Sep 24. Cilacar, Cilacar-T, Metrogyl, Sporolac, Nicardia, Rantac, Razel - company’s leading brands continue to do well. The acquired Othalmology portfolio ( from Novartis ) grew by 19 pc - @ 57 vs 48 cr YoY. Company has a dedicated field force of 100 + MRs for this division

International formulations - 300 cr, up 14 pc. South Africa and US business registered double digit growths. Russian business grew in high single digits

CMO - 94 cr, down 19 pc - due deferment of orders from Q2 to Q3. Expect to see strong Q3 and Q4 for the CMO division

APIs - 19 cr, down 20 pc

Company’s mix of Chronic : Acute sales in domestic mkt at 48:52 vs 37:63 in Mar 19. Chronic share has been inching up year after year

Company’s 5 brands ( Cilacar, Rantac, Metrogyl, Cilacar-T, Nicardia ) feature in top 150 brands in India. Their brand wise annual sales are as follows -

Cilacar ( Anti - Hypertensive ) - 431 cr
Rantac ( Antacid ) - 359 cr
Metrogyl ( Anti-Bacterial ) - 218 cr
Cilacar -T ( Anti - Hypertensive ) - 199 cr
Nicardia ( Anti - Hypertensive ) - 189 cr

Their fast growing emerging brands include - Sporolac ( probiotic ), Azmarda ( used to treat chronic heart failure ), Razel ( used for management of dislipidemia ) and the portfolio of Ophthalmology brands acquired from Novartis ( currently generating an annual sales run rate > 200 cr ). Razel and Sporolac brands have started clocking annual sales of 90 cr and 135 cr respectively

Current MR strength @ 2300+. MR productivity @ Rs 7 lakh + per month

Company is among the top 5 Contract manufacturer of Lozenges in the world. Annual CMO sales are > 430 cr. Expected to be a high growth area

Company’s manufacturing facilities are located @ Panoli ( Gujarat ) - 03 facilities, Ankleshwar ( Gujarat ) - 01 facility and Daman - 01 facility

Excluding the Ophthalmology portfolio, Gross margins improved by 100 bps ( 1 pc ) in Q2 vs Q2 LY ( as the Opthal portfolio has structurally lower margins )

Guiding for full year EBITDA margin band of 26-28 pc for FY 25 ( FY 24 margins were at 26 pc )

Expect the CMO business to reach $ 100 million ( from $ 50 million currently ) annual run rate in 3-5 yrs timeframe. Seeing good business momentum in this segment

Azmarda continues to grow strongly. Should be able to grow this brand @ mid teen rate in the foreseeable future. Razel brand is growing at even higher rates

India business’s volume growth in Q2 was 5 pc vs flattish volume growth for IPM

Capex spends lined up for H2 @ 50-55 cr

When the company acquired Othal - branded portfolio of Novartis India, they were covering aprox 6k ophthalmologists. Company has expanded that coverage to 13k+ ophthalmologists and plan to take it to 16k+ by next FY - this is again a high growth portfolio for the company

Metrogyl franchise ( ie Metrogyl + brand extensions ) is growing in high single digits. Rantac franchise is growing in low single digits

Despite being big brands, Cilacar + Cilacar T continue to grow volumes @ 12-14 pc for last 3-4 yrs

Company has lined up a lot of new product launches ( aprox 20 products ) in the branded generics space for SA + Russia mkts - beginning Q3 next FY. This should accelerate the growth in these geographies in FY 26, 27

Continue to participate in the 2000 cr probiotics mkt with their brand - Sporolac. This is a high growth area. Expecting Sporolac franchise ( ie Sporolac + brand extensions ) to keep growing in healthy double digits

Company has lined up a couple of Injectable products and a throat spray product to be launched under their CMO division

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

4 Likes
1291

Yatharth Hospitals -

Q2 FY 25 results and concall highlights -

Revenues - 218 vs 171 cr, up 27 pc
EBITDA - 55 vs 46 cr, up 21 pc ( margins @ 25.1 vs 26.6 pc YoY )
PAT - 31 vs 27.5 cr, up 12 pc ( due accelerated depreciation and amortisation @ 16 vs 5 cr YoY )

