Supriya Lifescience Ltd – pure play API

Invested at 285 range based on following conviction…

1. Last 3 quarters based on the available information company growth is above 25% including PAT.

2. Highly profitable business PAT is above 25%

3.Increased their market share in regulated market to 53% in 2022 from 34% in 2018. That is the another reason for increase in EBIT margin over the years.

4. Management expects that business and profit will increase CAGR of 25%.

5. Their total capex investments at the end of 2026 seems 450 crore( including current). Normally asset turnover of the company is 3 times. if that is the case expected turnover in 2026 will be 1350 and PAT margin of 25% will result Earnings of 330 Crore. Current Market cap is 2300. if the above expectations are met then P/E at current market value in 2026 will be 6 times. Normally pharma sector P/E is around 25 to 30 times. That gives enough margin of safety for me to hold this share for long period. But watching results and updates from company from quarter to quarter is very important.

6. Current P/E of Supriya is 13 and industry average 25… seems recent IPO hit at 270 range and share went to 600 and profit has booked by few so now trading at 280 range

7. Seems management is very honest and next generation is well knowledgeable and efficient.

8. What interested me more in their annual report they have provided 2 pages for employees comment. Never come across such pages in annual reports.

specially the following comment of an employee

” “Satishji invited employees with
their spouses – from the office
boy to the senior management at
the wedding of his daughters – at
Radisson’s in Alibaug and Leela in
Jaipur. All employees stayed at the
same hotel as the Waghs!”

and one more

“When the Managing Director heard
I had employed a baby-sitter, he
added the baby-sitter’s cost to my
salary, ensuring that my daughter
would be looked after while I
was at work. This company treats
employees as family!”

you could see many more in page 52 and 53 of AR 2022

9. They have obtained all most all the major certification from USFDA, EUGMP, EDQM, SFDA
   NMPA, ANVISA, KFDA, PMDA, TGA, Taiwan
   FDA, COFEPRIS, Health
   Canada, CDSCO

10. For me it is a value buy for long term perspective when the market at 13 p/e and a growth buy when management is putting plan for 25% growth in sales and PAT for next 5 years. Very rare to see value and growth combination of a share when market is at all time high.

11. Understand the risk of high concentration on business in 3 to 4 products and few customers of supriya. However, reading their annual report, going for various management interviews, analysis report, company website, of course VP discussion given me a confidence to allocate 10% of my capital to Supriya lifescience and will watch their next few quarters to see whether management is capable to deliver the result then will double my investment if supriya available at this valuation.