SastaSundar Ventures Ltd (a new venture in the nascent epharmacy space)

Stock Opportunities Untested - but worth a good look
21

Another mixed experience but more on the positive side of it.

Placed an order the day before yesterday, 7 PM of 13th July. Paid through mobikwik and received supercash thereafter. However, the order placed email/message came today morning, 8:30 AM of 15th July (But could check it under My Orders in website/app). It was written that the order will be derivered by 17th.

Called my heathbuddy at 2 PM to check about the delivery (not needed though). He assured me that the order will be delivered today, as tomorrow is Sunday. During the conversation I understood that the order was yet to dispatch… Received the order at 3:30 PM.

Since the ordered items were heavy (OTC), I was sure that some delivery van will come. Instead I found that heathbuddy himself came for the delivery in his SUV. He told me that all the delivery vans were left by the time my order was dispatching, and he came to keep his promise about the delivery. I feel this is quite a good gesture!

I found that they have neatly packed all the items in their branded packing box strapped with branced tape, much like Amazon/Flipkart. The glass bottles were bubble-wrapped.

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They have also sent a sample sachet of Oxy face-wash of Rohto Pharma.

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Disc. May enter the stock anytime soon. Waiting for their AR.

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[quote]The expansion is likely to play out over the next 2-3 years, depending on the response the company gets after launching its offerings in Delhi. So far, SastaSundar operates only in West Bengal. The pharmacy chain plans to set up 250 stores (up from 178) in its home State, and 50 in Delhi.
According to Mittal, the company will use the $5 million from Rohto to further expand its presence in Bengal, set up pathology labs, venture into telemedicine and enter new geographies. “For a national expansion, we will require close to $100 million,” BL Mittal, founder and Executive Chairman, SastaSundar, said… The Japanese firm might put in additional funding if required.[/quote]

P.S: SSVL is hitting lower circuits for the last three days! This correction could be an opportunity for me to enter the stock.

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Generally e commerce is race to bottom except for very few winners.

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suvs and cars for healthbuddies!!! deosnt it sound like they are less conscious of costs.

also packaging seems on a higher side. with medicines and otc, information flow (order accepted/ delivery time etc) and quick deliver more important thn extra cost on packaging. especially because margins on some of these are low.

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Hi,
Can someone tell me

  1. why stock is falling continuously.
    I have one more question related to the business
  2. online pharmacy is providing 20% discount in mumbai (i dont know about other state)against 15% discount by Sastasundar (SS). Also online pharmacy provides all the medicine so i dont have to go for different pharmacy for Chronic and Acute. Last time when i asked this question to the company he told me online pharmcy will not survive. But unless it will survive the company can match atleast discount rate to gain share? I dont think so that the company’s business model can comparable with offline pharmacy because most of SS orders are through online and Apps
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[quote=“narender, post:24, topic:8780, full:true”]
suvs and cars for healthbuddies!!! deosnt it sound like they are less conscious of costs.[/quote]
Healthbuddies are actually Independent Licensed Chemists who have drug license, 120sq.ft Shop and can invest Rs. 2.50Lacs. So, it is not unusual if they own SUVs.

They do not always send items in this kind of packing. When I order 1-2 OTC items they send those just in bubble wrapped soft packages. This time I ordered 8 OTC items all of which are liquid (Juice & Tonic) and fragile.

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The stock price seem to have consolidated. Probably Mr. Market identified that it was overvaluing it.

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40% correction from top in one months in bull market…should have some solid reason for this

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When there is no earnings there is no support

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did anyone attend AGM yesterday?

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Sastasundar Ventures-Annual-Report-FY-2016-17.pdf (1.5 MB)

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Although presently not an investor (in any stocks), I continue to be a consumer of Sastasundar, and it has never disappointed me so far during the last 30 odd orders. So, I am biased.

There is now a medicine shop near my home that offer flat 17% discount for cash (& Mobikwik) purchases and 15% for card purchases. After a short trial with them, I reverted back to SastaSundar because of wider availability of medicines, mostly 1-day delivery & no large crowd :wink:. They have the courtesy to call and apologise for any delay, and even give an option to pick-up the items.

