Tag: pharma

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Editorial

Ami Organics IPO: All You Need To Know

ami organic

The IPO frenzy continues! This time it is one of the many IPO stocks to debut this year. We are talking about Ami Organics. Ami Organics has announced its IPO starting September 1 (Wednesday) and closes 2 days later on September 3 (Friday). In this piece, we discuss the business model of Ami Organics, its finances, and its sustainability in the long term. 

Business Model

  • Ami Organics is a Research and Development driven pharmaceutical company that manufactures mainly two things – Pharmaceutical Intermediates and Speciality Chemicals. 
  • Pharma Intermediates are used to manufacture Active Pharmaceutical Ingredients (APIs), which are in turn used to manufacture medicines or drugs. Specialty Chemicals on the other hand can be used for other purposes like manufacturing agrochemicals or fine chemicals. 
  • The company has developed and commercialized over 450 Pharma Intermediates for APIs across 17 key therapeutic areas since inception and NCE, with a strong focus on R&D across the select high-growth high-margin areas. These include anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant, and anti-coagulant medicines. Therapeutic areas like anti depressants, anti-retrovirals, and anti-coagulants contributed to nearly 57% of total revenue 
  • In fiscal 2021, the Pharmaceutical Intermediates segment contributed close to 88.4% to total revenue of Rs 301.1 crore. The remaining came from Speciality Chemicals and other sources. 
  • The company’s revenue is highly dependent on exports. Its revenues from exports have grown at a CAGR of 21.84% between Fiscals 2019 and 2021. In fiscal 2021, close to ~51% of the total revenue of the company came from exports. The highest going to Italy. 
  • The company is also amply dependent on imports for raw materials. In 2021, 26.7% of total raw material purchases were from imports on which the company spent Rs 51.02 crores. Close to 9.39% of the total import purchases came from China. 
  • Its top five customers account for 44.6% of total revenue, while the top 10 forms 60.9% of it.
  • The company had one plant initially in Sachin GIDC, Surat, Gujarat. Recently it has acquired two plants of Gujarat Organics Limited, Ankleshwar and Jhagadia in Gujarat, for Rs 93 crore. This took the total manufacturing capacity up to 6,060 million tonnes per annum.

Finances 

The total revenue for fiscal 2021 was Rs 340 crore. However, this does not include the revenue generated from the acquisition of two new plants at Ankleshwar and Jhagadia. The Net Profit of the company grew at a CAGR of 32.44% over a period of three years to Rs 53.9 crore. 

IPO in a Nutshell

Conclusion

Ami Organics as a company has a strong and diversified product portfolio supported by strong R&D. The company also has patented many formulations. A patent is an exclusive right granted for an invention, it also gives the owner the legal right to exclude others from making, using, or selling an invention.

The company has a strong presence in developed pharmaceutical markets like Europe, the US, and China. Moreover, the company operates in a market that has high entry barriers. Manufacturing specialty chemicals and pharmaceuticals require lots of licenses and approvals from domestic and international organizations. 

Supported by healthy financial performance, Ami Organics has experienced sustained growth in terms of Revenue, Profit After Tax and Total Assets acquired. It has maintained a robust financial position with a strong balance sheet and increased profitability. Taking a closer look at its ‘Financial Performance’, we see that there was a major spurt in growth between fiscals 2020 and 2021. The strong balance sheet and positive operating cash flows coupled with low levels of debt can enable it to expand in the developing pharmaceutical sector in India. 

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Editorial

Krsnaa Diagnostics IPO: All You Need To Know

krsnaa diagonostics

Ever gone for an X-Ray scan? Or a blood test? These are called Diagnoses in medical terms. In the IPO boom, many hospitals, pharma companies, etc from the health industry have come up with their IPOs. Krsnsaa Diagnostics is one such company that has taken part. Krsnaa Diagnostics’ IPO opens on August 4, 2021, and closes two days later on August 6, 2021. 

