#IBullreal – top pick in the sector. Brand, Balance sheet, execution and access to low cost funds will drive value for the combined entity

Post merger, #Embassy will own 45% and Blackstone 10%. This will create institutional platform for investment in real estate sector and
combined entity will be one of the largest real estate companies in India.

In terms of valuation, 18000 cr net surplus, 2000 acres of land valued around 8-10 crs per acre, 1400 crs SEZ land, 42 Mn sq ft commercial space (potential of generating 4200 crs rentals) available at EV
of # 15000 crs. More importantly, with Embassy+Blackstone brand, execution capability and access to institutional money will re-rate the stock to earnings based multiple rather than asset based valuation.

Concerns –
-If Merger doesn’t happen – Currently only NCLT approval is
pending which is expected to complete by Feb 22. In worst case scenario, even if merger doesn’t materialize, operating control will remain with Embassy as it holds 14% while Mr Gehlot 11% in the company

-Mr. Gehlot sold in the market in Mar 21 – this was to raise 200 Mn GBP
which was used to buy assets from the company and reduce debt

-Concentrated commercial holding in Banglore (42 Mn sq ft) – Banglore has seen 17 Mn sq ft sale of commercial real estate at the peak. Currently Blackstone, Embassy REIT and Embassy are top 3 players in Blore
commercial space. Ticket size also gone up from 0.5 Mn sq ft to 1.5 Mn sq ft recently

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More from @jeevanpatwa

7 Jul
#RealEstate – story of structural reforms. Brand, Balance sheet, Execution and access to low cost funds will drive the value

Last 8-10 years, real estate sector faced multiple challenges with huge inventory build-up, demand slow down, liquidity crunch, drying source of funds..
Sector has given very lackluster performance for these years, but dynamics are now changing with reforms done by the government like GST and RERA. Demonetisation was actually negative for the sector in the short run but for long term, it proved to be a boon.
These structural reforms cleanup the sector with 70% competition gone, market share shifted from unorganized to organized players.

Brand, Balance sheet, Execution and access to low cost funds will drive the value in the sector henceforth.

Customer preference has shifted from
Read 6 tweets
12 Feb

My analysis after Concall
-ANDAs contribution to PAT was zero in FY20. It will be biggest growth driver for company with 5 already launched and 6-7 getting launched next year. Company working on one 505 b(2) opportunity which can materialize after Mar 22..
this can be large opportunity..Overall I estimate ANDAs to contribute 200-250 crs PAT in next 3 years..
-Rising pharma contribution was 46 crs in FY20. With company out of bankruptcy and 100+ ANDAs pipeline, PAT contribution will keep rising..
-CDMO pharma will have growth drivers in the form of 1-2 commercial molecules in next 18-24 months and moving from intermediates to API and formulation. Management said they are talking to 2 large customers on these lines
-CDMO non pharma has 2 molecules currently, 2 more will
Read 4 tweets
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
Read 4 tweets
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
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
Read 5 tweets
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

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