No need to put in the ji behind my name. Makes me feel older than what I am.
Regarding where I got the idea, well right in my consulting room when the company representatives turned up launching new excellent products in the derma range.
My investment argument here is that in the next year or two the company is set to surpass its previous best figures in terms of profits and sales. That was around 135 crores in net profits.
This expectation on my part is bcos of the restructuring in distribution model company undertook plus the expansions set to contribute to growth. With all these things slated to start contribute meaningfully in second half of FY 13, outlook for FY 13 and FY 14 looks quite good.
I wont be surprised to see the company clocking excellent growth and bettering its previous best numbers within next couple of years.
And icing on the cake could be the capital reduction whenever it comes about. Company being almost debt free is an added attraction for me.
My observation is that once the company turns around all good things tend to occur for it. So I have loaded up on this one.
Its amazing how you always have your nose snooping around for opprtunitieseven during your totally different field of work
Ajantha Pharma and now this.
How much would youattrinute the belowfactors to the success of a new product 1) how good the product is in the treatment 2) effective distribution system? Do you also speak to your colleagues to gauge the above?
Regarding success of new products-- depends how much use and effectiveness the product finds in some common diseases.
Plus how does competition stack up in terms of promoting new product. e.g in case of Ajanta and the product they launched-- first time in India-- pacroma (pimecrolimus) Biocon has also launched it but there has been no follow up marketing. So Ajanta continues to enjoy high pricing power there.
More than distribution, marketing works wonders for success of a new drug. Distribution is already in place for these companies bcos of the other products they have.
We do speak to our colleagues about efficacy of new products and try to share their experience. Plus once new products are launched companies go all out to market it thru talks by some maha gurus in the field of dermatology or whatever speciality they are concerned with.
As per my understanding the promoter is not reducing the share capital of Unichem.
The promoter is merging the holding company of Unichem with Unichem Lab. It willcancel the shares held by the holding company after its merger with Unichem. However, the shareholders of the holding company (effectively promoters) will be issued the same number of shares of Unichem as consideration for merging the holding company. Hence, the share capital is not reducing.
Pls refer to the clause no 19 and 12 of the attachment given to the shareholders as required under the listing agreement in October, 2011. It is available on NSE.
Did Unichem Labs publish consolidated results for this year. I was able to grab only standalone results. Couldnât get know how Niche Generics had fared. It was not fair for the company to not publish consolidated results. Sales had grown marginally due to more export revenue contribution otherwise Indian business sales has degrown. As usual Profit was down. Probably exports revenue was more in the sales mix. Nothing exciting at all. Pretty boring, unless we get to know about the subsidiary peformance. Ideally this stock should have been hammered down. Canât fathom how it is retaining 130 levels. Please let us know if you have any idea on the overall picture of the company including subsidiary. Any details on the consolidated financials would be most appreciated. Thanks! Disclaimer. Holding this stock.
Hi srinivasan, Cons results are still awaited. But my guess is that most of subsidiaries will show inconsequential losses still. FY 12 AR might give some idea.
Coming to stock holding 130 levels, I guess markets are betting on the company reporting better results in fy 13 as the pain of distribution revamping might start lessening and might reflect in domestic sales growth in next few quarters. Currently exports are the main growth driver and saving grace.
As to why this stock is holding the levels, there are some positives which I feel are playing out:
1). Management are perceived to be honest and able people.
2). Company has in the past paid good dividends. (Still not announced how much they are going to pay for fy 12)
3). Company has a clean low debt balance sheet and once it gets its act together is likely to generate a good amount of free cash.
So on PE basis it looks expensive but one has to consider this one as a turnaround (although it actually did not go into losses as the other turnarounds do) and pay higher PE for some time and expect earnings to catch up in next few quarters.
Thanks for your views. Markets being supreme already discounting the turnaround story and so is the doctor.After waiting for 120 levels, Iam nibbling this stock these days hoping the turnaround story will materialise atleast in 2 years time. Letâs see. Dr.,please post in this forum once you know about the subsidiary story. Thanks!
As per the investor update for Q42012, the company has lost market share in secondary sales (from distributor/ C&F to consumer).
In general destocking or change in channel would explain the drop in primary sales (from company to distributor/ C&F). any idea why this is happening and why this should not be a cause of concern ?
I dont think it is a cause for too much concern bcos while the company tries to get its act together in the domestic market, the growth in exports is more than compensating for this temporary glitch.
Plus I read a recent report on pharma sector by edelweiss where unichem has been shown to be showing around 6% growth in first two months of q1 fy 13 which should be good news going forward.
