We have been tracking this company for few years and we like the way the company has performed in the last 2-3 years and yet remains ignored and undervalued. We feel it’s a good pharma company to make a part of portfolio.
Smruthi Organics is a small sized pharma company based out of Solapur, engaged in manufacturing of APIs, drug intermediates, specialty chemicals & contract manufacturing. Continue reading Smruthi Organics Ltd. – BSE Code: 590046
We had discussed about Poly Medicure and their plans to become a major global Medical Disposable player. The article highlighted about their expansion plans ahead and target to be a 300-400 Cr company by 2013. We had discussed the stock @ Rs 100 (adjusted 1:1 bonus) and the stock price has tripled to Rs 315 in just 10 months!!
So what does the stock hold for existing investors?
The company is expected to post a turnover of 170 Cr+ this year with an EPS of 18-20.
As the stock has given multi-bagger returns and valuations are not cheap anymore, one should do partial profit booking at these levels and explore our other ideas. For long term perspective, the stock still holds value as the company is a leader in the healthcare field where the potential is unlimited. Its not easy to find such good companies again. The company is on a growth path and has lined up several expansions.
We have been holding this stock for few years and had lot of faith on the future potential of the company and quality of management. Few important learning from this investment:
Shilpa Medicare has made a new high at 345 today. We had initially discussed the stock on our blog here on 26th July, 2009 when the price was Rs 80. Hence the stock has given a gain of 331% in less than 1 year :). The stock is now a 10 bagger from March lows.
The stock has been witnessing a lot of fund action, Reliance Capital has bought 4.50 lac shares yesterday @ 285. Earlier ICICI Prudential had bought 9 lac shares.
The interest in the stock is logical due to the fantastic financial performance of the company and the bright prospects ahead. The Oncology business will remain to be the fastest growing segment for next 4-5 years and Shilpa is the largest standalone (not for captive use) Oncology API manufacturer in India. The company targets to be a 500 Cr turnover company in next 2 years.
Such successes are possible only due to active participation, discussion and feedback of our readers, investors and friends. Look forward to you support and views.
Regards,
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.
Poly Medicure is one of our favourite small cap stock which has carved out a niche for itself and has grown well over the last few years.
The company is the one of the biggest exporter of IV Safety Cannulae and other healthcare disposable products. This business segment is always growing and with development of better medical facilities, this segment should grow faster.
Few worthy points:
The last two quarters have been very good due to the backward integration efforts of the company done in the last few years and hence the company may be able to sustain operating margins around 20%.
Recent Developments
Challenges:
Being a high volume low price product, the scaling up of the business is not easy. The company has been trying to develop new products to overcome the same.
Here is a company with strong financials, good business model, high margins, good return on equity, good cash flow yet available at less than 8 PE.
“Its’ the work on your desk…It’s the work on your desk. Do well with what you already have and more will come in.” – Charlie Munger
Dear Friends,
This post is to bring an update and review of all the stocks discussed till now.
Performance till now:
| S.NO | SCRIP NAME | Date of Recommendation | Price of Recommendation | CMP | Percentage Returns | Remarks |
| 1 | CHI Investment | 11-05-2009 | 25 | 45 | 80.00 | Exit was advised earlier at higher price |
| 2 | Shilpa Medicare | 26-07-2009 | 93 | 239 | 156.99 | Hold |
| 3 | Jaihind Projects | 02-08-2009 | 95 | 173 | 82.11 | Hold |
| 4 | Albert David | 25-08-2009 | 75 | 119 | 58.67 | Book partial profits |
| 5 | Siemens Healthcare | 14-09-2009 | 1100 | 1270 | 15.45 | Exit was advised earlier |
| 6 | Ahlcon Parentals | 28-09-2009 | 37 | 47 | 27.03 | Hold |
| 7 | Fresenius Kabi | 28-09-2009 | 80 | 120 | 50.00 | Book partial profits |
| 8 | Majestic Auto | 22-10-2009 | 68 | 62 | -8.82 | Hold |
| 9 | Suprajit Eng | 26-10-2009 | 90 | 155 | 72.22 | Hold |
| 10 | IST Ltd | 16-11-2009 | 100 | 140 | 40.00 | Buy |
| 11 | Manjushree Technopack | 18-11-2009 | 32 | 46 | 43.75 | Hold |
| 12 | Asian Hotels | 01-12-2009 | 425 | 508 | 19.53 | Buy on declines |
Individual Updates:
1. Shilpa Medicare: This stock has been a wealth-creater. The company has yet again posted excellent Q3 nos. Based on the same, the future looks bright and the stock is getting the attention of bigger investors (Read: ICICI Prudential mutual fund 🙂 ). On repeat or better financial performance, the stock has potential to reach 350 levels.
