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Prasad Wakchaure, PhD 🇮🇳 🇸🇪 Profile picture
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24 Jul, 8 tweets, 2 min read
A company was a biggest wealth creator between year 2013-17, stock price moved 60x. Went into downtrend/consolidation for 4 years, now trying to move up.

Summarizing some reasons how this break out is supported by fundamentals.

A thread on #Caplin #CaplinPoint
What has changed in last 4 years?

Criticism on cash flow seems well addressed in FY2021. Biggest positive thing I see.

Management Walk the Talk: Top line of 2015 becomes bottom line of 2021

Company have always grown exponentially without taking any debt
Last 5 years, company have done Capex of 800 Cr and still managed to remain debt free

300 Cr ongoing Capex: 160 Cr for Oncology segment, 100 Cr for API backward integration

Spent 275 Cr in R&D last 4 years

Scientists count increased by 3x to 300+ Big positive sign for future
470 Cr cash despite ongoing expansions

Company aspires to grow faster than industry average

Focusing on products which are in continuous shortage in US markets

Establishing fully integrated value chain from KSM to API to Formulation to Online retail sale.
Though online retail sells will contribute less, other segment will led them to fetch even higher margins.

Remember, only low cost producers survive over longer run.

Clean USFDA/EU records past 4 years. Launched 8 products in US.
Eying niche injectables & ophthalmic products in US

3x Capacity expansion in Sterile plant & backward integration of API for US market is coming online in 4-6 months

Capacity expansion will let them serve 3 billion USD market size over current 700 million USD. Big scope.
I think with all the Capex towards backward integrations & number of product launches in US & other regulated markets, company will fetch industry leading margins in near future.

I think it's rerating candidate.
My Earlier thread

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More from @PrasadWakchaure

Prasad Wakchaure, PhD 🇮🇳 🇸🇪 Profile picture
9 Jul
Thread on #PDSMultinational A unique platform business model in the Textile sector.

The company design, souces & finace all kinds of textiles from 540 unorganized Asian manufacturers and supply to branded players in EU-USA. That's the platform business
The company started its own manufacturing in Bangladesh, India, and Sri Lanka. Doubling their Bangladesh capacity this year. #Dixon of textile in making.

Company finance & help debottleneck their sourcing partner, thus increase efficiency and reduce cost & time
Company operates three segments: Design-Sourcing, Manufacturing & Financing

OPM has improved from 1% to 5% in the last 5 years, which suggests the company is now well established

The company reduced debt by 260 Cr in last year
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Prasad Wakchaure, PhD 🇮🇳 🇸🇪 Profile picture
16 Jun
Recently bought #GlobusSpirits. I see good value in this counter, can give multifold returns in 2-3 yrs.

Broad summary:

1. The company has paid off 110 Cr debt in 4 years
2. Debt reduced from 252 Cr to 142 Cr
3. Doubling the capacity from 140 to 280 KLPD in WB
4. Paying debt & increasing capacity- very good sign
5. Currently running at 100% Capacity
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8. Present across the value chain
9. Supplier of hand spirit to FMCG player
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11. Huge scope to grow in franchise bottling
12. Globus today stands where #RadicoKhaitan was 4 years back (7x rise in market cap).
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Prasad Wakchaure, PhD 🇮🇳 🇸🇪 Profile picture
13 Jun
Ammonia is set to become World’s another renewable fuel. Sounds interesting? Thread.

Renewable fuels & energy storage solutions are the buzzing trends of the world. Increase in Solar & Wind energy harvesting efficiency have changed all the energy dynamics.

#Deepakfertilizer
This is disrupting many traditional businesses and impacting human life positively. Technology is accelerating & facing the change is life.

An ammonia molecule is composed of one nitrogen atom and three hydrogen atoms & mostly was used in making urea fertilizer.
With the emerging new application of ammonia as a green fuel, there is a possibility of World facing ammonia crunch and hence can give pricing power to the manufacturers. 180 Million tons of ammonia is made annually, 40% of plants are old. China is the largest producer.
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Prasad Wakchaure, PhD 🇮🇳 🇸🇪 Profile picture
15 Aug 20
Great news from #Lupin for Phase 3 data on #Solosec for Trichomoniasis. Its supplemental New Drug Application (sNDA). Solosec is currently approved by the FDA to treat bacterial vaginosis (BV) in adult women, so no safety concerns. FDA would look for good efficacy data (1)
Firstly, no new antibiotics are discovered. Humans are under a continuous threat against microbes. Solesec is developed by Symbiomix Therapeutics, Lupin bought it in 2017 for $150M

In the trial, 92% of patients achieved the primary endpoint versus 1.5% in the placebo group (2)
The cure rate was 95%(56/59) for Solosec versus 1.7% (1/60) for placebo. Well-tolerated, no serious adverse events were observed in the trial.

If approved, can get 10-year exclusivity. This is big. Most of the topline goes to the bottom line in patented drugs (3)
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Prasad Wakchaure, PhD 🇮🇳 🇸🇪 Profile picture
12 Aug 20
Few API players showed a sudden jump in profit margins in the gone quarter. I am trying to connect the dots by comparing COVID affected the first half of 2020 with 2018 when China was cracking down pollution from end of 2017. This has led to similar supply chain disruption

(1)
during 2018 in polluting chemical industries. The companies like Sadhana nitrochem, HEG/GI, Mangalam/Kanchi were the few to name Indian players who got benefited. See the share price of these companies after the end of 2017. The situation changed and afterward supply chain

(2)
became normal & stock prices have gone down.

Coming to 2020, the Wuhan region in China which is a chemical production zone was affected due to COVID from mid-January. 70% Indian API & raw material comes from China, and switching on-off is not that quick in the

(3)
Read 12 tweets
Prasad Wakchaure, PhD 🇮🇳 🇸🇪 Profile picture
3 Aug 20
My Thread on #CaplinPointLab

Sales Growth 3 years CAGR 40%,
Profit Growth 3 years CAGR 56% but

Stock price 3 years CAGR -14%!

Do you see value?

Because 10 Year Stock CAGR is 67%.

The company has grown from 15 Cr Mcap in 2010 to 3500 Cr today with negligible debt.
Always expanding through internal accruals. Negligible debt between 2011-15 and debt-free from 2015.

This is a well-known multi-bagger of last pharma bull run till 2015.

So let's focus on what has changed in the last 5 years when stock corrected to half from peak. (2)
Key transformations in last 5 years:

1. Entered regulated market in 2018 (US, UK, EU)
2. Shift from generic to branded generic (25% revenue currently)
3. Entered high margin injectable & Ophthalmic segment
4. 400 Cr Capex to serve US business through internal accruals (3)
Read 10 tweets

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