Tag: Poly Medicure

Updates from quarterly results and AGMs

“management’s indifference and shareholder negligence both worked on Warren’s behalf, for the fewer folks came to the show, the more valuable would be whatever knowledge he could wrest from the company.” – from The Snowball where WB talks on the importance of attending AGMs

Swelect AGM

There is a lot of fear in the markets and several stocks in the mid and small cap space are having a free fall. These are the great times to focus and research more on the companies to find undervalued gems.

Last month, we toured South India to attend a few AGMs. We visited Avanti Feeds, Shilpa Medicare and Swelect Energy. The meetings were good and the companies seem well placed. It is often concerning to watch a few shareholders holding nominal quantities and coming over for free gifts and snacks. Despite good arrangements and the good work by the management, these shareholders often sabotage the proceedings. We need to fix this, otherwise the promoters will never treat the minorities properly. Probably having a video conferencing of AGMs may help.

Brief updates from above meetings:

Avanti Feeds: We have discussed the company many times in past and the stock has performed well too. The industry continues to see high growth rates of 30%+ since the adoption of the new shrimp specie – Vannamei. The company is superbly placed in its sector (due to the support of TUF) and ranks among the top. The management seemed quite honest, hard working and conservative. They were one of the first to understand the potential of the Vannamei specie in India and took various steps to get it introduced. The company has grown from a turnover of just 100 Cr in 2009 to 650 Cr in 2013. Avanti seems well placed as the industry is expected to remain on a good growth path for the next few years. Continue reading Updates from quarterly results and AGMs

Lumax Auto Technologies

Two wheelers in India

BSE: 532796 | NSE: LUMAXTECH

It is usually rare to find a good company in the auto-ancillary business. The reason is that they are capital intensive and usually the margins are low and hence they provide low return on capital. However, there are always some companies which do much better than the indutry. Lumax Auto Tech seems to be one such company. The company has had a an excellent growth in past along with good profitability and strong balance sheet. Continue reading Lumax Auto Technologies

Update on Quarterly Results

Markets Cartoon

The third quarter of the financial year 2013 has generally been very weak. The common problem has been the demand slowdown and the pressure on margins due to inflation and competition. In most of the cases results have been below expectations. On the positive side, these challenging times are the best times to re-structure your portfolio. One gets to accumulate high quality ideas at low valuations, (often) due to temporary problems. The important thing is to maintain liquidity and discipline.

Starting off with the good results:

Ajanta Pharma: The company posted stellar results and the stock witnessed a strong activity and appreciation. We discussed about the company here.

The company has posted a 37% growth in the topline from 164 Cr to 225 Cr and 75% growth in the net profits from 18.50 Cr to 32.57 Cr. The results are remarkable as the growth in profits has persisted despite higher taxation. Usually 4th quarter is the best quarter for the company, hence the company may be able to repeat similar performance in Q4FY13 too. We feel investors can continue to hold and try to buy on sharp declines, if any. Continue reading Update on Quarterly Results

Sree Rayalaseema Hypo and other updates

A brief update on some of our stocks discussed before:

Sree Rayalaseema Hi-Strength Hypo (BSE Code – 532842, NSE Code – SRHHYPOLTD): We had discussed about the company’s expansion plants earlier. In the September quarter, the company has reported a good growth of 27% in turnover and the stock looks quite cheap, if it is able to maintain this growth in up-coming quarters (which is should cause of the recent expansion).

The company is operating in a niche area of water treatment chemical – Calcium Hypochloride and it’s the only Indian company doing this work. The company has healthy operating margins of about 19-20% and the business requires little working capital. The valuations seem quite attractive as the stock is trading at a PE of just 3.5 times and the Price to Book Value of only 0.50. We feel it’s a value pick at these levels.

Negative – The promoters have been increasing stake by doing preferential allotment and merging of group companies.

Continue reading Sree Rayalaseema Hypo and other updates

Poly Medicure – Dream Run

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:

  • Look for companies whose end product has ever increasing demand. In the case of Poly, the medical disposable space has a great future.
  • Look at crucial ratios like – High Operating margins, consistent growth, High ROCE. Poly has had very good operating margins in the range of 18-20%, consistent growth of 25-30% and consistent ROCE of 25%+ hence the company has been able to scale up quickly majorly from internal accruals.
  • Look for young, dynamic and ambitious management.
  • Buying into a quality company at cheap valuations is a sure shot multi-bagger thing 😀

Best articles during the week

“I read about eight newspapers in a day. When I’m in a town with only one newspaper, I read it eight times”. – Will Rogers

Most of our investment ideas come small corners of the daily newspapers or the weekly magazines (or some interesting blogs). We often come across some interesting articles feeling an urge share with our readers too. So we will often compile (mostly weekly) these interesting articles and share the same here.

1. Gas Sector – Huge Potential ahead

It was an interesting article in Business World magazine on the Gas Troubles in India and the potential ahead. “9% Energy needs met by gas in India, while 24% is the world average”.

Arundhati Prasad, 36, who lives in the outskirts of Patna, has to queue up in front of a liquefied petroleum gas (LPG) agency’s office to get a cylinder of gas. Now compare Prasad to Mohammad Ali Bhatti of Dera Baba Bhuman Shah village in Pakistan’s Okara district: in addition to the gas used for cooking in his kitchen, everything from the refrigerator to lamps in the Bhatti home run on natural gas.

india_energy_pu

Read complete article here.

There are various charts, tables which provide a lot of understanding on this sector.

2. India’s Best Market Minds (19th March ‘ 10 Issue of Outlook Profit)

It was a really good compilation by Outlook Profit with the warm interviews of the “India’s Best Market Minds” including Jhunjhunwala, Sanjoy Bhattacharya, Prof. Sanjay Bakshi and many more .

While all the interviews are not available online, you can read the interview of Prof. Sanjay Bakshi and Abhay Aima online.

3. Poly Medicure Media Updates (in Business Standard, Hindu & Financial Chronicle)

We have discussed on this company couple of times here and here. The stock has been doing well and getting attention of investors.

The company has provided some updates in the media recently about the expansion plans.

4. India Motor Parts & Accessories Ltd (IMPAL) – by Siddharth Shukla

Siddharth has done a good detailed work on the stock. IMPAL has come out with good Q4 numbers and the stock shot up by 20%.

We will be sharing more interesting articles and blog posts regularly.

Also, we have come upon with a new commenting system powered by Disqus to have more better conversations. So, do leave a comment and feel free to share your favorite articles.

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.

Poly Medicure

P/E Comparison

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 company has grown at a CAGR (Compounded annual growth rate) of 30.75% over last 10 years. (From turnover of 10 Cr in FY 2000 to 112.22 Cr turnover in FY 2009)
  • The company is expected to grow at 20% YOY (Year on year) for next 2-3 years. This year the company is expected to do a turnover of 135 Cr with a net profit of 15 Cr, thus implying an EPS of 27.
  • The CMP of 200 discounts the immediate EPS of 27 by just 7.5 times.

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

  • The company has won series of patent infringement cases against major B Braun, after which the company is free to sell the advanced IV Safety Cannulae with the inbuild safety feature (http://www.expresshealthcare.in/201002/market26.shtml). This product has potential to sell at a very remunerative price in the developed nations.
  • The company has been strengthening its sales network on the domestic front and tying up with major hospitals.
  • The company is looking to expand its capacities and targets to double turnover in next 3 years. For they same they are also looking to put up a new factory.

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.