This one looks interesting. This is a case of the company expanding the lactose facilities, earning the conversion charges from Kerry and utilising the cash flows to get into the lactulose market.
Given the arrangement with Kerry, the lactose segment would be an asset light model with periodic fixed asset charges for expansion.
The lactulose market looks interesting. From the import figures the rough guesstimate is that India is importing 2200-2400 tonnes per annum of lactulose. This seems to be primarily from Fresinus Kabi plants in Austria and Italy and Danipharm from Denmark. There also seem to be some shipments from the UK.
The question is what is the market size of lactulose in India and if the market can absorb the increased capacity. If the usage doesn’t go up, then it is a case of import substitution. Does anyone have pointers to the global market size and key players? Is it possible for Lactose India to export lactulose given the cost advantage if any.
At around $3.75 landed cost for lactulose, the peak revenue for the company would be around 60 crs before they need to expand again.
I think we need to dig deeper into the lactulose market dynamics before a decision can be taken.
The trading behaviour of this scrip looks very strange with no sellers but a single buy order at UC for a few lakh shares. The usual traded volume was a few thousand shares not very long ago. Better watch out
Disc- Not invested
| Subscribe To Our Free Newsletter |