Furthermore, it now conatins many OTC, Ayurveda products that I do not find in any online shops (Amazon, Grofers etc.). It seems that in OTC, Personal Care segments its collections are growing day-by-day and soon to become comparable with Grofers, Bigbasket etc. in variety.

I tested a few Chef On products and the quality seems to be fine to my taste. These kind of brands will help Sastasundar to increase margins.

They also promote customized health drink DNAVITA with pricing similar to healthdrinks like Ensure. You create your health profile in the website or app and get suggestion of your custom version of the health drink. After creating my health profile, I received a call with the details. I politely refused to try it, and they didn’t persuade me to make a choice. Rather, they educated me about the offer in greater detail. I came to know that my health profile will be refined after meeting with a nutritionist (for free) and the final composition of DNAVITA will be ready thereafter.

By nature, I actively resist Persuasion. The good thing about SastaSundar is that their representatives never force. If I do not place an order in a month, I get a short call asking about any requirement, and a simple ‘No’ is sufficient.

Recently, they are promoting the Medical Tests, through the establishment of their brand Genu Path Labs. The pricing is competitive, with special discounts for senior citizens and defense personnel. I believe this will also help increase the margin, although Medical Tests is a fiercely competitive area, with more prominent names like Thyrocare, Dr. Lal Path Labs etc.

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Annual Report 2017-18
http://www.sastasundarventures.com/sastasundarventures/Pdf/Annual_Report_SVL_2018.pdf

It has now started operation in New Delhi, Uttar Pradesh and Haryana.
It has started B2B channel in the name ‘’Retailer Shakti Supply Chain’’ towards Pharmacy and Grocery Retail Store based on cash and carry model.

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Today received sample-packs of “Nu-Shakti Powermix for rice” from SastaSundar. This is a new kind of product offered by tying up with Netherlands based global life sciences and material sciences company DSM.

The Nu-Shakti range of products are available as Nu-Shakti Powermix for rice, Nu-Shakti Powermix for atta, Nu-Shakti MixMe powdered beverage and Nu-Shakti Vitamins & Minerals Supplement.

Nu-Shakti Vitamins & Minerals Supplement is a fortifying food additive that provides wholesome nutrition without changing the taste. Sprinkling this mix on food makes up for the nutritional benefits of upto 12 vitamins and five minerals.

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Interesting news. Not invested. https://www.equitybulls.com/admin/news2006/news_det.asp?id=255886

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Excerpts:

Strategically, Sastasundar owns 100% of the inventory and owns centralized warehouses to deliver medicines and healthcare products. They have such an warehouse in Kolkata (their first), through which they serves the markets of West Bengal, Jharkhand, Odisha and Bihar, whereas the markets of Delhi, UP and Haryana are served through the logistics centre in Delhi-NCR. They have also set up a 3rd such centre in Mumbai to expand in Maharashtra. In fact, the company is seeing fast growth in these newer markets. They are also aiming to drive scale and efficiency by making capital investments in technology and distribution centres.

Operating margins of the company now hovers close to 0% from -14% last year. According to Moneycontrol Research, recent improvements in company’s performance suggest that FY22 could be a turnaround year for the business as it benefits from economies of scale. Moreover, Sastasundar can potentially cross-sell products and can further improve efficiency and margins.

Company Sales (FY20) Loss (FY20) Margins (FY20) Valuation EV/Sales
1MG 358 318 -89% 1500 Cr 4.2x
PharmEasy + Medlife 1050 500 -48% 11250 Cr 10.7x
Netmeds 605 154 -25% 2250 Cr 3.7x
SastaSundar 450 42 -9% 350 Cr 0.8x

Sastasundar is the 3rd largest player in the market and is trading at a deep discount (~ 75%) to competitors despite much better operating metrics. Like their competitors, they are also backed by marquee Japanese investors like Mitsubishi Corporation and Rohto Pharmaceuticals.

According to moneycontrol research, the discount with competitors could narrow down, given the industry growth characteristics and operating history of the company. Risk is that the company’s stock is pretty illiquid. Also government may regulate e-pharmacies in near future.

Disc: Not holding. I am a customer of Sastasundar. Invested in the company in the past.

Note: The above writeup is NOT a copy paste. I have written it in my language after acquiring specifics from the original article.