In this piece, we cover the business model, the financial health and future prospects of the company.

Business Model

Established in 2010, Krsnaa Diagnostics offers radiology, pathology/clinical laboratory and teleradiology services to public and private hospitals, medical colleges and community health centres.  It operates 1,801 diagnostic centres offering both radiology and pathology services in 14 states across India, with the largest presence in Maharashtra, Rajasthan and Karnataka. These three states contain 690 diagnostic centres or ~29% of the total footprint. 

Apart from operating its own diagnostic centres, it forms Public-Private Partnerships (PPP) contracts with different health agencies. Krsnaa has won 77.59% of all tenders that it has bid for, making it a preferable choice by public health agencies. Close to ~70% of the company’s revenue comes from tenders and partnerships with public health agencies. Krsnaa takes tenders from the National Health Mission to conduct operations in the premises of district hospitals and health care centres.

Krsnaa operates a capital intensive business. It needs to spend on syringes, refills, testing kits, X-Ray machines, testing kits, RT-PCR kits, testing devices, machines, nurses, staff, doctors and much more. In case the company falls short of working capital or has insufficient cash flows, it could impact the business. 

Finances

.FY21FY20FY19
Total Assets604.5 629.9 528.9
Total Revenue661.40258.42209.23
Profit After Tax184.90−111.95−58.05
Total Expense366.0 429.7 292.0 
Debt231.2 169.2 100.6
All Amount In Rs Crores

Krsnaa Diagnostics’ revenue increased by 53.41% over a year to Rs 396.45 crore in March 2021. Close to Rs 147 crore of the revenue came from COVID-19 related diagnostics. 67.49% of the total revenue in FY21 came from tenders by public health agencies like National Health Mission to name one.

The company posted a profit of Rs 184.93 crore in FY21 versus a loss of Rs 58.06 crore in FY19.

The company has a total debt of Rs 231 crores as of March 31, 2021. It plans to repay Rs 146 crores of debt by the end of FY22. 

A special mention to the revenue statement. Out of Rs 661.4 crore earned in FY21, only Rs 396.4 crores were earned from operations. Close to Rs 252.7 crores were earned because of ‘Gain on fair value movement of compulsory convertible preference shares (CCPS)’. CCPS are a form of fixed income instrument that companies use to raise capital. They can be converted to equity shares. 

Industry Peer Comparison

Peer Comparison Total Income (Rs Crore)PAT (Rs Crore)PE (X)RoNW (%)Market Cap (Rs Crore)
Dr Lal PathLabs1,581.26290.894.323.430,992.60
Krsnaa Diagnostics661.40184.9095.379.82,994.00
Metropolis Healthcare997.98182.077.725.914,754.50

IPO In A Nutshell

The proceeds from the IPO will be used:

  • To finance the cost of establishing diagnostics centres at Punjab, Karnataka, Himachal Pradesh and Maharashtra.
  • For Repayment/pre-payment, in full or part, of borrowings from banks and other lenders availed by the Company

Conclusion

Krsnaa Diagnostics is looking to raise a total of Rs 1,213.33 crore through the IPO. It has received fair feedback from the grey market or the market for unlisted shares. In the grey market, the shares are trading for Rs 400 more (Grey Market Premium or GMP) than the expected price band. The company’s business model, India-wide market presence and rapport with public health agencies are impressive. The finances however print a different story. According to the company’s prospectus, FY21 has been the first profitable year, that too most of it comes from the gain on fair value movement of compulsory convertible preference shares (CCPS). 


NIFTY index has crossed a record 16,000 mark for the first time just a day before the company’s listing. A correction in the market could hit valuations on listing day. Three more companies apart from Krsnaa have their IPOs debuting on the same day. The saturation might not attract sufficient interest, especially from retail investors. This is because they have a pool of IPOs to choose from, but have limited capital. 

Do you think Krsnaa Diagonistics could give listing gains? Or it is a long term investor’s haven. You can let us know in the comments section in the marketfeed app available exclusively for Android and iOS.

