Poly Medicure – Aiming to global medical devices market

“In the next three to five years, our focus will be on safety devices market. We are expecting our revenues to grow from Rs 135 crore to Rs 300 to 400 crore by 2013” – Rishi Baid, executive director, Poly Medicure Ltd

We recently discussed about Poly Medicure which is one of the biggest exporter of IV Safety Cannulae and other healthcare disposable products. Now it is looking to expand in global markets too and targeting a 10% global market share.

If the company is able to do a turnover of even 165-170 Cr next year, the stock is trading at just 5-6 times FY11 expected earnings.

Pharmabiz discusses about the talks with management:

The New Delhi-based Poly Medicure Pvt Ltd, manufacturer and supplier of medical devices and disposables, is planning to invest Rs 100 crore by 2013 to expand its presence in overseas market with a thrust on safety medical devices and outsourcing manufacturing and research activities.

The company, which currently has almost 75 per cent of its total Rs 135 crore revenue from exporting products to more than 80 countries including US and Europe, is planning to invest around Rs 100 crore within 2013 to increase its presence in global market and to explore the potential of outsourcing market, said Rishi Baid, executive director, Poly Medicure Ltd. The company is also mulling on acquiring a medical devices company with research and development focus in US, by spending around USD 20 to 30 million.

“In the next three to five years, our focus will be on safety devices market. We are expecting our revenues to grow from Rs 135 crore to Rs 300 to 400 crore by 2013,” Baid averred. The target for the financial year 2010-2011 is fixed at Rs 175 to 200 crore.

The company sells its safety device products to almost 30 countries including South America and Middle East. The safety devices portfolio is expected to increase to 30 to 40 per cent of its revenue in next five years, from a meager eight per cent reported at present, he added.

Poly Medicure is currently operating on selected medical devices and disposables segment, which has a potential up to Rs 1000 crore and currently has five per cent market share. Through the capacity expansion, the company is targeting to bag 10 per cent of the market share by 2012.

Majestic Auto – Updates

We earlier discussed about Hero Honda and Majestic Auto at our blog and the valuations just keep improving.

As expected, Hero Honda has appreciated from approx Rs 1,600 to Rs.1935 i.e. a gain of 21% in less than 5 months; while Majestic Auto is yet to follow. The current upside in Hero Honda is creating fresh opportunity for Majestic as the gap between the Market Value of Investments (16.25 lac shares of Hero Honda) and the companies own market cap is widening everyday.

The valuation of Majestic as of today:

Own Market Cap of Company: 65.50 Cr

Value of investment in Hero Honda (16.25 Lakh shares) : 314 Cr

Apart from these investments, the company also has a factory, land and other assets.

Discount: >80%

Majestic Auto Website

BNK Capital – Hidden deep value

BNK Capital is a small finance company with experience of over several decades. The company provides brokering services across the various products such as equities, commodities etc and serves several HNIs and corporates.

The interesting part is the market value of the investment the company holds. Some of the major investments are:

As on 18th Feb, 2010
Name Qty CMP Value (Cr)
CESC Ltd 30,17,351 378.00 114.06
India Foils Ltd. 2,24,000 10.00 0.22
Mcleod Russel Ltd. 2,74,205 234.00 6.42
KEC International Ltd. 3,75,105 577.00 21.64
Zensar Technologies Ltd. 4,200 286.00 0.12
Jaipraksh Associates 37,500 135.00 0.51
Total 142.97
* Co holds a lot of other investments also totalling 4-5 Cr

At CMP of about 42, the co’s own Mcap is close to 25 Cr while the value of marketable investments on Balance sheet is 143 Cr!! Hence the company is available at a discount of 82.65% to the value of investments. Similar valuations were once found in CHI Investments too, which was then our favorite and yielded very good returns.

Yes, many of the similar finance companies trade at discounts to their market value of investments, but such discounts are usually not more than 30-35%. Here we are getting a company at 83% discount.

Jaihind Projects – Update

There’s a whole ocean of oil under our feet! – Plainview in “There Will Be Blood” (Oscar Winner)

We had recommended the stock earlier on our blog here. Though the stock is up more than 65% now, it still has a lot of potential.

