I am trying to invest in bonds. I am new to bonds market. Let’s say I try to buy a few units of an already listed bond from stock exchange at market value. Let’s say 100 units of bonds have market value of Rs. 98,000. The date to maturity is 1 years 6 months 15 days from today (01/11/2024). The coupon rate is 9.5% and the YTM is 11%. How much profit in Rupees will I make on purchasing this bond?

Interesting. Aren’t we comparing a store vs a storage?

Cipla –

Q2 FY 25 results and concall highlights –

Revenues – 7051 cr, up 9 pc
EBITDA – 1886 cr, up 12 pc ( margins @ 26.7 vs 26.1 pc )
PAT – 1303 cr, up 17 pc

Geography wise performance –

India – 2948 cr, up 5 pc. Chronic sales mix @ 61.5 pc. Launched 2 new products in India in Q2 – Vanoprazan ( for gastro-oesophaegal reflux ) and Cipenmet ( for allergic rhinitis ) – both these are in-licensed products

Continues to do well in key focus therapies – Cardio, Respiratory and Urology – outpacing IPM growth rates. Grew in line with the Industry in the anti-infective space

Company has 21 brands in top 300 brands. 25 of company’s brands have sales > 100 cr

Consumer healthcare brands grew strongly in double digits. Key brands include – Cofsils, Nicotex, Cipladine, Prolyte and Omnigel

US – 1967 cr, up 4 pc. Launched 4 new products in US in Q2. Lareotide franchise and Albuterol reached a mkt share of 35 and 19 pc respectively

South Africa – 639 cr, up 12 pc. Company is ranked no.2 in South African Pharma mkt. Company has 8 brands with sales > 100 Mn ZAR ( aprox 50 cr )

EU + EMs – 797 cr, up 18 pc

API sales – 140 cr, up 7 pc

R&D spends @ 5.5 pc of sales

Cash on books ( minus the debt ) @ 7950 cr

A weak season for anti – infectives and respiratory drugs led to weak growth in India business. This should reverse in Q3

Share of chronic business in India now stands @ 61.5 pc

Facing some supply challenges in the Lanreotide business. Q3 sales may be lower than in Q2 because of the same. Supply challenges expected to resolve by end of Q3

Company’s Goa facility has been awarded VAI status by USFDA post its inspection on 30 Oct. This should accelerate the expected launch of Abraxane ( chemotherapy drug ) in US – a key positive

Expect to launch Advair in US in H1 FY 26

Continue to maintain EBITDA margin guidance band of 24-26 pc for FY 25

Have added aprox 1500 MRs in India in the last 2.5 yrs

Because of supply constraints in Lanreotide in Q3, US revenues in Q3 are likely to be below $ 220 million vs $ 237 million in Q2

Launch of Symbicort expected to be in FY 27

Seeing low double digit price erosion in the oral solids base business in US

Mkt share in Lanreotide is expected to fall sharply in Q3 ( to around 20 pc levels ) in Q3. Should start to bounce back wef Q4 – once the supply challenges go away

Looking to make acquisition in India to utilise the cash on books. That’s priority No 1. Second priority is acquiring differentiated assets in US with strong entry barriers

Acquisition of Astaberry is helping accelerate the consumer healthcare business in India

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

They will have good operating leverage in coming quarters. As it clearly seen by revenue growth and ebitda growth while cost of goods staying constant in last few quarters. So the eps growth will be much more than topline growth atleast till their present capacity is fully utilised. That’s untill 350 cr topline as per the concall notes someone posted above

I feel this is not a sudden surprise. Management had clarified in AGM that revenue will be muted in FY25 as CV and tractors are expected to slow down and some export programs are expected to start towards the end of FY25 or early FY26. Any finally WIL is auto ancillary company and its prone to cyclicality in the auto sector. Even in auto sector, one thing that needs appreciation is the way management has maintained strength of balance sheet and working capital.

• From FY21 sales has doubled from 2200 Crs to 4600Crs in FY25. But the debtor days has reduced from 117 days (117 could be due to COVID, we can consider 70 days as normalized debtor days) to 57 days even though the exports have become 25% of the sales. Generally credit period increases with increase in exports for covering transit period and extended credit period for overseas customers.
• Much of the debt is related to working capital loan backed by inventory and receivables.
• Inventory days, cash conversion days – have improved even though the sales have doubled from FY21 to FY25. Due to this tight working capital management, operating cash flows has doubled from 150+cr to 300+cr from last 2 years
• Most of the capex done with free cash flows (all the cash from the business is getting reinvested)
• ROCE has improved from 5% to 13% (it has reached close to 15% quarterly in last 3 quarters)
• There is still much scope for improvement in ROCE with the ramp up of alloy wheels, PV wheels (this has just turned profitable and historically it has clocked 13-15Cr of PAT)
• CV – In Q3 FY25 seems to be better compared to Q2 FY25
• Tractors wheels expected to do better in Q4FY25
• Alloy wheels capacity will be increased from 40K to 50K with debottlenecking (doesn’t need much capex here, not sure about the quantum)
• Very conservative management with good track record of corporate governance (atleast I haven’t come across issues related to CG).
• Consistent dividend player (they have given dividend even in COVID year)
• Management never did concall earlier or released investor presentation. After the group restructure, started doing concall half-yearly. This shows that atleast management wants to get the better market visibility for the company.
• Another point management highlighted in the recent concall is that they are trying to improve credit ratings over a period of 1.5 to 2 years. This will help to refinance debt at lower interest rates.

Stock has not given returns from 2019. IDFC and Reliance Nippon who are owning this counter from 2019 might not have got returns (infact negative returns, not even crossing FD returns ). Looks like they are tired of holding and exiting slowly creating selling pressure even though fundamentally things have improved. Management also acknowledged in the recent concall that stock has not moved inspite good performance Hoping that market recognises in the next couple of quarters.

Disc: Invested and hence biased