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29 Jan, 5 tweets, 2 min read
#Lauruslabs – PE expansion inevitable…

Henceforth, every qtr will post better nos than preceding qtr…story will continue for next 8-10 qtr..It will have EPS of 18/27/35 for FY21/22/23..almost 100% growth in next 2 years with much higher contribution from CDMO, biologics and
Non-ARV API and formulations…Current RoCE of 40%..should remain above 30% for next few years..

PE expansion is inevitable…

#Lauruslabs concall takeaways
- Strong focus on growing Non-ARV business. Future growth drivers are CDMO, Biologics, Diabetes, Cardi-vascular.
- CDMO and Biologics have much bigger opportunities
- Currently working in only oral solids..will get into other dosage forms subsequently..
Big contract from EU player in Diabetic for API and formulations..to start from FY23
- First FTF will start FY25, even without that business have strong growth visibility for next few years..
- Dolutegravir market share increasing..its low volume high price product..(My view – Process Innovation playing a role…LL has patented low cost process for it)
- Doesn’t see any threat from long acting injectable in HIV…it won’t come under WHO guidelines before 2025, whenever it comes, LL will be part of the disruption. Already developed the API, will develop formulation as well..

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More from @jeevanpatwa

jeevan patwa Profile picture
30 Jan
#Lauruslabs ARV - Cash machine

People are very critical of ARV business of Laurus but it has the best dynamics for Laurus. Unlike other APIs (Paracetamol, Ibuprofen, Azithromycin, Metformin etc.) where there are more than 20-30 players globally,
ARV has only 6 players (only 4 serious players – Mylan, Laurus, Auro and Hetero) globally with Laurus being world leader. This leadership has come from years of research and process innovation. It is the lowest cost producer in the world for these APIs.
The beauty is, it has become a cash machine for Laurus now, throwing enormous amount of cash which is now being deployed to expand other businesses like Biologics, CDMO and non ARV API and formulations.

API capacity growing by 30%, formulations by 100% which will be all non ARV
Read 4 tweets
jeevan patwa Profile picture
13 Jan
#MSTC – With and without #Scrappagepolicy

Scenario 1 – No Scrappage Policy

As promised by management, MSTC will be able to clean up the balance sheet by Sep’21. Trading business is already closed. FSNL divestment has started by DIPAM.
Post Sep’21, MSTC may have around 800 crs cash (assuming 300 crs proceeds from FSNL) in the BS, Rs 115 per share..

It will have E-Comm as the only business with multiple opportunities which are detailed in the note attached below..
Ex cash RoCE will be 50% plus with growth rate of 15-20% for E-Comm business with 250 crs topline and 100 crs PAT (excl. other income) for FY22. Estimated EPS of Rs 15 for core E-comm business.

At 15x PE for core E-Comm value = 15x15 + 115 = 340…
At 20x, it would be 415..
Read 7 tweets
jeevan patwa Profile picture
25 Dec 20
#Suven – Journey of my first 50 bagger…

I bought #Suven first in Apr 2013 around Rs 20…today after almost 7.5 years, its Rs 1000 (Suven pharma 920 adjusted for bonus + Suven Life 80)..CAGR of almost 68% for 7.5 years. I am fortunate to hold it throughout the journey and

1/n
add on multiple occasions on way up. Like to share my experience in this thread for everyone’s benefit..

First time I bought because I like the management focus on R&D. It had chosen the most difficult therapeutic area in pharma which is CNS and it was investing the cash

2/n
flow it used to earn from CRAMS. It also used to write off all the R&D expenses in the P&L instead of capitalizing it in BS. That gave me lot of comfort about management quality.

I kept on adding as funds keep coming. I remember giving a public presentation on Suven in

3/n
Read 10 tweets
jeevan patwa Profile picture
15 Dec 20
#SuvenLife – Niche R&D play..very high risk and very high reward…key is right allocation…

Jazz Pharma was quoting around $0.5 in 2009, today its $150 and Mcap of $8.5 Bn on Nasdaq..almost 300x in 11 years. 80% of its total sales ($2.1 Bn) come from single drug Xyrem.
Axovant Lifescience, bought Alzheimer molecule from GSK, repackaged it and done phase-3 trials. Before starting the trials, the valuation was $2 Bn, just before announcing the data, it rose to $3 Bn. One of the leading broker put the target of $12 Bn if the trials succeeded..
but it failed in phase-3 trials. Current Mcap is $120 Mn…

This is R&D for New Chemical Entity (NCE)…very high risk and very high reward…

Brain-related illnesses, also known as CNS diseases, afflict more than 2 billion people worldwide. Diseases of the brain and mind range
Read 12 tweets
jeevan patwa Profile picture
1 Nov 20
Suven Pharma – Becoming more relevant for customers…

“Crucial alliances were forged. Important investments were made. Strong associations sustained. We chose to widen our canvas. Heighten our vision”
“There is no API as of today. But we can manufacture APIs if our customers desire so”

“There is only one formulation as of today. Creating a basket of formulations for our CDMO customers could be an opportunity”
--- This is where Suven Pharma is moving to become more relevant for its customers…

It is only the penultimate intermediate until now. But straddling the phama value is the new customer mandate. Suven will be taking more wallet share of the customer by supplying the
Read 10 tweets
jeevan patwa Profile picture
30 Oct 20
Laurus Labs – A process Innovator and a CRAMS player – deserves much higher multiple

With more than 100 process patents on his name, Dr Chhava has created a sustainable competitive advantage for Laurus Labs. Similar to drug innovator enjoying 15 years patent protection,
Laurus enjoys patent protection for its economically viable and innovative processes for different APIs like Efavirenz, Tenofovir, Dolutegravir, Metformin, Ivacaftor and many more..

Laurus developed novel and cost effective process for Efavirenz which reduced the cost by 50%...
Similar thing repeated when newer HIV regimen, Dolutegravir came into effect..Laurus developed its own proprietary novel and cost effective process for it..it is one of the few players having approval for TLE400...It has got process patent for Metformin where it can be
Read 9 tweets

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