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Clean Science And Technology IPO: All You Need To Know

The story of this chemical company started on November 7, 2003 in Pune. Back then, it was called ‘Sri Distikemi Private Limited’, a very traditional name compared to what we know it today as. The name was changed to ‘Clean Science and Technology Private Limited’ in 2006 after its shareholders decide to adopt a more ‘sustainable’ and ‘clean’ method to manufacture chemicals.

Clean Science and Technology has come up with an IPO, starting on July 7, 2021. In this piece, we analyze the company’s business model and its financial health to determine if it has potential in the markets. 

Business Model

Clean Science and Technology is a speciality chemical manufacturer that produces chemicals used for ‘special’ purposes. These chemicals can be used in manufacturing a sunscreen lotion, medicine, or even a bag of chips. Based on segmental revenue, the company manufactures the following chemicals: 

Performance Chemicals (~69% of total revenue) – Mequinol (MEHQ), Beta-Hydroxy Acid (BHA).

Pharmaceutical Intermediates (~16% of total revenue) – Guaiacol, DCC

FMCG Chemicals (~12% of total revenue) – 4 MAP, Anisole

Other Products (~3% of total revenue)

The company has two manufacturing facilities near Kurkumbh (Maharashtra) and is all set to open the third one very soon. The company has already bought land for setting up a fourth facility, which is expected to be operational by 2023-24. Currently, it has a capacity of 29,900 million tonnes per annum (MTPA), with utilization at 71.94%.

Based on the table above, we get to know that the company is one of the LARGEST manufacturers of the list of speciality chemicals that they manufacture. The company earns most of its revenue from the sale of MEHQ, which is used in manufacturing acrylic fibres, paints and inks, adhesives, and super absorbent polymers. 

Close to 69% of the company’s revenue comes from exports, and China is its largest customer. The company exports its products globally to Europe, the USA, China, Korea, Japan.

The top 10 customers contribute nearly 50% to the company’s total revenue.  Key customers include Bayer AG, SRF Limited, Gennex Laboratories Limited, Nutriad International NV, and Vinati Organics Limited. 

Financial Performance

The company has shown a healthy increase in revenue, profits, and asset value. Apparently, it seems that COVID-19 had a rather small impact on the company’s business, unlike other sectors. Rightly so, because the company manufacturers essential components used in the pharmaceutical industry, which saw a growth opportunity during the pandemic. 

All Amount In Rupees Crore

Looking at the vital financial ratios of the company, we know that the company saw a healthy rise in EBITDA Margins. It is also using its resources more efficiently as shown by the Return on Capital Employed (ROCE) figures. The company has given a healthy Return on Equity (ROE), which saw a decline during FY21 due to the impact of COVID-19

While comparing its performance with that of peers, we found that the company had the highest EBIDTA margin and Return on Net Worth (RoNW). Even though competitors such as SRF, Navine Flourine, and PI Industries have high revenue figures, they have not able to optimize costs and turn the figures into profit. Meanwhile, Clean Science and Technology has managed to give a bang for the buck (a good value for money), despite having a small market cap compared to its peers. Its business model seems rather sustainable and apt for international expansion. 

IPO Details

The company traded at a Grey Market Premium of Rs 450 a day before its listing. Clearly, the company has caught the keen eye of investors, rightly so because of its attractive revenue model. Have you subscribed to the issue? Do you think the company can hit listing gains? Is it the right choice for long-term investment?  Let us know in the comment section available on the marketfeed app.

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Editorial

KIMS IPO: All You Need To Know

Krishna Institute of Medical Sciences or KIMS’ IPO has gone live on June 16, 2021. A private healthcare services company with a stronghold in Andhra Pradesh and Telangana, the company is likely to give fair competition to other listed stocks like FORTIS and Apollo Hospitals. Let’s talk about what the IPO has to offer.

