That sounds like a well-defined strategy. Using technical charts for entry and having a clear exit point can help maintain discipline. Chart Ink screeners are a good tool for identifying potential stocks. Have you found any particular technical indicators or patterns to be more reliable for your entries?
Posts tagged Value Pickr
Binny Ltd – own property in the heart of Chennai at 1/10th the cost! (01-07-2024)
There seems to be lot of infighting going in the family.
Anyone tracking it.
Disc : Not invested
Natco Pharma: Focusing On Complex Products (01-07-2024)
NATCO Pharma Ltd
NATCO (established in 1981) is a vertically integrated, research and development focused pharmaceutical company engaged in developing, manufacturing, and marketing complex products for niche therapeutic areas. The company growth story is due to its strong R&D focus and product pipelines. The co is projected to give returns of 94% next year
Date of report: | 24-06-2024 | Industry PE | 33.08 | Sector | Pharmaceuticals |
---|---|---|---|---|---|
CMP: | 1196 | Current PE | 15.43 | No of Years | 43 |
Market Cap: | 21416Cr | Highest PE | 73.7 (2022) | Key Products | Complex Formula |
ROCE / ROE | 30% / 25.9% | Lowest PE | 3.1 (2008) | Key Competitor | Biocon Ltd |
Business Model and Industry Analysis
Overview:
The company can be divided into 4 sectors namely Domestic Formulation, Export Formulation, Crop Health Science and Active Pharmaceutical Ingredients (API).
- Export Formulation (79% of revenue): Focuses on niche complex products and wins on first to file patents. The biggest market is US where currently the company is under gain sharing agreement. It has established its subsidiary in US to have direct access to market. It is also having high growth in RoW markets and pharmerging groups. Diversification in different markets help to diversify geographical risk
- Domestic Formulation (11% of revenue): Sale in domestic market has been around similar levels since past years. The company faces pricing pressure which needs to be offset with new product pipeline
- API Business (6% of revenue): Focuses on complex oncology molecules. Other therapeutic area of development includes CNS and orphan indication. Portfolio of 45 active US DMF’s with niche product under development.
- Crop Health Sciences (4% of revenue): New business launched 2 years ago. Targeting two categories of product- bioproducts and pesticides
Industry Growth:
The US pharma market is expected to grow at 5.36% CAGR. The pharmerging market is expected to grow at 8.97% CAGR where the company is trying to expand its customer base and introduce new products. The API market is expected to grow at CAGR of 7.22%. Further higher spending capacity and increasing diseases among population supports NATCO’s business.
Capacity Utilisation:
Co has 5 FDF manufacturing facility, 2 API manufacturing facility, 2 R&D centres and 2 crop health science units. The company has major concentration with exception of 2 facilities in Uttarakhand and Assam. Company has no huge capacity plans thus it can be assumed that this plants has spare capacity to support future growth
Opportunities:
- US Markets: NATCO business enjoy high entry barrier due to legal compliances, technology and R&D support and playing in niche segment. It will bank on this strength to introduce further complex niche formulas and target a minimum of 8 -10 new generic product application. Further due to acquisition, it has direct access to US market and has its own pipeline launches and in licensing opportunities
- New Geographies: Co has launched many products in Canada, Brazil and Philippines market. It is establishing subsidiary in Indonesia and Columbia. In new markets, company is strategy is “First to File” and Direct participation in tenders
- Crop Business: Co is focusing on scaling up its agri business by introducing niche molecule for both domestic and international markets
Risk:
- Co has high working capital requirement and has to hold large inventories, giving rise to liquidity risk. Further 79% of revenue comes from export giving high currency risk.
- Co has received a warning letter from US FDA for its Kothur plant. The same has not material affect on its filing as the product filings can be routed through other plants
- It also faces risk from products going out of patent and thus decline in margins. The co mitigates risk by having strong product pipeline and R&D investment (increasing YoY)
Future Expansion:
The company do not have any committed future expansion plans. It will be looking out for opportunities for inorganic acquisition which helps to either enter new geographies or new molecule segment
Management:
Management has delivered its commitment and is focused on core business operations. Further there are no much related party transactions. Promoters hold 49.7% shares which are free from any pledge
Institutional Investor:
FII and DII continue to hold around 26% in the company
Historical Data and Financials
Profit N Loss Account:
* Sales have historically grown at **18%** CAGR over last 10 years and at **48%** in last year
* Margins have continuously improved and stands at around **44%** currently
Balance Sheet:
* Company has high net cash which it is holding for inorganic growth opportunities
* Interest coverage ratio is **91 times**
* EVA of company is positive
* Inventory days have reduced from **432** days to **357** days
* Debtor days is constant
* Working Cycle and Cash conversion cycle have improved YoY
* Current ratio stands at 8 times.
