Disclaimer – Below Analysis is NOT a BUY/SELL/HOLD Recommendation. It is for educational purpose and it can be used for educational purposes further. There could be lot of things which might have been missed in my analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
Supriya Lifesciences– CMP 386 (Dated 24-02-2022)
Supriya Lifescience Limited got incorporated in the year 2008 and became one of the key Indian manufacturers and the supplier of APIs.
Business —
Supriya sells 38 API focused on the diverse therapeutic segments, along with being the largest exporter of Chlorphenamine Maleate, Salbutamol Sulphate, Ketamine Hydrochloride and Esketamine from India.
Supriya Lifescience is a pioneer in segments like antihistamine, analgesic, anesthetic, vitamin and anti-asthmetic and anti-allergic.
Region of operation—
Company is focused on regulated markets and company is more export oriented with 77% revenues coming from exports
FY22
END USER INDUSTRIES — Kind of evergreen and growing industries in coming decade
Antihistamine
Anti-allergic
Anesthetic
Antiasthmatic and
Vitamin therapy
Moats —
Backward integrated business model with well established presence in the API manufacturing, with focus on high value products with limited competition. Backward integration of top 12 products generating 67% of revenues thus de-risking many issues on supplies, pricing
Niche product basket of 38 APIs across diverse therapeutic segments
Advanced manufacturing and research and development capabilities with ability to handle complex chemistries across varied chain of reactions
Strengths
Pioneer in segments like antihistamine, analgesic, anesthetic, vitamin and anti-asthmetic and anti-allergic and clear leader in top three products having more than 50% share
Diversified export profile –Exports to 86 countries
Global clientele with long standing relationships on the back of consistent product quality & reliability of supply
Diversified therapeutic categories
USFDA, EUDQ, EUGMP, NMPA, CEP grants and approvals in place
Experienced senior management team and qualified operational personnel with new generation started in company already
Shareholding
Promoter has sufficient skin in game with holding ~68% and other prominent players in DII/FII holding 18% more leaving only 13-14% to general public
Getting portfolio derisked and adding more categories which are complementing existing therapies
Expansion of manufacturing capability and capacity, scaling of existing molecules and addition of new products
Entering CDMO space
Growth in European region
Q4FY22 inputs from company
Risks (tried to see major risks, please do due diligence to understand more on this part)
Company earnings are quarter dependent with some quarters showing better growth than other quarters, it will take company few years to balance this up and down quarters with new products filling up
Risks associated with pharma companies on USFDA etc. kind of approvals
Any delay in CMO, CDMO projects ramp up which is expected by Q2FY24 (Aug-Sep 2023)
Any delay in ramping up Amber Nath facility (expected Dec2022)
Any sell off by FII/DII can lead to quick price erosion
Financials
Company is showing Good revenue growth with increasing Gross margins and reducing Debt to equity profile
Valuations —
Current valuation look to factor in immediate growth for 1-2 quarters but if we keep our horizon long and vision as shared by company, then valuations seems reasonable (estimated PE of 16-19 Q1FY23E with CMP 386). Increasing capacity utilization and profitability can lead to rerating of company
Your strategy can be different than mine. Your selection of company might be different than mine. So lets not be a BLIND FOLLOWER
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It is for educational purpose and it can be used for educational purposes further. There could be lot of things which might have been missed in my analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
Disclaimer – Below Analysis is NOT a BUY/SELL/HOLD Recommendation. It is for educational purpose and it can be used for educational purposes further. There could be lot of things which might have been missed in my analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
Tatva Chintan– CMP 2520 (Dated 3-feb-22)
Incorporated in 1996, Tatva Chintan Pharma Chem Limited is a specialty chemicals manufacturing company. It is engaged in the manufacture of structure directing agents (SDAs), phase transfer catalysts (PTCs), electrolyte salts for super capacitor batteries and pharmaceutical & agrochemical intermediates & other specialty chemicals (PASC).
Business —
One of the leading producers with entire range of PTCs in India and one of the key producers across the globe
2nd largest manufacturer of SDAs for Zeolites globally and the largest commercial supplier in India
TCPCL is the largest producer of Glymes in India and third largest in the world.