Occupancy @ 60 pc, up 3 pc YoY
ARPOB @ 30.6k, up 11 pc YoY

Hospital Wise revenue contribution -

Noida Extension - 37 vs 31 pc
Greater Noida - 31 vs 36 pc
Noida - 21 vs 28 pc
Jhansi - 7 vs 5 pc
Faridabad - 4 pc vs NIL ( this hospital was acquired in Feb 24 )

In Oct 24, company has acquired 2 more hospitals - @ Model Town New Delhi ( for 160 cr, 300 beds ) and a second hospital in Faridabad ( bought 60 pc stake for 91 cr, bed capacity can go upto 400 + beds ). Both these hospitals are expected to go live in Q1 FY 26

Company’s existing bed capacity, Q2 ARPOB, Q2 Occupancy -

Greater Noida - 400 beds, 33k, 65 pc
Noida - 250 beds, 29k, 79 pc
Noida Extension - 450 beds, 38k, 59 pc
Jhansi - 300 beds, 14k, 48 pc
Faridabad - 200 beds, 28k, 38 pc

Company’s hospitals are at close distances from both Jewar and IGI International airports. This gives them ample opportunity to tap into Medical Tourism mkt

Company’s current bed capacity stands @ 1600. should go upto 2300 beds by Q1 FY 26 !!! ( because of recent acquisitions )

Cash on Books as on 31 Sep @ 244 cr - will be used for Faridabad, Model Town acquisitions

Company intends to infuse another 100 cr into the newly acquired hospital at Faridabad into upgrading its infra, medical equipment and setting up a new Onco unit. For the Model Town hospital, this figure should be around 60-70 cr

Onco now contributes to 12 pc of group revenues

Have appointed Delloite as their new Auditor

Working capital days have reduced from 112 days in Q4 FY 24 to 104 days in Q2 FY 25 ( despite sharp growth in H1 )

Model Town is a high per capita income area in North Delhi. Company expects this hospital to clock best ARPOB ( 40k or thereabouts to start with ) among their portfolio of hospitals

Model Town hospital was set up in 2019 but was non-operational for last 18 odd months as the previous promoters were facing financial difficulties and elected to halt operations

For both these new acquisitions, all the land, buildings shall come on the books of Yatharth Hospitals - basically they won’t have to pay rentals here

In Q2, there has been a slight drop in the occupancy levels @ Noida, Noida extension hospitals. The same has happened because of the company rationalising the Govt business. They are trying to improve the payor mix towards Insurance + Cash patients

Company intends to keep pursuing this inorganic acquisition strategy to expand their footprint for next 2-3 yrs as well. Plus they will be doing brownfield expansion at Noida extension and greater Noida hospitals - adding around 200 beds each over next 2-3 yrs

Aim to keep sustaining the 25 pc EBITDA margin trajectory for foreseeable future

**Company has reduced its share of Govt business ( which is lower margin ) by 6 percentage points H1 vs H1 LY. They aim to bring it down to 25 pc of their revenues inside next 3 yrs **

Expect to continue to see industry leading topline growth for FY 25-27 with EBITDA margins around 25 pc ( IMHO - this would be a huge positive if the company is able to pull this off )

Company is confident of sustaining 25 pc EBITDA margins in FY 26 despite operationalising 2 new hospitals wef Q1 FY 26 as they believe that the initial drag of two new hospitals will be compensated by increased occupancies and better ARPOBs at Greater Noida and Noida extension hospitals

Expect better results from the company in Q3, Q4 because of continued ramp up in the Faridabad, Jhansi, Noida Extension and greater Noida hospitals. Company should close FY 25 close to 1000 cr topline mark

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

2 Likes
1292

Electronics mart -

Q2 FY 25 results and concall highlights -

Revenues - 1386 vs 1303 cr, up 6 pc
EBITDA - 84 vs 97 cr, down 13 pc ( margins @ 6.1 vs 7.4 pc )
PAT - 25 vs 37 cr, down 34 cr

Total stores -

NCR cluster - 25
Telangana + AP cluster - 152 stores

Stores added in last 6 months @ 18. Stores added in FY 24 @ 34

Geography wise EBITDA margins -

North cluster - 1 pc ( North Cluster’s operations started only in Aug 22. Margins should improve as the stores mature )
South cluster - 8 pc