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Thanks for providing in sights. Their business model looks good
1.customer order and it goes to centralized inventory and from their it will dispatch to health buddy and health buddy will deliver to customer.
They are planning this model for 16 states and by 2024 ,its planning to target 7000 cr revenue and 15% EBITA as per investor presentation given in 2018.
Will they be able to scale up 1/5th of this?
2.There is B2B called retail shakthi and it will arrange medicines and products from the centralized inventory
3.Patholagy business and already started genu path labs. They are plaining to scale this to every state
Somewhere I read that market size is 15 Billion dollar and organized players may get 10% of market share and it is expected to grow 15%cagr.

If all goes well ,its a great opportunity .

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The company is raising money more than 4x it’s book value and more than its market cap.

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Considering start-up fundings it is very common to raise growth capital. These aggregator/ e-commerce businesses require huge upfront investments from seed/ series investors. Generally, after turbulent years of private money, these companies start generating revenue/ cash predictably and go public. Here this sequence has been changed.
Though Sastasundar is only listed E pharmacy in India. I m confused and not getting the grip of their funding plan. Though the company is listed still it is raising start-up funding. As an investor how should we look at it?

(small position for tracking)

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Only difference is instead of the promoters and employees holding the shares it is open to public. So we are getting the opportunity that is generally available only to the employees/promoters.

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@sahil_vi requested me to post my experiences of using Sastasundar. I am an old user of Sastasundar and used to post the experiences earlier but stopped posting as the thread lacked interest from others. Personal experiences, nevertheless, may not mean much in regards to investment perspective, but can help in understanding how the business works.

  1. Earlier Sastasundar attempted to deliver medicines, OTC, FMCG items in Amazon like cardboard packaging, but later on they stopped doing that and now only sends items in soft packaging, but bubble wraps fragile bottles. I never received any damaged items.

  2. Earlier the delivery associates used to come in uniforms but nowadays I don’t recall seeing them in uniform.

  3. They do not hire tele-callers. Rather their delivery associates give a call monthly to check for medicine requirements from their personal phones. This is not legal and so can’t be stopped if you have DND activated. I requested them to stop calling me, which they did for some time, but it started again after some time, and so later I started to ignore such calls. I couldn’t block those numbers as they call from those numbers when they attempt delivery.

  4. One can find OTC, FMCG products in Sastasundar also. They have a good stock of such items. I used to order stationary items like Pens, Notebooks from them when stationary shops were closed during lockdown. Now also I place orders through Sastasundar most times to purchase those OTC/FMCG items. Mainly I purchase those which are not available in Grofers/Bigbasket, or available at similar discounts. I even find some items in Sastasundar which are not available elsewhere, e.g. Baidyanath cool hair oil, Godrej Shikakai Soap etc. I also purchased masks, sanitizers, disinfectant sprays from them in the early pandemic times when those items were out of stock in most online eCom players. They usually deliver faster that online eCom orders. Usually 24-72 hours is the delivery time. I believe this cross selling of FMCG/OTC/Private Label is going well with them. I have tried only one private label product. The quality was good.

  5. I booked lab testing of lipid and thyroid profile test once (Dec 2019). Their lab chain Genu Path Labs collected blood next morning, and emailed report that evening. Then they delivered the hard copy next day. They sent two emails, one with the reports attached, another with a link through which I can download the report form the website. I just checked and found that the report is still available on their site. Just needs an OTP as verification before downloading. That time I checked that for tests which needs lab vising is difficult for me as the lab is way too far from my place. Don’t know about now, whether they have opened any pathology labs near my home.

  6. They usually split the orders into parts based on the types, or maybe depending on the availability in their difference warehouses. I always found that they club the medicine orders together, but OTC orders are sometimes spitted too. Most times they deliver all the orders together, but it has happened at least two times when they delivered different part of orders on different day.

  7. Usually the delivery time is 24-72 hours. Only once it was late and I had to call the healthbuddy store.

  8. The healthbuddy store usually don’t sell medicines like a pharmacy store. It works as a point of inventory collection from different warehouses, and then the delivery associates take the delivery form there. One can also collect delivery personally from the store. People who can’t place orders online can go to the store and place orders through them, but they deliver those later. I believe that the local stores do not keep much inventories.

The above points are written in a haste. Sorry if those seem disorganized. I will update this post if I remember any other worthy points.

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