Alembic Pharma Q&A and other updates

Alembic Pharma Management Q&A

We have an US CEO who has been with us for last 5 years and assembled together a top Team in International Generics business. Success has come because of Product Identification ability. Year-wise market-wise plans are drawn up till 2024

We have built a strong IP Culture/Team over last 5 years or so.

We have been following Alembic Pharma for last few quarters. We mentioned about the company in our Diwali post.

Alembic Pharma is among the oldest companies in the Indian pharma industry. But no major developments took place over the last decade as the company was more into the domestic markets, and limited to the anti-infectives, cough and cold segment which are highly competitive and matured. Over last 2-3 years there has been a contrasting change in the company. The revenues are growing (earlier the growth was 10% now it is 20-25%), the margins are expanding (earlier margins were 13-15% now it is 18-20%) and the balance sheet is getting stronger and efficient.

Reason for the change is the shift towards the international generics. This segment is expanding quite quickly for the company – from about 100 odd Cr in 2010 to 235 Cr in 2013 to 450 Cr in 2014 (expected). This segment has a potential to scale up to 1000 Cr turnover over the next 2-3 years given a strong product pipeline prepared by the company. Alembic Pharma has filed 60 ANDAs (just 18 five years back and 31 are approved till date). On the domestic side, the company has been entering the specialty segments such as Ophthalmology, Cardio, Anti-Diabetic etc, which have a higher growth and a better margin. Continue reading

Happy New Year 2014

Welcome 2014!

New year img

Dear Friends,

Dalal-street team wishes you & your family a very Happy & Prosperous New Year!

2013 has been a great year for markets, especially the mid cap area we focus on. The best thing about markets has been that it has focused on quality and rewarded companies with good balance sheet, business model and corporate governance. Several stocks which we discussed earlier like  Astral Poly, Ajanta Pharma, Atul Auto, Mayur Uniquoters, Poly Medicure etc underwent multiple re-ratings and delivered multi-bagger returns. While at the same time cos with poor track records and corporate governance standards are just languishing and long term returns have been very poor. This will go a long way in encouraging investors, companies etc to seek something unique and establish high governance standards. Continue reading

Avanti Feeds: MPEDA announcements

We were lucky to get the understanding of the change in the fortune of the shrimp industry and to spot Avanti Feeds at a very early stage. Since then we have been providing regular updates.

It has been one of the dream performance over the last 2-3 years – the company’s revenue have grown at a CAGR of 88% over last 3 years, and the stock returns have also been fabulous.

Over last few days, there have been reports of reporting of EMS disease in the Indian Shrimp industry. The EMS has been confirmed and as a preventive measure, MPEDA has decided to halt fresh production for next 2-3 months. Though it is a short term negative development for the industry, few positives to note are: 1. The EMS reported is in very small portion of the sample (just 1%) 2. As December to February is a lean period for the industry hence the damage will be limited and if the preventive steps are properly undertaken then the industry can quickly come out of the problem. MPEDA has provided a detailed clarification.

As a caution, we have chosen to book profits and reduce the exposure, and monitor how things develop going forward.

Among the new ideas, we are currently studying: APM Industries, KCP Sugar, Kitex Garments and Muthoot Capital. We hope to discuss the latest quarterly results and a detailed analysis in the next article.

Happy Deepawali: Samvat 2070

Muhurat Trading Session

We wish all our readers a very Happy & Prosperous Deepawali. May Goddess Laxmi shower her blessings, and Lord Ganesha shower happiness on all of us.

Samvat 2069 ended on a wonderful note as the Sensex hit an all time high.

We recommend our readers to take part in the Muhurat Trading session on this auspicious day. Few ideas for long term perspective are:

1. Alembic Pharma

2. GRP

3. Oriental Carbon

4. P I Ind

5. Shilpa Medicare

Over last couple of years, we have got some superb companies to participate in, such as Astral Poly Technik, Ajanta Pharma, Atul Auto, Avanti Feeds, Poly Medicure, Mayur Uniquoters etc and all of these have given some superb returns. The Q2FY14 results have been very good for most of the companies we have been tracking and hence existing ideas give more comfort and promise rather than something new and unknown.

The best stock to buy could be the one you already own – Peter Lynch

We would like to thank our readers for your support and collaboration in doing the in-depth research and groundwork. We are pretty optimistic about the year ahead and wish you Happy Investing!!!

Few interesting micro caps

Small-cap

We personally love to keep a track of small, interesting and growing companies with a market capitalization of under 100 crores. But we are rarely able to talk much about these small companies as they come with their own set of troubles including low liquidity, low visibility, lesser information, chances of corporate in-governance etc.

It is interesting to go through their annual reports and valuations even if one does not invest in them.

[Companies with ** mark are classified under PCAS (call-auction mechanism)]

Acrysil** (M.Cap 53 Cr): Acrysil is the ”only company in all of Asia – and one of just a few companies worldwide – manufacturing quartz kitchen sinks.” The company posted a good June quarter. The management talks about big ambitions in the annual report. If they actually end up delivering what they are aiming for, this stock can give fantastic returns.

Alicon Castalloy** (M.Cap 55 Cr): This company is “one of the largest integrated aluminium casting manufacturing units in India.” Interestingly, the company has posted a growth of 25% in the revenues over last 3 years, when the whole auto ancillary industry has been witnessing a slowdown. The margins have fallen significantly though (from 18% to 11%). CRISIL report provides a good history of the company. The book value is Rs.96 and the stock is at 3.5 times earnings at Rs.50. Continue reading