Cash Flow:
* CFO/PAT is at lower side standing at 88.58% due to long working capital cycle
* It is a cash rich company and can support acquisition through internal accruals
Valuation and future potential:
Particular | Current | 52W High | 52W Low | Historical High | Historical Low | Industry Median |
---|---|---|---|---|---|---|
Price | 1196 | 1210 | 671 | 1210 | 9.1 | - |
PE Ratio | 15.43 | 22.4 | 12.1 | 73.7 | 3.1 | 33.08 |
EPS | 77.51 | 77.51 | 45.1 | 77.51 | 2.1 | - |
Price/Book | 3.7 | 3.9 | 2.5 | 14.4 | 0.6 | 3.62 |
EV/EBITDA | 11.1 | 15.3 | 8.6 | 44.1 | 0.9 | 18.18 |
Valuation:
Particular | 23/24 | 24/25 | Comments |
---|---|---|---|
Sales | 3999 | 4798 | Management Conservative guidance |
Profit | 1388 | 1665 | Management Conservative guidance |
No of Share | 17.9 | 17.9 | - |
EPS | 77.51 | 93.02 | - |
PE Ratio | 15.43 | 25 | Average PE traded in past 3 years |
Share price | 1196 | 2325 | |
Return | 94% |
Disclaimer: This is a study report, not for any decision making or investment advisory. Invested
Made by: Nidhi Devidan
Date:28th June 2024
Atma Nirbhar Bharat – Stock opportunities (01-07-2024)
Since the Govt has already declared its intention of OFS in Mazgaon dock, the stock is likely to be under pressure until OFS is executed, since investors are likely to wait until OFS to buy in order to get a better price if possible.
And so the wide gap in valuation between its peers may continue.
But once the OFS is executed, it may try to catch up at a rapid rate l.
When would be the OFS of Mazgaon dock ,?
Now since a hint has been given, it could be any day all of a sudden depending upon market conditions.
However, there is a hitch here!
Could it be before budget or post budget ?
it is difficult to say because the Govt has decided not to take a target of “Disinvestment” ,. They would call it capital receipt and this change in nomenclature is supposed to be officially declared in budget session.
However , if the Govt may also carry out OFS before budget , they may add to capital receipts for 2024-25.
Action construction equipment ltd (01-07-2024)
I think numbers aren’t going to remain the same, they will only improve as there was a demand slowdown due to elections.
DDev Plastiks Industries – A Smallcap Gem (01-07-2024)
Some KTAs from mgmt meeting
Reason for demerger of Ddev plastiks from Kkalpana Industries was to focus on compounds business considering industry tailwinds, earlier due to company structure company had lost a major contract from mitsui who wanted to setup a JV with Ddev for manufacturing compounds
cable and wires companies have been now increasingly cautious about their supply chain post covid and are shifting from imports to domestic procurement
Company does not cater to house wires and telecom wires due to unfavourable operating economics ( Current capacity is 30000 tons as compared to market demand of 8L tonnes)
Current TAM is 14-16% in value terms of the total cables and wires industry sales value
Domestic and export mix to remain the same as both markets are growing at the same pace
Shakun polymers is only in the business of semiconductor and HFFR cables and does not have the complete product portfolio such as insulations
HFFR cables currently the capacity 20000 tons in the industry as compared to total pvc market of 8-9 lakh tons, company expects the segment to grow to 150000 tons and company is targeting a 50% market share
HFFR cable acceptance is mainly led by government regulation as despite better quality, the cost of HFFR wires is 10-12% higher. Company expects over the next few years solar cables,
Capex - Initial capex is to set up a green field capacity at both the east and west coast, with around 170 crs of investment, further investment of 130 crs for HFFR and XPLE capacity , current capex per ton - Rs 30000 (i.e 30 cr per 10000 ton), 120000 is the total peak capacity at these facilities.
Decrease in trade payables is mainly due to domestic PVC sourcing which has lower trade payable days.
Engineered plastics is a difficult business to crack because generally the consumer durables companies have there own approved set of vendors or mainly import
Kkalpana and Ddev synergy - Mixed PVC compounds using the recycling ability of Kkalpana is something which the company is thinking, as in packaging there is a provision for use of mixed compounds, company is working with Prysmian for developing a mixed compound using virgin PVC compound
Atma Nirbhar Bharat – Stock opportunities (01-07-2024)
Export orders for defence shipping companies.
Our defence Shipping companies have come a long way not only to assist to become self reliant India - Atma nirbhar Bharat, but also participating in generating revenues from export market.
Currently, India has less than one percent share of the global shipbuilding market, which is largely dominated by China, South Korea, and Japan. Replacement of aging fleets is a top concern for most shipowners, specifically in Europe which is implementing some of the toughest maritime environmental regulations. The growing orders from European shipowners are however helping India as it vies for a top position in the industry.
Earlier, Mazgaon dock and Cochin shipyards, Garden reach had signed master service agreement with US Navy.
While Defence shipping companies are taking the lead in exports, others are not lagging behind…HAL, BEL, Bharat dynamics , Midhani , Solar industries , L&T , Bharat forge and many others including ancillaries.
Great articles to read on the web (01-07-2024)
Excellent discussion on Insurance which everyone must listen to, whether you have or don’t have health insurance. The title is a bit negative and misleading, but in reality, it’s actually a very insightful talk and an even better Q & A at the end. Will be worth your time.
Investing Basics – Feel free to ask the most basic questions (01-07-2024)
Hi,
You might have posted under the Collaborator’s Corner category, so it will require approval. Please post under the Not So Hidden Gems, it will go through.