Thread by @rahul93shukla

Beta Drugs – SME Co

Co Overview: Beta Drugs Ltd is engaged in manufacturing of a wide range of oncology (anti-cancer) drugs in India. As per Co’s website, it is aiming to launch 25 new products by 2026. It's manufacturing facilities consist of an API & formulation plants
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Leadership: After the demise of Late Shri Vijay Batra (Founder), the next generation of the Family has taken over the Leadership Role – Mr. Rahul Batra Chairman & Managing Director (Looks very aggressive in strategies to Me)

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Business Overview:

1. Domestic Market: Beta Drugs develops and commercialize high quality & cost effective complex oncology drugs. Beta Drugs has a leadership position in Indian Oncology Market with 100 SKU's.

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2. Contract Mfg: In its contract manufacturing segment Beta has clientele of 49+ Cos which includes Zydus, Cadila, Alkem, Torrent, Shilpa etc.

3. International Mkt: Presence in over 15 Countries with more than 50 products have been registered in these Countries

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Financials:
Sales & PAT 4yrs CAGR ~38%
Last 3 yrs ROE 25%
PAT margin is consistent at 12-13%
DE ratio at 0.25x
Mgmt guided for 30-40% growth for next few years
Assuming 30% growth and PAT margin consistent at 13% Exp EPS for FY23:32, FY24:40, FY25:50

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Valuations:
So at FY23E its trading at 22 PE & FY24E 18x, FY25E 14x which makes me believe there is still room for another 2x from CMP obviously if Mgmt delivers on guidance which they have done in the past for few years

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Key Risks
1. SME Co - less info about business, management people are available in public domain
2. Illiquid nature of instrument as trades in lots
3. Highly cost investment due to Lot size
4. Financials only published Half yearly so business updates can be less frequent
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Key Risks (cont'd)
5. Management delivery vs Management guidance: Need to closely track execution vis a vis management commentary
6. Less media interactions make it more vulnerable to understand any significant business updates/changes

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ACE Investor Mr. Ashish Kacholia holds 5.5% stake of the Co as per latest Shareholding data

Disc: Personal holding
I am not SEBI registered, please do not consider this thread as Investment advice or recommendation. Consult your financial advisor before making any investments.

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