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
Just sharing below a Tweet by Sajal Kapoor about RPG Life
https://x.com/unseenvalue/status/1805553798577795407
I hope you find it useful.
Hi, Hope you are still holding RPG.
Had a BEAUTIFUL journey from all the way 600 ( in July 22) to 1800 as of today i.e. 16 July 2024.
Special thanks to Sajal Kapoor sir and Aditya Khemka sir for suggesting this one and helping me in building the conviction in this stock.
dr.vikas
Nice thread since 2015
I took a fresh entry last week before the run up.
While going through the past discussions in this forum, I have noticed the frequent management changes, and quality problems with certain products.
Anyone else knows if the issue stills persists with the company, as whoever the management, no business is investable if the products are not reliables
Strong cash basis, no debt, and strongest reserves, and ideal Accounting profit to OCF are my conviction points.
Again good set of numbers by RPG
I hope you find it useful
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
RPG Lifesciences -
Q3 FY 25 results highlights -
Revenues - 172 vs 153 cr, up 12 pc
EBITDA - 52 vs 40 cr, up 32 pc ( margins @ 30.4 vs 25.9 pc YoY - massive margin expansion )
PAT - 35 vs 27 cr, up 30 pc
Segmental sales breakup -
Domestic formulations - 330 vs 294 cr, up 12 pc. New product ( launched after FY 19 ) contribution improving consistently, now accounting for > 25 pc of domestic sales. Sales force productivity now @ > 6 lakhs / month
International formulations - 98 vs 86 cr, up 15 pc. New products + New mkts ( launched / entered after FY 19 contribution now at 30 pc of international sales )
APIs - 77 vs 71 cr, up 8 pc
Company’s biggest brand - Naprosyn ( includes Naprosyn + Naprosyn Gel, Naprosyn SR, Naprosyn Gel, Naprosyn M, Naprosyn D ) - is likely to become a 100 cr / yr brand in near future ( by next FY )
Popular brands from company’s stable include -
Naprosyn - Painkiller
Azoran - Immunosupressant
Lomotil - used to treat diarrhoea
Immunotac - Immunosuppressant
Arpimune - Immunosupressant
Mofetyl - Immunosupressant
In FY 27, new API and International formulations plant will be operational with new product launches. That should lead of accelerated growth in these business segments
Cash on books @ 159. Once the company receives the cash against the land parcel sold by them, cash balance should rise to around 250 cr. This money will be used to fund acquisition of formulation brands / API facilities in the domestic mkts
Disc: holding, biased, not SEBI registered, not a buy / sell recommendation, posted for educational purposes
And the best part is, the correction since around the time the inimitable Mr Sikri announced his retirement, has made the valuations very attractive indeed!
RPG Lifesciences -
Q4 FY 25 results and concall highlights -
Q4 outcomes -
Revenues - 143 vs 127 cr, up 13 pc
EBITDA - 30 vs 23 cr, up 36 pc ( margins @ 21.4 vs 17.6 pc )
PAT ( adjusted for one off gains ) - 18.5 vs 13.2 cr, up 40 pc YoY
FY 25 outcomes -
Revenues - 653 vs 582 cr, up 12 pc
EBITDA - 172 vs 135 cr, up 27 pc ( margins @ 26.4 vs 23.3 pc )
PAT ( adjusted for one off gains ) - 112 vs 88 cr, up 27 pc
EBITDA margins have seen continuous expansion for past 6 years
Company is debt free
FY 25 segmental performance -
Domestic formulations - 425 vs 386 cr, up 10 pc
International formulations - 132 vs 106 cr, up 24 pc
APIs - 90 vs 85 cr, up 6 pc
Company’s manufacturing footprint -
F1 unit @ Ankleshwar caters to domestic and emerging markets, has approvals from WHO, various African countries
F2 unit @ Ankleshwar caters to regulated markets, has approvals from EU GMP, WHO, various African countries
API unit @ Navi Mumbai, has approvals from PMDA ( Japan ), WHO, TGA ( Australia )
Popular brands from company’s stable include -
Naprosyn - Painkiller
Azoran - Immunosupressant
Lomotil - used to treat diarrhoea
Immunotac - Immunosuppressant
Arpimune - Immunosupressant
Mofetyl - Immunosupressant
NuGliptin - Cardiovascular
SacuNew - Cardiovascular
HerMab - Trastuzumab - Onco Drug
AdluMab - Adalimumab - Onco Drug
IvzuMab - Bevacizumab - Onco Drug
In FY 27, new API and International formulations plant will be operational with new product launches. That should lead of accelerated growth in these business segments
Cash on books now @ 266 cr ( post receipt of proceeds from sale of surplus land holdings )
Naprosyn and its variants clocked sales of 76 cr, Immunosuppressants clocked sales of 79 cr for full FY 25
Company’s newer businesses like - Nephrology, Cardiology, Monoclonal anti bodies and Oncology are growing in healthy double digits
Cardiology now contributes to 20 pc of company’s sales
Receivables in Q4 are slightly elevated due higher sales in the international business
As Monoclonal Anti Bodies, Cardio portfolio grow bigger, margins should improve gradually. However, the possibility of some of company’s brands coming under DPCO may exert negative pressure on margins
MR productivity @ 6.3 lakh. MR productivity in speciality divisions is > 13 lakh / MR
Domestic formulations growth for FY 25 by volume @ 7.3 pc, by price @ 2.3 pc, by new product introductions @ 1.1 pc
Price hikes this year are likely to be higher in FY 26 vs 25. Aprox 30 pc of company’s business is under DPCO. The price hikes allowed in the DPCO part of the business in FY 25 was < 1 pc. Also, company faced some pricing pressures in the non DPCO business
Even the new launches in FY 26 should be far higher vs FY 25
The Industry’s volume growth in FY 25 was 1.1 pc vs 7.3 pc for the company ( no mean feat - imo )
If the company is able to maintain its volume growth, bigger price hikes + newer product introductions next year may propel company’s topline growth into mid teens
Company has invested a lot of money in upgrading and modernising its API plant. There are 12 molecules in the company’s R&D pipeline. Company hopes its API business should start to see improved growth rates wef FY 27
Company is also planning to add multiple new formulations to its international formulations business by early FY 27. This should help them keep the international growth momentum intact
API segment’s growth in H1 was in double digits. Then there was an unfortunate fire incident in one of their three API manufacturing blocks. This led to a slower full yr growth in their API business. This should start to reverse wef H2 FY 26
Company lost sales to the tune of 8-10 cr in Q4 due to the a/m fire incident
Disc: holding, biased, inclined to add more, not SEBI registered, not a buy/sell recommendation