The Business Model

  • Broadly speaking, any hospital has two sources of revenue, an In-Patient Department(IPD) and an Out-Patient Department(OPD). A minor health checkup, a follow-up checkup after surgery, or a regular visit to a physician counts as an OPD. Anything major involving critical care or a stay at the hospital is handled by IPD. 
  • For the Indian Healthcare Industry, ~70% of the revenue comes from Inpatients which includes surgeries, critical care, general care, and other care.  An interesting pattern was observed over the IPD and OPD figures. It seems that KIMS makes most of its money only through IPD. The volumes for inpatients is relatively low but has pretty high revenue. The opposite is true for OPD, where the volumes are relatively high but revenue doesn’t seem significant for the volume. This could talk a lot about the way the healthcare system in general churns money. 
.2018201920209M 2021
Inpatient Volume 88,577 111,382 140,676 83,860
InpatientRevenue Rs 594.7 CrRs 717.6 CrRs 879.9 CrRs 778.3 Cr
Outpatient Volume  661,000 900,043 1,137,560557,071 
Outpatient
Revenue		Rs 152.7 Cr Rs 195.6 CrRs 238.8 CrRs 192.1 Cr
All Figures in Rs Crore
  • KIMS offers 25 types of speciality and super speciality services at its various hospitals. As of December 31, 2020, the total bed capacity of the hospital stood at 3064 beds across 9 locations viz. Secunderabad, Nellore, Rajahmundry, Srikakulam, Kondapur, Ongole, Vizag, Anantapur, Kurnool. Close to 50% of the group revenue comes from the KIMS Secunderabad facility. 
.2018201920209M 2021
Bed Capacity2,1202,8043,0043,064
% Occupancy75.83%71.83%80.49%72.00%
  • The major revenue-generating specialities for KIMS are Cardiac Sciences(20.98% of Group Revenue) and Neuro Sciences(14.67% of Group Revenue).
  • KIMS’ healthcare services are classified as ‘affordable’ to an extent. The company Average Revenue Per Patient(ARPP) was Rs 79,000 per person which is 41% less compared to the Industry Average of 1,12,000 per person. KIMS manages affordability by optimizing bed usage, cost management and variable compensation to doctors based on patients attended, work hours, the severity of case etc. 
  • The company prospectus states that it is working towards expanding in markets like Bangalore, Bhubaneshwar, Chennai and some cities in central India like Indore, Aurangabad, Nagpur and Raipur.
  • There are three factors that can add to the company’s performance: 1) Patient Volumes 2) Occupancy Rate of Beds 3) Cost Management Per Bed Occupied.

Finances

.2018201920209M 2021
Revenue7,000.49,238.67 11,287.28 9,773.77 
Profit(461.90)(485.86) 1,150.72 1,468.58
Debt7,032.122,880.97 3,207.79 2,146.30
All Figures in Rs Crore

From the table given above, we can concur that the revenue has grown significantly over the past three years. In fact, KIMS has managed to surpass past annual figures in just 9 Months of FY 2020-21. The company drove up from a loss in 2018 and surpassed FY 2019-20’s profit figures in just 9 months of FY 2020-21. Moreover, the company now holds less than one-third of the debt it owed in 2018.

.2018201920209M 2021
Average Revenue Per Occupied Bed18,80718,33418,30721,823
Average Length Of Stay(Days)4.494.474.345.30
All Amount In Rupees
  • The Average Revenue Per Occupied Bed(ARPOB) decreased between 2018-2020 till we saw a sudden spike in 2021, obviously due to the onset of COVID-19. The Average Length Of Stay(ALOS) too spiked in 2021. This increased the overall revenue and profits in 9M 2021. 
  • The company offers the best Return On Capital Employed as compared to its peers. KIMS offers a ROCE of 22% followed by Narayana Health at 16%, Apollo Hospitals at 12% followed by the rest. The company also offers the highest turnover ratio(1.4) in the industry along with Apollo Hospitals. This means that the company is able to generate revenue efficiently from the assets it owns.