Category wise revenue breakup -

Mobiles - 42 pc
Large appliances - 46 pc
Small appliances - 12 pc

Heavy and unseasonal rains in South India impacted demand in Q2

Likely to add 10-12 more stores in H2

Sales in Oct 24 have been encouraging

Should be able to achieve 15-18 pc sales growth for FY 25. Sales growth in H1 has been @ 13 pc ( it seems, they have had a good festive season - just a conjecture - to be taken with a pinch of salt )

Company expects positive operating leverage from Northern Cluster to start playing out in another 18 months or so

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

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1293

Mankind Pharma -

Q2 FY 25 results and concall highlights -

Revenues - 3077 vs 2708 cr, up 14 pc
Gross Margins @ 71.6 vs 69.5 pc
EBITDA - 850 vs 683 cr, up 24 pc ( margins @ 27.7 vs 25.2 pc YoY )
PAT - 659 vs 511 cr, up 30 pc

Cash on books @ 4255 cr on 31 Sep vs 3260 cr on 31 Mar

Domestic : International sales @ 91:9

Sales breakup -

Domestic formulations - 2564 cr, up 10 pc
Consumer OTC products - 232 cr, up 20 pc
International formulations - 281 cr, up 57 pc

Share of Chronic sales @ 38 vs 37 pc YoY ( Chronic therapies often have substantially higher margins vs Acute therapy segments ). Company’s chronic share in FY 18 was @ 28 pc

Company’s rank in IPM in their strong therapies -

Cardio - 4
Anti-Diabetic - 5
Anti-Infectives - 4
GI - 4
Respiratory - 5

Company is currently ranked 4th in the IPM

OTC sales growth in Q2 led by strong growth in - Manforce, GasOFast, HealthOK brands. There OTC brands like - AcneStar, PregaNews, Unwanted72 are also doing well

Some of the speciality brands launched by the company in last 2 yrs -

Neptaz ( heart failure ) - in-licensed from Novartis

Crenzlo ( high LDL ) - in-licensed from Novartis

Nobeglar ( type 1 Diabetes ) - in - licensed from Biocon

Combinable ( Obstructive pulmonary disease ) - acquired from DRL

Symbicort ( Obstructive pulmonary disease ) - exclusive distribution arrangement with AstraZeneca

Daffy ( Pediatric skin and hair care ) - acquired from DRL

Vonatime + Vonalong ( Gastroesophageal reflux disease ) - in - licensed from Takeda

Company had acquired Bharat Serum and Vaccines in Q2. The consolidation of BSV results with Mankind shall begin wef Q3. Their high entry barrier, difficult to make, speciality products in Women’s healthcare and Critical care are expected to drive a lot of growth for Mankind Pharma in India and EMs. Their products are going to be EBITDA accretive for Mankind Pharma

Company aims to maintain Net Debt / EBITDA ratio below 2 while funding this acquisition. Hence is expected to raise some equity for the said acquisition

R&D expenses in Q2 were at 2 pc of sales

Company has raised a Debt of Rs 10k cr @ avg interest rate of 7.7 pc in order to fund the BSV ltd’s acquisition. Company intends to retire a part of this debt via the equity raise that they have planned

BSV business has multiple growth levers that can be exercised immediately. These are - organic base business growth of BSV, improvement in MR productivity ( which is sub-optimal at present ), distribution expansion under Mankind. The Gross Margins of BSV’s brands is > 70 pc ( similar to Mankind’s business )

Company’s brand of Dydrogestrone ( generic of Abbott’s Duphaston ) - Dydroboon grew at > 20 pc in Q2 YoY

Company is guiding for 15 pc kind of topline growth for the BSV’s business in FY 25 with EBITDA margins in the vicinity of 26-28 pc for full FY 25 ( FY 24 revenues were 1723 cr )

In the OTC business, expect high single digit growth this FY and double digit growth in FY 26. OTC business is expected to clock EBITDA margins in the range of 18-20 pc for foreseeable future

Company intends to retire all the debt that its taking up for the BSV’s acquisition

Company also has some non-core assets that the company is planing to sell off to further accelerate the debt repayment. Should be able to get 600-650 cr valuation on these non-core assets

The equity raise for the BSV acquisition should be around 3000 cr

The overall export sales should grow @ > 20 pc for BSV’s portfolio ( across mkts - ASEAN, LATAM, GCC etc ). BSV export business’s export margins are > domestic margins

The exports that Mankind is doing have EBITDA margins of around 20-21 pc ( higher than their OTC but lower than their domestic formulations business )

Oral contraceptives have now been brought under price controls. This has led to price erosion in the company’s brand - Unwanted 72

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

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1294

Do they give how much is the margin from these categories?