Largest producer of electrolyte salts for super capacitor batteries in India
END USER INDUSTRIES — Growing industries in coming decade
Pharmaceutical API’s
Flavors and Fragrances
Agrochemicals
Environment Control Processes -NOx removal
Automotive – Catalytic Converter – Emission Control
Petrochemicals – Cracking crude
Automotive Transport & Infrastructure
Electric Vehicles
Consumer Electronics
Renewable Energy
Grid Balancing
Paints and coatings products
Li Battery
Detergents and personal care products
Moats —
TCPCL is one of the few companies globally that uses Electrolysis process in organic synthesis. Advanced chemistries in process and for commercial development, manufacture and approvals, it takes 1-6 years for new players to enter this field.
In many of the segments, it is amongst top five players
Strengths
Considering the wide range of applications of our products, TCPCL can cater to customers across wide spectrum of Chemical Industries which ensures a sustainable business model. Diversified product portfolio has helped accelerate growth and in innovating and thus retain both new and existing customers
Diversified esteemed clientele
Necessary certifications in place : ISO 9001:2015 ISO 14001:2015 BS OHSAS 18001:2007
Advantages of Electrolyses
Electrolysis is considered as a ‘green’ chemistry process wherein apart from a single starting raw material, the process largely uses only water and electricity
Since no additional solvents or other chemicals are used, it is a safe chemistry
It has minimum requirement of auxiliary substances
The process enables faster output and Higher Purity
By deploying electrolysis, the products achieve the lowest possible process mass intensity
Region of operation
The company exports most of its products to over 25 countries, including the US, China, Germany, Japan, South Africa and the UK.
It reduced % revenue dependency on top 10 customers from 60% to 47%
Shareholding
Promoter has sufficient skin in game with holding ~79% and other prominent players holding 10% more
Getting into EV domain with supercapacitor batteries and new horizon opening up faster than anticipated
New versatile product development in Continuous flow chemistry us also capable in other applications including EV
Comfortable Leading market share in almost all operating domains
Mindset of accepting which projects
Risks (tried to see major risks, please do due diligence to understand more on this part)
Delayed expansion –currently scheduled for Nov 22
Delay in semiconductors supplies impacting SDA in FY23 as well (current anticipation is till FY22)
Slow ramp up of electrolyte salts than projected
Approvals for new PASC delayed
Increase in raw material and frieght costs is already impacting margins, further increase will hurt next two quarters badly in terms of margins if it happens ( Q4FY22, Q1FY23)
Valuations —
They have to be seen in terms of huge growth runway available but current valuations don’t give that comfort to take large positions with risks on execution and inflation
Looks better to give time to company and see how it performs and keep accumulating in background in small tranches. That may work.
Your strategy can be different than mine. Your selection of company might be different than mine. So lets not be a BLIND FOLLOWER
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It is for educational purpose and it can be used for educational purposes further. There could be lot of things which might have been missed in my analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that
Ami Organics IPO-Incorporated in 2004, Ami Organics Limited is one of the leading research and development driven manufacturers of specialty chemicals.
Business — The company manufactures different types of Advanced Pharmaceutical Intermediates and Active Pharmaceutical ingredients (API) for New Chemical Entities, and material for agrochemicals and fine chemicals. The company has developed over 450 pharma intermediates across 17 key therapeutic areas i.e. anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant, and anti-coagulant.
Region of operation –Company caters to India and in 25 countries overseas i.e. Europe, USA, China, Israel, Japan, Latin America
Offer purpose — The IPO includes an OFS portion of ₹370 crore and a fresh issue of ₹200 crore. The fresh issue proceeds will be utilised to lower the debt of ₹140 crore (from a recent acquisition) and shore up stretched working capital requirements of the company (₹90 crore).
Risks —
High concentration of revenues from few clients
Export oriented risks
Strength
Leading global market share for some of intermediaries
Strong R&D, sales and marketing capabilities
Consistent financial performance track record
Long term contracts for most of exports with price escalation clauses
Strong relationship with customers over long ter
Future
The strong growth anticipated for Ami Organics, drawing from its product and client profile and strong pipeline presents a good future prospects
Valuations
Valuations are matching considering peers but look reasonable
Should we apply?
People can subscribe for long term only
Add more if it dips below issue price keeping long term horizon mindset
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
ALPHA AFFAIRS 