And now onwards unichem results will be on a lower and weaker base and hence would look much better.
would you know why the company lost share in the secondary market ? In my own experience in FMCG / Pharma OTC, change in distribution to C&F can cause some level of disruption as the old distributors now carry lower stock and are paid lower margins (due to lower Wcap) and hence are not selling as hard. the new distributors take some time to establish themselves
Due to this the depth of distribution (stocking levels) in retail can drop causing drop in sales. But usually the drop in secondary sales is not too high
Now the main reason why a company would do this would be to increase the number of total distrbutor to increase coverage.do you have any numbers around the increase in number of distributors in the last 1-2 years ?
The company has reduced inventory days in distribution channels from 89 days to 52 days, to be further reduced to 45 days.On one hand company wants to be in a GST ready scenario, minimize taxing issues; on the other hand it is focusing on better product mix in chronic therapies.
As Hiteshji mentions, export growth was robust yoy growth of 56%. It has filed 25 ANDAs, received US FDA approval for 11 ANDAs and launched 7 generics. Plan to file 6-8 more ANDAs in FY13.
Also the UK subsidiary has turned profitable in the last quarter.
The company is moving in with an aggressive sales force in the domestic market. Current strength of 2300 MRs, to add 100-150 MRs in FY13.
All in all, in line for a turnaround in the next two quarters. And on a weaker base of FY12 will look even sweeter.
I am not denying that the company is doing well on the export front and yes it has reduced losses on in all the foreign subs
I am just trying to understand why the market share losses have happened from a secondary sales perspective. Reducing channel inventory will reduce primary sales (From company to distributor), but should not reduce retail sales. This is all the more confusing (maybe only for me) as the company is also increasing the sales force.
I am trying to understand what can go wrong âŚand would be happy to be proven wrong here as i am not an expert in pharma stocks as hitesh is.
The other factor is that in the pharma space there is high level of activity among almost all the companies - there have been large additions of MRs in the last few years as almost every MNC is also focusing on the domestic market. I am trying to understand if the drop in domestic sales is due to higher competitive intensity or just the re-structuring of the distribution system
the drop in domestic sales is marginal and not alarming. Still it is a drop all the same and I guess there are two reasons:
First is the conscious decision of the management to change the distribution model which has caused pain in the domestic market since march 11 and is likely to come to an end in next quarter or two.
Secondly their first line drugs like ampoxin, etc are finding it hard to grow. Hence the focus is more on second line drugs in a bid to promote growth. Plus their focus seems to be increasing in the higher growth higher margin segments like dermatology.
last week their reps came to launch a new formulation for an antifungal preparation terbinafine â their preparation is in gel formulation which nobody else has.
It doesnt matter too much whether the formulation is gel or cream - in fact in most situations we prefer creams (gels are preferred in hairy areas and have a better spread as compared to creams) but atleast company seems to be doing something different. named tebif gel.
And the sales force seems to be on their toes trying to push up their product sales. the packaging and fragrance and formulation is top class atleast in their derma range in products like hidrate cream and lotion (moisturisers), cbesta (local steroid for eczema), momoz, momoz t and momoz s and momoz f (local mometasone which is a newer steroid with lesser side effects and moderate potency â the t and f etc are brand extensions with antifungals, antibiotics added to the basic steroid molecule) â best thing about the momoz business is the catchy name which immediately catches doctorâs fancy. (I tasted and liked momo while on trek to nainitalâits a steamed preparation looking like kachori but totally different in taste)
Unichem Laboratories Limited has informed the Exchange vide letter dated July 17, 2012 that the Honble High Court Bombay vide its order dated July 12, 2012 approved the Scheme of Arrangement between AVM Capital Services Private Limited (ACSPL) and Chevy Capital Services Private Limited (CCSPL) and PM Capital Services Private Limited (PCSPL) and Pranit Trading Private Limited (PTPL) and Viramrut Trading Private Limited (VTPL) and Unichem Laboratories Limited (ULL) and their respective shareholders under Section 391 to 394 read with Sections 80, 100 to 103 and any other applicable provisions of the Companies Act, 1956 (Scheme or the Scheme).
Post Veritas reveletion on Indiabulls I have become vary of comapny going in mor merger and acquisition.JP group does it very often whcih is to the interest of promoters.Similarly Jubilant Ind gave a rude shock to its unfortunate investors when it merged the retail business.Escorts another example.
what was the need for this M& A? at what cost are promoter getting the shares ? Any value addition to retail investors ??
Also ICICI bank does not accept any more Unichem sahres for pledging.Have the prmoters pledged already a large no of Unichem shares ??If not promoters then who has ?