1295

Zydus Lifesciences -

Q2 FY 25 results and concall highlights -

Revenues - 5237 vs 4368 cr, up 20 pc
EBITDA - 1461 vs 1146 cr, up 27 pc ( margins @ 27.9 vs 26.2 pc )
PAT - 911 vs 800 cr, up 14 pc ( due increased tax rate )

Geography wise sales breakup -

India formulations - 1456 cr, up 9 pc
India consumer wellness - 487 cr, up 12 pc
US formulations - 2416 vs 1864 cr, up 29 pc
International formulations - 538 vs 450 cr, up 19 pc
APIs - 119 vs 140 cr, down 15 pc
Others - 94 vs 34 cr, up 177 pc

Launched 12 new products in India in Q2. Out of these, 4 were first to mkt products

Share of chronic sales @ 42 pc vs 38 pc in FY 21

Consumer wellness business registered 8 pc volume growth

Zydus Wellness ( company’s subsidiary ) acquired - Naturell Pvt Ltd in Q2 ( for 390 cr ). It manufactures and sells Nutrition bars, protein cookies, protein chips and other health foods

Q2 capex @ 301 cr. Q1 capex spends were @ 302 cr

Cash on books @ 2590 cr

In India, 10 of company’s brands have sales > 100 cr. Another 21 brands have sales between 50-100 cr

Launched 4 new products in US in Q2. Filed 8 ANDAs and received 9 approvals ( including 3 tentative approvals )
Share of chronic sales @ 42 pc vs 38 pc in FY 21

Consumer wellness business registered 8 pc volume growth

Company acquired - Naturell Pvt Ltd in Q2. It manufactures and sells Nutrition bars, protein cookies, protein chips and other health foods

Q2 capex @ 301 cr. Q1 capex spends were @ 302 cr

Cash on books @ 2590 cr

In India, 10 of company’s brands have sales > 100 cr. Another 21 brands have sales between 50-100 cr

Launched 4 new products in US in Q2. Filed 8 ANDAs and received 9 approvals ( including 3 tentative approvals )

Entered into an exclusive licensing and supply agreement with Viwit Pharma for 02 - Gadolinium based MRI - contrast agents - to be supplied in the US mkts. These are injectables - used to increase the visibility of organs during MRI procedures. This is a niche but valuable drug. There r no generics for this drug currently in the mkt

Updates on Innovation -

Saroglitazar Magnesium - Recruited patients for phase 3 trials for the indication - Primary biliary cholangitis

Unsoflast - Completed phase 2 trials in India for the Indication - ALS ( Amyotrophic Lateral Sclerosis )

Desidustat - Initiated phase 2 trials in US for Sickle cell disease

Received WHO approval for their TCV vaccine - ZYVAC ( to prevent Typhoid )

Company has acquired 50 pc stake in Sterling Biotech for 550 cr. Currently setting up state of the art manufacturing facility to produce fermented animal free proteins. Also acquired sterling Bio’s API business that manufactures fermentation based APIs like - Lovastatin, Daunorubicin, Doxorubicin and Epirubicin

During the Qtr, 02 of company’s facilities were inspected by US FDA - Injectables facility at Jarod received a warning letter ( a key negative ), Ahmedabad SEZ facility successfully completed the inspection and received an EIR with a VAI status

Guiding for an R&D expense of 8 pc of topline for full FY 25 - a key positive ( IMO )

Maintaining high teens topline growth guidance with EBITDA margins > FY 24 margins for FY 25 ( likely to exceed their guidance )

