What’s wrong with this company? I mean, despite such good financials, why there is so little institutional or expert interest in RPG Lifesciences? Is it just because of absence of USFDA or focus on acute therapies or I am missing something else?
(Disc: Tracking, no positions)
Well. Maybe some patience is required. That way, the stock has given kind of 30% returns in one year, which is not at all bad.
I have been invested in it since July 22 around 600. And with averaging up, my cost is now around 850. It forms around 10% of my stock portfolio. So I may not add it any more.
I came to know about this stock from Sujal Kapoor & Aditya Khemka. So it’s kind of borrowed conviction, but has played well for me till now. I guess, it’s one of the top 5 holdings in InCred Health managed by Aditya Khemka.
It’s a Branded Generic business and relatively cheap compared to other branded generics like FDC / Jagsonpal.
Hopefully, institutions will notice it once it crosses rs.100 cr of PAT ( A rough criterion suggested by Samit Vartak a few years back. But may not apply to every business)
Hope you find this useful
dr.vikas
Hi, Thanks for pointing out that it is one of the top holdings in Aditya Khemka’s fund. That was precisely my point actually – despite good financials and stock performance, why the expert interest is so low. FII / DII holding is just 2 %, there is hardly any media chatter, even here on VP the thread has just 40 odd posts. So I am looking for anti-thesis pointers, actually.
In this below tweet , RPG was also discussed in the last management part.
Overall a great video to listen.
https://x.com/unseenvalue/status/1737878545370673474?s=20
Hope it adds value to this forum.
dr.vikas
Great set of numbers by RPG.
Hope it helps.
RPG Lifesciences -
Q4 concall and results highlights -
Q4 outcomes -
Revenues - 127 vs 118 cr ( up 7 pc )
EBITDA - 22.4 vs 17.8 pc ( up 26 pc, margins @ 17.6 vs 15 pc )
PAT - 13.2 vs 10.4 cr ( up 28 pc )
FY 24 outcomes -
Revenues - 582 vs 512 cr ( up 14 pc )
EBITDA - 135 vs 107 cr ( up 26 pc, margins @ 23.3 vs 21 pc )
PAT - 87 vs 67 cr ( up 30 pc )
Segment wise performance for FY 24 -
Domestic branded formulations - 390 vs 340 cr ( up 15 pc ). New products ( launched after FY 19 ) contributed to 25 pc of sales. Sales force productivity crossed 5 lakh
International formulations - 106 vs 92 cr ( up 15 pc ). New products ( launched after FY 19 ) contributed to 30 pc of sales
APIs - 85 vs 79 cr ( up 7 pc ). Company hopes to ramp up API segment growth into double digits - going fwd
Company’s leading brands in India formulations market include -
Azoran ( immunosupressant )
Aldactone ( Diuretic - used to treat high BP/ heart failure )
Lomotil ( used to treat diarrhoea )
Naprosyn ( potent painkiller )
Serenace ( anti-psychotic )
Norpace ( used to treat abnormal heart rhythm )
Manufacturing facilities -
02 - formulations facilities @ Ankleshwar. Unit -1 caters to domestic and emerging mkts. Unit -2 caters to developed mkts
01 - API facility @ Navi Mumbai. Company makes the APIs of immunosuppressants in-house
In Q4, company’s secondary sales grew by 19 pc vs Industry growth of 6 pc !!!
Naprosyn and its line extensions - touched 75 cr sales in FY 24
Immunosuppressants portfolio - touched 70 cr sales in FY 24
Company aspires to take both these portfolios beyond 100 cr sales each
Cash on books @ 127 cr - actively looking at M&A opportunities ( cash build up has happened despite spending 140 cr for modernisation of one of their formulations and API facilities over last 2 yrs )
Company has traditionally been a laggard wrt chronic therapy sales. Have identified Derma, GI, Cardio, metabolic disorders - as key focus areas to ramp up their presence in chronic therapies. The ramp up shall however take time as the incumbents are well entrenched
The Jan-Aushadhi Kendra led Generic-Generic medicines do pose a long term threat to the company. However, if the manufacturers supplying to Jan-Aushadhi Kendras were to comply with the WHO GMP / Other quality standards, their product costs shall rise materially and be comparable to branded generics
When the company launches a new product in the Mkt, its manufacturing is generally outsourced. Only when its volumes build up beyond a certain scale, the company brings its production inhouse
Some countries to which company is exporting to are facing forex shortages. Hence the Govt’s there are resorting to import restrictions which is reducing company’s export growth rates. Still, Pharma Industry is one - which is the last one to face such restrictions
Company has identified new APIs for in-house manufacturing. Aim to launch these by FY 26 - should lead to better growth rates in the API vertical
Disc: holding, biased, not SEBI registered
