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jeevan patwa

@jeevanpatwa

11 Feb

#MSTC results - right way to look at these numbers is to add back provisions to PAT and then compare. If add provisions to PBT and then take tax rate as 33%, your number will match with the reported tax.

Provisions relates to cash and carry business which has been stopped

a year back. There was around 120 crs of provisions related to that. I wish it should write off everything once for all so that it can start next year on a clean slate..

Only negative according to me is no Q-o-Q growth in e-comm revenue which I was expecting due to higher

realisations during the qtr.

Its your call to hold or sell..this is the story of future... If you want to play on scrappage policy then #MSTC is biggest beneficiary...provision write off was due and may happen in Q4 again but I hope from next year...things will look different

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jeevan patwa

@jeevanpatwa

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

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jeevan patwa

@jeevanpatwa

29 Jan

#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

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jeevan patwa

@jeevanpatwa

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..

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jeevan patwa

@jeevanpatwa

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

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jeevan patwa

@jeevanpatwa

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

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