IPO Details

IPO Opening DateJun 16, 2021
IPO Closing DateJun 18, 2021
Issue TypeBook Built Issue IPO
Face ValueRs 10 per equity share
IPO PriceRs 815 to Rs 825 per equity share
Min Order Quantity18 Shares
Issue SizeRs 2,143.74 crore
Fresh Issue2,424,242 equity shares of Rs 10
Offer for Sale23,560,538 equity shares of Rs 10
(aggregating up to Rs 1,943.74 crore)

The Bottom Line

The past year has been economically beneficial for the healthcare and pharma industry. It is evident from KIMS’ finances that the company has progressed in the time of the pandemic. The company needs to focus on diversifying its geography. While two-thirds of KIMS’ revenue comes from its Secunderabad and Kondapur facilities, other competitors like Apollo, Fortis and others are rather widespread.  

KIMS has an interesting model where doctors own a stake in many of their hospitals. Around 21% of its revenue comes from the top 10 doctors of the company. Although the company has managed to attract the best talent from the country, its revenue depends on very few doctors, any instance where the doctor decides to not work for KIMS could have an adverse effect on the revenue. 

Bed occupancy rates took a hit during COVID-19, however, things are returning to normal for hospitals. If the vaccination drive is successful and we do not see an adverse third-wave of COVID-19, we can expect the company to scale up and reach heights like never before. 

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Editorial

How Remdesivir Became A Matter of Life And Death

A group of angry people picketed a chemist at a big hospital in Pune when he said that the injection Remdesivir was out of stock. 6 individuals in Chandigarh,2 in Pune, and probably hundreds of such individuals all across India were arrested by the police after they were caught selling Remdesivir in the black market. There are reports of a single vial of Remdesivir selling for 10x the MRP. So what is this magical drug? Why is there a shortage? Why is there a black market thriving around it? And What is the government doing to solve its shortage? Let’s find out.

About Remdesivir

Remdesivir is an anti-viral medication currently being used to treat the COVID-19. It is originally created and developed by Gilead Sciences. Remdesivir was developed in 2009, to treat hepatitis C and respiratory syncytial virus(RSV) but failed to treat these diseases. In 2015, it was later found effective against Ebola and Marburg Viruses. The drug has currently been given an Emergency Use Authorization(EUA) by the United States Food and Drug Administration(US FDA) as well as Central Drugs Standard Control Organization in India.

The drug is quite expensive and is currently facing a shortage in India. This has caused a vicious cycle of panic-buying, hoarding, and black marketing where people are having to pay more than ten times the MRP for the medication. After the first wave of COVID-19 subsided in India pharma companies cut down on production. After the number of reported cases started to decline in September 2020, the demand for Remdesivir slumped. Companies that were left with excess stockpiles were forced to destroy them. The volume of infections and the severity in the second wave was unprecedented and the demand for the drug went up.  The already expensive Remdesivir was now being hoarded and people had to resort to the black market to buy it. 

The Economics Behind Remdesivir

  • Remdesivir currently is manufactured by 7 major pharmaceutical companies apart from other smaller ones. The companies being Mylan, Hetero, Jubilant Life Sciences, Cipla, Dr. Reddy’s, Zydus Cadila, and Sun Pharma. Hetero is the largest manufacturer of Remdesivir by numbers. India currently has a production capacity of ~38-40 lakh vials per month.
  • According to a statement by Mansukh Manadaviya, the Minister of State for Chemical and Fertilizers,  Hetero produces 10.50 lakh vials a month, Cipla makes 6.20 lakh vials, 5 lakh vials are produced by Zydus Cadila and Mylan produces 4 lakh vials. The remaining drugmakers produce vials in the range of 1 lakh and 2.5 lakh a month. He also stated that the production will be increased to around 78 lakh vials per month soon.  