The company had held an analyst meet yesterday and the updates are very encouraging. Few highlights:

  • Jaihind Projects is into Pipeline EPC business and has vast experience in pipeline construction segment having laid down more than 10000 km of pipeline. The company has 2nd largest equipment base for execution of pipeline EPC contracts.
  • There is a total proposed investments of more than Rs 200 billion in developing and expanding the existing pipeline network in India over next 3 to 4 years, adding up to more than 10000 km of additional cross-country natural gas pipeline across the country. Further more than 60 cities are earmarked to get CGD (city gas distribution) networks by FY’12, along with proposed implementation of National Gas Grid by GAIL and capacity expansion of the LNG terminals, the demand for natural gas pipelines is slated to grow.
  • Total order book position of the company as on Dec’09 stands at Rs 943 crore.
  • In addition to the above, the company has bid nearly Rs 1000 crore of domestic orders on its own and more than Rs 1000 crore of international orders along with the alliances.
  • The company intends to invest in windmills and generate about 12-15 MW using wind power.
  • The company has target of net sales of more than Rs 475 crore for FY’10 with better margins.

Post Demerger impact of Asian Hotels – Unlocking the hidden value

Hi friends, this is exciting!

Asian Hotels (which we recommended recently for its demerger news) has filed a document with BSE detailing the post-demerger financial aspects including the post-demerger balance sheet of the three new companies. We were flirting with the data to guess the post demerger scenario and here are the possibilities (provided in the excel sheet below).

As per the announcement, a shareholder holding 100 shares of Asian Hotels will get:
– 50 shares of AHL residual company
– 50 shares of Chillwinds
– 50 shares of Vardhman Hotels
The new figures show a significant rise in the book values, as during the demerger, the assets are transfered at their fair values.

Do give it a look at the above numbers and share your comments.

Manjushree Technopack – In depth snapshot

We covered Manjushree Technopack recently and the stock has shown a pretty good movement since then (as was expected). MTP (Manjushree Technopack) is one of the companies we have loved to work upon. Together with Donald and his esteemed team, we had collected all the data and did some very useful research and compared the same with the peers. The same has been brilliantly compiled and presented on his site along with 10 Questions to Manjushree Technopack Management:

[…] You see negative Free Cash Flows, but that’s not a bad thing for a company in its early growth stages. It is investing all the profits it generates and more back into business expansion. As you can see even the much bigger global majors report marginal or negative free cash flows in this industry.

Best Margins & Returns in the business

And when we look at its track record, it makes us feel even better. Although achieved on a small base, it has more than tripled its sales in last 5 years while earnings per share (EPS) has gone up 8x (on an adjusted basis) in the same period. Just look at the long term track record, it tells us this Management is managing growth nicely.

Exciting Growth on a low base

Makes me wonder about the quality of this growth. How has it managed profitability and returns in the pursuit of this growth?
Its heartening to see that margins have consistently been trending up. Returns shot up tremendously in FY07 on the back of high capacity utilisations. Since FY07 Manjushree has been investing in this growth aggressively by doubling capex every year. This has led to lower capacity utilisations and Asset turns, in turn lowering RoA and RoE. But on the whole returns have also been trending up.

Tells me Management is savvy and doing the right things while pursuing growth aggressively. […]

You can read the complete in depth analysis done by us jointly at Stock Pick Focus.

In -depth Snapshot of Manjushree Technopack [at Stock Pick Focus]

You might also like 10 Questions to Manjushree Technopack Management.

Manjushree Technopack (MT)

Top 10 Brand Values
Top 10 Brand Values

This was the article in “Economic Times” which specially attracted Dad. At number one, in respect of brand value, it was none other than Coca-Cola, and on a bit of research, it was revealed that Manjushree Technopack (MT) was providing bottling services to them. Yeah, it became an instant favorite 😀 .


MT is a packaging solutions provider with an experience of two and a half decades in providing its customers with cutting edge plastic packaging solutions.

