ValuePickr Forum

Tyche Industries

Company History:1998 - Incorporated as Siris Soft. It was established as a software company but later on was diversified into the manufacture of fine chemicals.2000 - The company had made a public offer to part finance its cost of expansion of infrastructure, meet the cost of marketing ERP products and establish branches in the US.2004 - Name of the company was changed to its present name Tyche Industries Ltd.2005 - The company commenced its commercial production from August 2005.Tyche Industries Ltd dispatched its first export consignment of 5 tons of Glucosamine HCL in September 2005.

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Story:Hyderabad based Tyche Industries Ltd is engaged in manufacturing and

marketing of Active Pharma Ingredients (API) and Intermediates. Company is also producing Chiral Intermediates and Nutraceuticals.In fact,Tyche is one of the largest producer of Glucosamine Products in India which are also exported to USA and Europe. Until FY11, company had been stagnating.However, since last year, Tyche has been growing rapidly in terms of topline as well as bottomline. Moreover, Tyche has small Long Term Debt of just 1 crores and interest cost as percentage of sales are very very low. With sharply improved results in recent past and expectation of continued improvement, Buy recommendation as scrip is available at very lowvaluation.

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Fy13 and fy14 half yearly numbers:For FY13, Tyche had reported best ever performance with sales rising by 58% to 79 crores and PAT is rising by whopping 114% to 6.09 crores. EPS stood at Rs. 5.94.Tyche declared dividend of 5% for FY13.Tyche has reported bumper results for H1 wherein its topline has zoomed by 190% to 69 crores(just 10 crores less than full year turnover of FY13) and PAT has grown 60% to 4.82 crores.EPS for H1 stands at Rs 4.82.

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10 year track record:Company sales have grown at an astounding pace of 76% CAGR since 2004.Profits have risen from a loss of 30 lakhs to 6crs during the same period.The company has an average Return on equity of 15% over the last decade.Tyche generates healthy cash flows from its operating activities.

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Conclusion:Tyche has planned to set up a new plant and has already procured 5 acres land in Vishakhapatnam.Proposed capex and capacities are at planning stage. This new plant should beoperational by H2 of FY15.For FY14, Tyche can achieve topline of 135 crores and EPSof Rs 10. Scrip is available at just 3xFY14E EPS and at 2.5xFY15E EPS(fy15 sales can be 160crs with a PAT of 12.5crs).Current market cap is just Rs 30 crores. Pharma industry has been growing at phenomenal pace and has extremely bright prospects. In such a scenario, Tyche is available dirt cheap.Scrip should do well over a period of 9-12 months.Downside from current levels is negligible (unless broader markets crash)

The track record over the past 5 years(2009-13) has been rather erratic.Sales have improved from 38cr. to 78cr.,but the net effect on bottomline has been very marginal.Is the company compromising profits for Sales growth? Have they got low pricing power? Also,the interest expense has increased from nil to 95 lakhs.So,a bigger balance sheet,with lower profits/unchanged profits looks unimpressive.Sure,the growth this year has been stupendous,but that maybe due to exports(rupee tailwind) And,Is the expansion being done by internal accruals? I think we need more work on the quality of growth & what/who are their clients? The nature of the biz. itself looks a bit cyclical(dependent on US,European markets…who buys Glucosamine or Chiral products?)
I don’t think 1 good year will be a green signal for investing.Sure,upsides maybe possible in the short-term due to overall good sentiment & cheap valuations,but doesn’t appeal as a case for investing.Compromising quality for risk/return may not be a good idea…at best,I would take a 3-4% allocation here.Pharma sector itself has some excellent cos.,even at CMP.
I think we need much more work on this company.

Hello I had performed analysis of this company so adding my view points.

Company has a miniscule presence so cannot be compared with big pharma companies.

Sales growth has been good but that did not turn into profit growth.

Company is planning to expand in vizag so will need additional capital over next few years. Debt levels are comfortable so going for expansion should not be a problem .

Inventory levels have increased and collection of payments from debtors is also bad.

Since Andhra Pradesh will enjoy tax benefits over next five years not sure if Industries will also get benefits. If Industries were to get benefits then it will be a plus for tyche since both the manufacturing plants are in Andhra Pradesh.

This company needs some time to come back on track. Need to be revisited at a later stage.

Sept 2019 result is good.
In fact company is showing good growth since 2015

Another area, which the government is planning to address soon, is the dependence on critical Active Pharmaceutical Ingredient (API), a bulk of which gets imported from China to meet Indian requirements.