Thread by @drprashantmish6

#Everest Organics Ltd
This company caught my attention when i saw the news of remdesivir API development by it
CMP 283 -
MCAP- 225 Cr
Promotors holding- 73.79%( Increasing )
BV-42
ROE (FY20)-33.63,
ROCE 35.30

Debt 15 cr

FY 20 EPS 13.62,
LAST q EPS 4,47
CFO –positive

Negatives-
1-Very low float which can be dangerous and once you are stuck then you wont able to sell it ( so not a safe investing – be careful )

2-in past plant was shut down because of some pollution related issue and with a single plant it can happen again then it may be a disastrous investment.
3-Trade Receivables 40 to 44 cr ,trade payable 49 to 56 cr

4-Some transaction on arm length basis i could not understand ( probably received by company)
5-Gratuity provisions made for Rs. 82.03 lakhs, payment made to the Gratuity Fund is Rs. 35.00 Lakhs only
( very unusual- when Company is generating cash flow )

POSITIVES - ( in covid epidemic this word positive looks very dangerous)
1- USFDA approved API facility in Hyderabad manufactures and exports various APls products to more than 40 countries as well as caters to local demand in market in India

2-Director is a Doctor ( anaesthetist ) and his daughter is also a doctor ( no Successor issue )
3- Good R&D- although small company but still they developed API like Remdesivir and OSELTAMIVIR ( Tami flu antiviral )

4-Everest is having 15% of global prazole market share ( Omeprazole, Esomeprazole, Pantoprazole,Rabeprazole ) these are all drugs for acidity relief and very commony used and with problems related to ranitide, uses of all those API will increase.

5-Other APIs are Fenofibrate ( to reduce triglycerides ) Itraconazole (for fungus infection), Rivaroxaban ( used in vein clot formation )and Febuxostat( used for gout)
- Along with APIs they are manufacturing intermediates also for their APIs

6- Enhanced focus on anti-viral segment, Oseltamivir (under commercial stage) and Remdesivir just developed

7-Recently it got Enviromental clearance for 3X expansion in capacity.

8- Future plan is to develop immunity booster and and vitamins

9-Their plant is situated in 33 Acres of land and only 10 acre of land is covered by manufacturing infrastructure , so i think for expansion they don’t need to buy new land .

10-Last two years company started paying dividend .

Although its a very high risk investment but i like taking risks so my intention is to buy it between200-230 with long term horizon with , in case of any negative news i will sell it.
Again reminding that it’s a high risk.

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