2. Jaihind Projects: The company has been doing well. As per a recent ET article, the co has to complete major projects by mid this year. One should continue to hold.
3. Albert David: This stock was picked as more of a value pick to park idle funds. One can consider booking partial profits.
4. Suprajit Engineering: The company has come out with excellent Q3 nos. The stock has also done well. To reward the shareholders, the management has proposed 45% interim dividend, 1:1 bonus and stock split. Though a bit aggressive than required, all these developments can take the stock to higher levels.
5. IST Ltd: As per the recent updates, the construction activities are going at good pace and co has built almost 10 lac sq ft of space. Leasing out of the same in due time will be a very positive development. If things keep going as per the plans, the stock has all the potentials of becoming a multi-bagger.
6. Manjushree Technopack: We have been providing updates in other threads.
7. Asian Hotels: Usually demergers create lot of shareholder wealth. So one should remain invested and look forward to buying on declines.
We are trying to bring some new picks from the Q3 nos. In the meanwhile some of my other favourite cos have come out with very good numbers and investors can consider them for investing: Balkrishna Industries & Poly Medicure.
I came across this very interesting stock idea and I think we all should dig into it more and accumulate on declines.
Background:
The company was earlier known as Bayer Diagnostics. Siemens group took over this company last year.
Positives:
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.
The company has come out with very good June Qtr nos and deserves a closer tracking.
About the company and the business:
On Financials:
Why I like the company:
Valuations:
Annexure 1:
| Year |
200303 |
200403 |
200503 |
200603 |
200703 |
200803 |
200903 |
201003 |
| Type |
Full Year |
Full Year |
Full Year |
Full Year |
Full Year |
Full Year |
Full Year |
Full Year |
| Sales Turnover |
24.11 |
35.66 |
37.51 |
47.62 |
68.39 |
95.81 |
138.09 |
200.00 |
| Other Income |
1.78 |
0.73 |
1.12 |
1.27 |
2.36 |
2.52 |
0.90 |
|
| Total Income |
25.89 |
36.39 |
38.63 |
48.89 |
70.75 |
98.33 |
138.99 |
200.00 |
| Total Expenditure |
23.68 |
30.88 |
32.79 |
40.58 |
56.79 |
77.22 |
102.00 |
|
| Operating Profit |
2.21 |
5.51 |
5.84 |
8.31 |
13.96 |
21.11 |
36.99 |
50.00 |
| Interest |
0.29 |
0.46 |
0.31 |
0.39 |
0.32 |
0.85 |
4.92 |
7.00 |
| Gross Profit |
1.92 |
5.05 |
5.53 |
7.92 |
13.64 |
20.26 |
32.07 |
43.50 |
| Depreciation |
0.30 |
0.82 |
1.00 |
1.77 |
2.30 |
3.51 |
6.05 |
9.00 |
| Extraordinary Adj |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
10.85 |
0.00 |
| Tax |
0.63 |
1.74 |
1.24 |
1.88 |
3.48 |
5.44 |
8.39 |
9.00 |
| Reported PAT |
0.99 |
2.49 |
3.29 |
4.27 |
7.86 |
11.31 |
6.78 |
25.00 |
| EPS |
0.74 |
1.85 |
2.40 |
2.46 |
4.53 |
5.32 |
3.08 |
11.35 |
| PE |
12.00 |
|||||||
| Exp Price |
136 |
|||||||
| CMP (26-Jul-09) |
95 |
|||||||
| OPM % |
9.17 |
15.45 |
15.57 |
17.45 |
20.41 |
22.03 |
26.79 |
25.00 |
| NP % |
4.11 |
6.98 |
8.77 |
8.97 |
11.49 |
11.80 |
4.91 |
12.50 |
| Mcap |
209.24 |
|||||||
| ROCE: |
21.73 |
39.54 |
29.53 |
17.61 |
21.34 |
12.21 |