Stagflation has been a buzzing word since Friday. Let's understand the concept and how it will impact our equity investment in the near future.
The below pic is very informative showing the implication of inflation on GDP growth.
Economists across the world are trying to interpret the present situation and making their consensus on the most likely upcoming stagflationary phase followed by the Global recession. Economists are cutting their GDP growth forecasts & raising inflation projections.
Pharma serving to regulated market are under stress due product price erosion. Market is comfortably giving higher multiples to step down segment in value chain i.e. raw material suppliers.
eg. Alkyl & Balaji Amine. Very few Pharma are growing well. But again, they can’t grow in isolation as the question is what makes them so special other than promoters? Stagnancy is imminent after certain size.
Jul 24, 2021 • 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.
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
Jun 16, 2021 • 10 tweets • 3 min read
Recently bought #GlobusSpirits. I see good value in this counter, can give multifold returns in 2-3 yrs.
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 6. Margins have improved in last 4 yrs (8% to 20%) 7. Cash has gone up to 58 Cr 8. Present across the value chain 9. Supplier of hand spirit to FMCG player
Jun 13, 2021 • 15 tweets • 4 min read
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.
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.
Aug 15, 2020 • 4 tweets • 2 min read
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)
Aug 12, 2020 • 12 tweets • 3 min read
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
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
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)
Jul 25, 2020 • 5 tweets • 1 min read
Companies present in the API+Formulation+Branded drug segment fetch high margins. They are called vertically integrated.
Companies operating in the only formulation segment are currently at risk of raw material/API supply from China.
India has a strong presence in the API+Formulation+Generic segment but dependant on China for raw material.
Outsourcing happens from top to bottom. Branded drugs are still manufactured mostly in developed countries.
Generic drugs are thin margin high volume business
Jul 25, 2020 • 5 tweets • 2 min read
What a fantastic company & Mgmt. Growing without taking debt, Stock 10 yr CAGR 46%, No equity dilution for a decade. Uninterrupted dividend-paying since 1952, 1300 Acre integrated manufacturing campus. Serves diverse products/sector/geographies/customers (1/1)
Broadly presence in Dye, Agrochemicals, Pharma API intermediates, Polymer, Fragrance, Bulk & specialty chemicals. World leader in date Palm tissue culture plants.
Agrochemicals: 3 fungicides, 10 herbicides, 1 insecticide, and their intermediates (2/2)
Jul 17, 2020 • 7 tweets • 3 min read
Really complex APIs, formulations, branded segments, home diagnostics and whatnot. If growth in API happens, should cross all-time high. The stock corrected 30% even after the best Nos. Debt-free. repaid the debt of 100 Cr in last 5 yrs
Invested by looking at the complexity of API they make, believe me, I am a chemist.
Few silent features: 80% US market share in Loratidine API that's amazing. Other APIs doing well are Montelukast, Atorvastatin, Rosuvastatin, all complex.
Jul 12, 2020 • 5 tweets • 2 min read
#AlembicPharma Good potential. 2500 Cr Capex till 2021 ongoing. Entered in high margin injectable business. Capex on Oncology injectable facility ongoing. Injectables have more stringent FDA requirements than oral dosages. Hence less competitive.
RnD expenditure is an important parameter for identifying the future potential for a pharma company. 650 Cr spent in 2020. This should reflect in earnings in the coming years. The stock price might discount this before 2021.
Jul 9, 2020 • 9 tweets • 3 min read
Thread on Fluorine (F) containing APIs (F-APIs):
Around 30% of Modern drugs & about half of the blockbuster drugs contain fluorine atoms.
F-applications are on a continuous surge. It took more time to understand and develop the Chemistry of Fluorine (1/1)
due to complexities associated with it. Lately, Medicinal Chemist discovered importance of the Fluorine in drugs and now this tiny atom has become indispensable in the drug discovery field. Fluorine gives superb properties to Drug molecules (2/2)
Chemicals in the pipeline: Sorbitol and Acetonitrile
Ethyl acetate being green solvent, 2019 global sale valued at $3.3 billion, massive opportunity for scale, Capex ongoing
Jul 8, 2020 • 9 tweets • 4 min read
API molecules are made by connecting fragments/intermediates. This joining process-synthesis takes place in the presence of ´solvent´. When India is taking a giant leap in manufacturing APIs, it needs thousands of liters of solvent
Listing some commonly used solvents here
THF, DMF, DMSO
Find out companies who make them or which solvents are being imported
India needs ´Atmanirbhar´ supply chain for becoming competitive
Jun 23, 2020 • 6 tweets • 3 min read
Bankrupt Ruchi Soya was bought by Patanjali in Dec 2019. Share price then was Rs 3 rupees and market capitalizations was Rs ~3500 Cr.
Today share price surged above Rs 1300 and Mcap is Rs 38000 Crs within 6 months.
Everything fits well under the bankruptcy act but....
They reduced the Equity share capital of the existing shareholders by 99 percent and kept only 2% floating shares while the rest 98% owned by promoters. This 2% of floating shares have done this magic and this was not unintentional.
मोदी जिथे जिथे लक्ष घालतात तिथे तिथे फेल होतात. भारताला १९६२ ला चीन कडून हार पत्करावी लागली होती. यासाठी सर्वस्वी नेहरूंना बदनाम केलं जातं. असेलही. परंतु नेहरूंनी देशाला शीतयुद्धाच्या काळात जे अलिप्ततावादी धोरण आखून दिलं होतं ते आज २०२० मधेही किती महत्वाचं आहे हे आजच्या (1/n)
घटनेवरून अधोरेखित होतं. किंबहुना भारताच्या सार्वत्रिक शक्तीला साजेसंच धोरण होतं ते. त्यामागे खूप विचार होता. त्याकाळात देश टिकणे महत्वाचं होतं. याच धोरणामुळे नेहरूंनी देशाला कमीतकमी नुकसान होऊ दिलं. गेल्या काही वर्षांपासून आपण अमेरिकेकडे झुकत चाललो आहोत. (2/n)