Naturell Pvt ltd currently does an annual sales of 130 cr

Mirabegron sales in US continue to remain strong - which is why the gross margins are holding up > 70 pc despite Revlimid not contributing in Q2 ( Revlimid sales happen only in Q1 and Q4 )

Sales and pricing of Asacol are likely to get adversly affected wef Q3 { as the competitor (Teva) ramps up their product }. Zydus was the only generic for Asacol in the US mkt for quite some time now

Opportunities like - Palbociclib ( breast cancer drug ) and Riociguat ( for treatment of pulmonary arterial hypertension ) and Cabizantinib ( used to treat thyroid cancer ) generics should help them offset the loss of exclusivity on Revlimid ( to a large extent ) wef Jan 26. Company is also looking to file and launch a few more 505(b)(2) opportunities immediately. On both - Palbociclib and Riociguat - company is expected to get exclusivity for meaningful time period

Hopeful of getting a WHO approval for their MR ( measles and rubella ) Vaccine as well. Both these vaccines ( MR + TCV ) should bring in sizeable business for the company as UNICEF buys them in bulk every year ( to the tune of 8-10 cr doses ). Scale up should begin sometime in FY 26. Even if they get a fraction of this business - it can be very significant business for the company

Despite loss of exclusivity on Asacol, company is confident of growing their US business in FY 26 over FY 25

Company has won a US govt tender for supply of Sitagliptin for a 3 yr period starting next FY. This should be valuable business for the company. Company will also sell Sitagliptin in US through the 505(b)(2) route for FY 26 before it goes generic in FY 27

Company has a healthy pipeline of Transdermal and complex Injectable products to be launched in US - these should help them sustain the business momentum in the US mkt

Key things to watch out for in the Indian innovative portfolio of the company for the near future should be their mkt share in products like - Saroglitazar, Desidustat and the Biologics that the company is launching. Company’s mkt share - both in volumes and value for Ujvira ( Trastuzunab - for treatment of breast cancer ) is now higher than the innovator

Company aspires to take Saroglitazar and Desidustat to among top 50 products in IPM

If Saroglitazar is approved in US as per the expected timelines, company should be launching it in Q1 FY 28 or so

Disc: holding, biased, inclined to add more, not SEBI registered, not a buy/sell recommendation

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1296

Jyothy Labs -

Q2 FY 25 results and concall highlights -

Revenues - 734 vs 732 cr
Gross Margins @ 50.2 vs 49.2 pc
EBITDA - 138 vs 135 cr ( margins @ 19 vs 18 pc )
PAT - 105 vs 104 cr

Q2 volume growth @ 3 pc

A&P spends @ 61 vs 57 cr YoY

Cash on books @ 658 cr

Category wise revenue contribution -

Fabric Wash - 33 pc ( Henko + Mr White + Morelight + Ujala Detergent )
Post Wash - 10 pc (Ujala Whitener + Ujala crisp & Shine)
HI - 6 pc ( Maxo )
Personal Care - 12 pc ( Margo + Fa )
Dish Wash - 35 pc ( Pril + Exo )

Ujala detergent achieved a mkt share of 24 pc in Kerala in Q2

Rolled out Mr White liquid detergent in select markets in Oct 24

Pril liquid’s mkt share @ 14 pc

Maxo liquid vaporiser grew in double digits vs mkt growth of 2 pc. Maxo coils saw a volume decline due to consumer shift towards incense sticks

40 pc of company sales come from South India. July was a weak month for the company due to floods in south India. In Sep, they saw double digit growth

Company expects mid to high single digit growth in Q3 ( going by trends in Oct )

Ex-July ( because of floods ), company’s volume growth has been mid - high single digits

Company has lined up a new product launches in CY 26 ( its going to be a new product category )

Modern Trade and E-Commerce have been growing at double digits. General trade has been under pressure

Company still has a descent headroom ( not as much as before ) to keep expanding its distribution reach more foreseeable future. However, they ll have to be more measured while embarking on further distribution expansion journey

Ujala Detergent is one brand which is present only in Kerala, TN, WB. Company intends to take it pan India

Will be taking a price hike in their Soaps portfolio in late Q3

Guiding for a 16-17 pc EBITDA margin for full FY 25 ( likely to spend more on demand generation, A&P which may result in moderation in margins )

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

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