Fantastic thread and got me up to speed within 2 hours of research. A word of gratitude to some fantastic contributors here.
Personally, I have made the following high level obervations:
Current red flags – Degrowing topline, reducing margins, eroding reserves, rising debt (mostly short-term debt and working capital loans), interest and depreciation cost (reserves lower can total debt), high inventory losses. Rich valuations (~27 times of 2022 earnings (best year), even with the current drop).
Management has stopped calls since Nov 2022.
Key monitorable,
- CDMO business growth
- R&D – 1-2 molecules every year
- Improving in topline, margins and bottom-line (not visible before Q4, but let’s see)
- improving cashflows, reducing working capital loans and reducing debt and interest cost. (Gross block growth has also bumped up depreciation, so PAT will be muted further).
- improving contribution of CDMO / CRAMS business.
Watch out for major planned investment in CDMO business in FY25.
Potential turnaround but risky bet for now.
Disclosure: Not invested, curious.
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