from a technical p.o.v, 200 was the 61.8% retracement level. It’s down to the 50% level now.
The appreciation of the rupee is not a good sign for the export oriented players.
Being new to the this forum and learning the ideas behind investing, can someone tell me if I am missing anything here.
As per ICRA article on Indian Pharmaceutical business, companies with strong presence in domestic formulations will be impacted the most. Thought there are other variables also being considered viz. degree of diversification both at product and therapy level.
As per the latest AR ,formulation contributes 87% to sales & Income with domestic
formulationsâ portfolio revenues comprise of 63% from chronic therapies and 37% from acute therapies.
How will this pan out for the company?
http://www.icra.in/Files/Articles/Indian%20Pharmaceutical%20.pdf
Unichem Laboratories Ltd has informed BSE regarding a Press Release dated October 17, 2012 titled “Unichem Laboratories receives ANDA tentative approval from USFDA for IRBESARTAN TABLETS”
results on OCT 20 Stock may start rallying soon.
subash,
I dont think Unichem is likely to be affected in a major way by the govt antics on dpco. And then there are ways and means by which companies can get out of these kind of roadblocks. so if i were convinced about this turnaround story I would not worry too much about these things.
Revenues grow by 33 %
Profit up 83 %
Eps for the quarter is 3.87 against 2.11 for the last year.
http://www.bseindia.com/corporates/AnnPdfOpen.aspx?Pname=Unichem_Laboratories_Ltd1_201012_Rst.pdf
http://www.bseindia.com/corporates/AnnPdfOpen.aspx?Pname=Unichem_Laboratories_Ltd_201012_Rst.pdf
unichem as above links show has come out with very good numbers for q2 fy 13.
half yearly figures makes for interesting reading.
period h1 fy 12 h1 fy 13
sales 383 524
NP 34.7 68
eps 3.85 7.85
Full year eps could be very good if things keep on going as they are till now.
I think it could register eps of close to 16-17 or more as usually second half is usually better for most pharma companies.
I think this bodes well for ajanta results also which are due to be announced on 25th oct.
Unichem looks a great buy on declines. This is one pick which has given me immense satisfaction as it is working out exactly as predicted in the initial write up where we had expected a targeted upside of 100%.
With things getting on track for unichem and net debt almost nil according to the half yearly statement of accounts, we could be seeing much higher targets in coming quarters for unichem.
Hitesh Bhai,
Congrats on yet another superb call!!
We too feel the satisfaction when we follow your lead and and makes the correct capital allocation. Should have allocated more in this case…not sure if it will decline to 175-180 levels again.
Ajanta…yes loadedup after numerous hints from your side.
Thank You
Vinod
UNICHEM UPDATE POST Q2 FY 13 -- buy on declines
As mentioned above unichem has posted good turnaround results for q2 fy 13 and h1 fy 13.
Posting below results for past few quarters which shows how the margins and sales went down initially and now things seem to be on track for the company.
Last few quarter results
|
Qtr |
Sales |
Pbdt |
Np |
Npm |
|
Mar 10 |
174 |
41 |
33 |
19.17 |
|
Jun 10 |
186 |
50 |
33 |
17.74 |
|
Sep 10 |
200 |
51 |
35 |
17.5 |
|
Dec 10 |
195 |
40 |
26 |
13.33 |
|
Mar 11 |
176 |
26 |
15 |
8.5 |
|
Jun 11 |
187 |
28 |
16 |
8.55 |
|
Sep 11 |
197 |
33 |
19 |
9.64 |
|
Dec 11 |
220 |
36.8 |
24.5 |
11.14 |
|
Mar 12 |
190 |
34.5 |
23.25 |
12.23 |
|
Jun 12 |
263 |
48 |
33.14 |
12.6 |
|
Sep 12 |
261 |
53 |
35.07 |
13.43 |
Now we may not expect the net margins to improve to the peak levels of 19% or so but with better utilisation of new facilities and new sales force, I think there could be some more margin improvement to around 15% levels at net level.
Based on first half results, Unichem is likely to post eps for fy 13 in the range of 16-17 for fy 13. FY 14 would be even better.
Rationale for buying on dips :
1. Near debt free company inspite of expansions
2. Since company has undergone expansion and rejig in distribution network, it will not need major capex for near future.
3. It already has a good presence in the US markets and latest feather in the cap is the irbesartan approval.
4. Domestic sales is likely to improve with higher productivity from newly recruited sales force whose training and initiation period is likely to be over now.
5. Company is likely to surpass peak performance shown in last five years in fy 13 and show even better growth in subsequent years.
About the moneycontrol link,
Regarding the question of earnings for fy 13 and fy 14, I think the guys asking the questions dont seem to have done any homework.
half yearly eps is close to 7.5 and then they ask whether the company can achieve eps of 12 for whole fy 13 and that too when second half is usually better for most pharma companies.
i am expecting an EPS of 16 if all goes well. Somehow the management too says that they will achieve the targets, and not beat them!!! Perhaps they are too conservative.