Few positives:

  • MT has been growing at CAGR of almost 25% for last 5 years. This growth rate is expected to continue for next few years based on the aggressive expansions the company has been undertaking. The company has been tying up with the top MNCs
  • MT has an impressive client profile : Cadbury, Nestle, Coca Cola, P&G, Bisleri etc
  • MT has been able to maintain very good operating margins and able to expand the same with increase in turnover. The other good things are its strong balance sheet – reasonable debt equity ratio, control over debtors and inventory to get strong cash flow.
  • As per the recent announcements, the company has tied up with Coca Cola & Bisleri and is putting up exclusive capacities to cater to their requirements. As per the arrangement, the offtake will increase 50% every year.
  • MT is also targeting to cater to the liquor industry and has tied up with likes of UB Group, Radio etc.

Attractive Valuations:

  • At CMP of Rs. 32.50, the stock is available less than 5 PE.
  • It is trading at a discount to its BV of 44 by almost 25%.
  • Co is a regular dividend paying company & had paid 10% dividend last year.


  • We expect MT to continue to grow @ 20-25% for next 2-3 years.
  • For FY 2010, MT may be able to deliver 130-140 Cr turnover resulting into a NP of 8-10 Cr. Hence an EPS of 6-7.5

Snapshot of past financials:


Excellent Q2 nos from Shilpa Medicare

Shilpa Medicare (reviewed on July 26) has posted fantastic Q2 nos. Few highlights are:

  • Approx 54.00% rise in standalone turnover YoY & 24.20% rise QoQ.
  • Approx 77.57% rise in standalone OPM YoY & 20.33% rise QoQ.
  • NP = 12.62 Cr resulting into an EPS of 5.74.
  • OPM very healthy around 31-32%.
  • The loss in the subsidiary has narrowed down substantially.
  • The interest cost has started reducing despite the company being in expansion mode.

I expect the company to continue posting such healthy nos and should better out in coming quarters. The stock has all the potential to move to the next orbit of Rs 250-300 levels.

Warm up to Q2 results


Quarter two results are are almost there, and we will keep our eyes on the stocks which are undergoing expansion and have come out with good Q1, yet available at cheap valuations. Focus sector is the pharma sector (as it is in the pink of health) and here are two stock ideas:

  1. Ahlcon Parentals: The company is back to decent profitability after having some troubles in the slowdown. One must go through their latest annual report and sense the optimism in the company. The company is in the process of scaling up the capacities and they could achieve 50-70% growth in next 1-2 years. Even if they don’t scale up majorly but be back to pre-crash sales levels of roughly 50 Cr, the company could well achieve an EPS of say 8-10. CMP is just 37.
  2. Fresenius Kabi: Better known as Dabur Pharma earlier, this company is having ambitious plans for the oncology segment. Oncology sector is witnessing high growth rates and we should continue to bet on serious players in this space. Go through their annual report and one can sense the major expansions and the possible returns one can generate. Their Q1 was excellent and a consistency or improvement over Q1 can zoom the stock price.
    Share your views

Siemens Healthcare

siemens (1)

I came across this very interesting stock idea and I think we all should dig into it more and accumulate on declines.


The company was earlier known as Bayer Diagnostics. Siemens group took over this company last year.


  1. Tiny Equity capital of just 1.57 Cr hence at CMP of 1100 – Mcap of 165-170 Cr is not much considering it to be part of the huge Siemens group.
  2. The company is into healthcare sector which is bound to grow rapidly over next few years. Cos like Siemens are market leaders in this sector and can exploit the maximum potential.
  3. The turnover has already started increasing. Co has reported 75% growth till June 09 (first 9 months) and 92% growth in March Qtr (45.38 Cr vs 23.61 Cr)
  4. The profitability part is not clear due to several adjustments and may be balance sheet clean up after the takeover. But I expect the OPMs to be easily 20%+ if the Siemens group is bringing it’s expertise in this co. We should get a clearer picture in next qtr nos and annual report.

The opportunity I’m seeing is – For a group like Siemens, current size of operations & Mcap are peanuts. They can definitely scale-up big time here and create multibagger returns for shareholders.

Please dig in more and contribute with your industry knowledge on this company.