  • There was a recent ‘voluntary’ reduction in price for the drug by major pharma companies. Since the distribution of Remdesivir is a haywire affair where there is uneven distribution, black marketing, and shortage of the drug, certain state governments have restricted its sale ONLY to hospitals. This move is aimed to reduce the black market of the drug where people end up paying ten times more for the drug. The government has also banned its export and cut down all import duties on the drug.
  • In the past month, the stir around the drug has definitely benefitted the share price of pharma companies. Cadila’s share price has been up by 28% in the past 1 month, CIPLA has been up by 24%, Dr. Reddy’s Laboratories has been up by 19%.
  • There is also a shortage of another drug Tocilizumab. In India, the drug is manufactured only by Cipla in partnership with Swiss-pharma company Roche Holdings AG. Similar to the case of Remdesivir, an excess demand for the drug might positively impact Cipla’s share price and revenue. 
  • While Jubilant Pharmova has been up 16%, its share price surged 8% when it announced that it had developed an oral form of Remdesivir apart from the regular injection administered. Jubilant Pharmova’s share gained special attention a month ago when ace-investors Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala increased their stake in the company.

The Hidden Picture

So far there hasn’t been a strong clinical trial report that supports the use of Remdesivir. What remains unknown is the sudden spike in usage of this one particular drug. World Health Organisation(WHO) had approved the drug for emergency usage only in the case of patients with high symptoms. For patients with mild symptoms, other drugs were prescribed. Dexamethasone is another recommended drug that costs just about Rs 6- Rs 12 in the retail market as against the few thousands paid for Remdesivir. There are other drugs prescribed for patients with mild to moderate symptoms that are cheaper than Remdesivir. 

In November 2020, WHO advised AGAINST the use of Remdesivir for treatment of COVID-19 patients. Excess use of Remdesvir can lead to a severe immunogenic reaction called the Cytokine Storm which can be fatal. The body starts to attack its own cells and tissues instead of just the virus. Even the European Union decided not to go ahead with authorizing Remdesivir after it had stockpiled the drug. Despite the global negative outlook, Indian doctors have continued to prescribe the relatively expensive drug. There might be a false demand being created over here since patients with mild symptoms are prescribed other drugs like Fabiflu, Hydroxychloroquine, Favipiravir. Treating COVID-19 might not be an expensive case after all. 

The director of AIIMS Delhi, Dr. Randeep Guleria has said that Remdesivir isn’t a magic bullet. He also said that ”Giving treatment when it is not required, you may be doing more harm than good”.

Drug Regulators, Health ministers, and agencies have advised doctors to judiciously prescribe Remdesivir, that too only for patients with severe symptoms. While pharma companies struggle to meet demand, they are facing flack from government bodies. Major Remdesivir manufacturers have companies of political pressure, calls from local corporators MLAs, and MPs. 

Pharma companies need to assess ramping up production of these vials as they face the risk of a glut/overproduction. The second wave of the deadly coronavirus has hit with an unprecedented magnitude. Individually, states have started to impose lockdowns. One can expect an increased production of Remdesivir by respective pharma companies. It won’t be before one month that we get a clearer picture of the second wave of COVID-19. Until then, Stay Home, Stay Safe!

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Market News Top 10 News

SEBI Imposes Rs 25 crore fine on Ambani and Family- Top Indian Market News

SEBI imposes Rs 25 crore fine on Ambani and Family

Market regulator SEBI or Securities and Exchange Board of India has imposed a Rs 25 crore fine on Mukesh Ambani, Anil Ambani, Nita Ambani, Tina Ambani, KD Ambani, and other family members, in a case dating 20 years back. According to SEBI guidelines, any promoter buying into more than 5% stake/voting rights in a company has to make a public announcement to its shareholders, in case they may withdraw from the company for whatsoever reason. According to SEBI, there were multiple violations made with regard to this by members of the Ambani family. 

Read More Here.