As reported, there may be some impact due to the drug pricing policy in Q3FY13 but going forward company should meet an effective target of 15+ EPS for FY13.
Due it’s much superior cash flows, lower debt, higher and stable margins, strong brands and steady presence in domestic and foreign markets Unichem commands a P/E in the high teens as compared to Ajanta. And the P/E gap may sustain in the near future with Ajanta’s high capex plan laid out over next few years.
A pharma play with the combination of Ajanta and Unichem from here on, even with both maintaining their current P/Es (forward) on expanded earnings should bode well over the next 5 year period.
While intermediate strong gains in contract manufacturers like Dishman from favorable conditions on low base of last year should be ideal for profit booking in the short to mid term.
Disc: Invested in Ajanta, Unichem and Dishman.
For me the biggest plus in unichem is that it has completed its expansion and all distribution rejigs and the fruits of the same are going to flow in within next 2-3 years.
And to top it all the company has negligible/nil debt so i think with improving financials dividends also are expected to go up.
Unichem is likely to be a growth stock going forward from the turnaround category.
Some concall details available in a recent emkay update regarding unichem
)- Company is confident of beating industry growth rates in fy 13/fy 14 on back of completion of inventory rationalisation process at distribution level and deveopment of gynaec and derma speciality and improving MR utilisation.
)- As per company’s internal estimates** the effect on topline due to drug pricing will be around 15 crores.**
**CRAMS-- **this business contributed 20-25 crores this quarter. the company is supplying to an MNC customer from its Ghaziabad facility which is operating at 95% capacity utilisation.
US )-- Company has filed 27 ANDAs till date and got approvals for 11 of them. It has already launched 8 products in US. Another product lamotrigine is expected to be launched in q3 fy 13.
-** TAX RATE** )- Company has guided for tax rate of 22-23%.
CAPEX–
)- Capex for fy 13 has been guided at 100 crores which includes a new R&D facility and upcoming facility in SEZ.
)- For fy 14, capex will be lower than 100 crores.
Only icici guys have upgraded earnings estimates from earlier 13.4 to 14.8 for fy 13. All the rest of the brokerages including emkay and anand rathi guys are still stuck with earnings projections for fy 13 between 11-12 for fy 13. I guess their excel sheets are still not updated bcos they all seem to be working on mathematical models rather than looking at the improvements visible in last few quarters.
If the company continues to keep the momentum shown in first half into the second half as well, I expect it to surpass all the above projections and report eps of close to 16-17 for fy 13 itself and stock price to try and challenge all time high of 270 or so.
**
**
Highlights of the call:As per Capital Market.
The forex loss was Rs 2.10 crore (in other expenses line item) in Q2’FY 13 compared to forex gain Rs 1.79 crore (in other income line item) in Q2’FY12.
The R&D expenses are 4-5% of sales and majority will be for US & Europe business.
The Domestic Branded Formulations grew by 21 % YoY and grew by 2 % Q-o-Q for the quarter ended September 2012. The International Formulation Business grew by 76% YoY and declined by 12 % Q-o-Q for the same period.
The Domestic API business declined by 12% YoY; while on sequential quarter it declined by 41 % for the quarter ended September 2012. Further, The International API business grew by 65 % YoY and grew by 23% Q-o-Q for the same period.
The price growth in the domestic business is around 3.8% and the rest is driven volumes during the quarter.
The MR strength is 2200 as on 30th September 2012 and around 100 were added in the current financial year.
The impact on Company due to New Drug Pricing Policy expected to be Rs 15 crore in the products where there is price reduction.
It has filed 27 products for US market and received approval for the 11 products. Further, Out of 11, it has launched 8 products and expects one more product to be launched soon and lost the opportunity for the other two.
The Capex was Rs 117 crore in FY’12 and expected to be Rs 100 crore for FY’13 and 80 crore for the FY’14.
The Company expects domestic formulation to grow above the market for FY’13 as well as for the FY’14.
It expects API Export business to be volatile going forward.
The Company expects 2% increase in margins for FY’13 and 2% increase for FY’14 as well.
http://www.unichemlabs.com/pdf/Investor_Update_Q2(FY12-13).pdf
The subsidiaries are incurring losses still, though negligible. Once they turn around, we may see even better profits and margins.
It seems the market is ignoring the wonderful set of results of unichem or are we missing something?
I think there will be some consolidation before any significant upmove. It formed a bottom near 173 during its earlier correction. What I feel is that we may be in process of formation of a higher bottom currently. fundamentally I think there are a lot of positives which i have ennumerated earlier.
Market itself looks tired after the breakout so lets see how things progress.