AstraZeneca Sends Legal Notice To Serum Institute Over Delays In Vaccine Supply

UK-based AstraZeneca has sent a legal notice to Pune-based vaccine maker Serum Institute of India(SII). The notice comes after AstraZeneca alleged that Serum Institute is delaying the supply of vaccines under contract and is also violating obligations to other countries in supplying the Covishield vaccine to other countries. Adar Poonawala, CEO of SII has said that the delay is because of the Centre’s decision to halt vaccine exports temporarily. He also said that he would temporarily prioritize domestic needs. 

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Macrotech Developers IPO subscribed 35% on Day Two

Macrotech Developers or formerly known as Lodha World launched its IPO on April 7, 2021. The company was subscribed 26% on the first day of the bidding, receiving. bids for 95.91 lakh equity shares. On the second day, the company was subscribed 35%. The company is known for building the Trump Towers in Mumbai and the tallest building in India, World One.

Read More Here.
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Zydus Gets Usfda Nod For Drugs Used To Treat Hypertension And Cancer

Indian Pharmaceutical company Zydus Cadila has received approval from the United States Food and Drug Administration for Ibrutinib capsules to treat cancer and Macitentan tablets that are used to treat hypertension.  

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Kalpataru Power Acquires 51% Stake In Fasttel 

Kalpataru Power Transmission Ltd’s (KPTL’s) wholly-owned subsidiary in Brazil has completed the acquisition of 51 percent controlling stake in Fasttel Engenharia Ltda. Fasttel specializes in engineering, procurement, and construction (EPC) and maintenance of power transmission lines, distribution systems and sub-stations 

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Minda Corp: Co-Signs Strategic Partnership With Israel Based Company For First Unique Collision Avoidance Technology For 2 Wheelers In India


Minda Corporation announced a strategic partnership with an Israel-based Ride Vision, an advanced driver-assistance systems company. The company plans to bring artificial intelligence-based collision avoidance systems to the Indian two-wheeler market. The company in its quarterly report had announced that it was going to pump Rs 250 crores into business expansion. The company had reported a ~19% increase in profits over the last quarter.

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Airtel Refused To Pay Videocon’s AGR Dues: DoT to SC

The Department of Telecommunications has told the Supreme Court that Airtel, which had acquired now-defunct Videocon’s telecom spectrums in 2016 has refused to pay the AGR dues applicable on the spectrum. The DoT has raised a demand to recover Rs 1375 crore of Videocon’s dues payable by Airtel. Airtel on the other hand holds that the DoT has made no such demand to recover any such dues and has agreed in the past that these dues are solely recoverable from Videocon itself. 


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Infosys: Co Announces Strategic Long-term Collaboration With ArcelorMittal For Digital Transformation

Indian IT-Giant Infosys has announced a long-term collaboration with multinational steel manufacturing corporation ArcelorMittal for Digital Transformation. Infosys will offer application management and business process management (BPM) services to ArcelorMittal’s Business Center of Excellence (BCoE) in Europe.

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AstraZeneca Vaccines Causes Rade Blood Clots: New Advisory Issued

UK vaccine maker AstraZeneca Plc’s Covid-19 vaccine has been causing blood clots in individuals below 30. In fact, there have been 19 deaths recorded so far due to blood clots caused by the vaccine in the UK. The Medicines and Healthcare products Regulatory Agency(MHRA) has issued new advisories. It has stated that the blood clot in found rarely, in close to 4 out of 10 lakh people. The UK’s Joint Committee on Vaccination and Immunisation (JCVI) has advised offering an alternative to the AstraZeneca Covid-19 vaccine to adults under the age of 30, due to the blood clot link. 

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Vehicle Registrations Down By 28.64% In March 2021: FADA

The Federation of Automobile Dealers Associations (FADA) has said that overall vehicle registrations are down by 28.64% in March 2021 as compared to last month. Tractor and Passenger Vehicles are the only two segments that have witnessed double-digit growth in the season. As compared to March 2020, Two-wheeler sales were down by 35.26%, Three-wheeler sales reduced by 50.72%, Three-wheeler sales were down by 50.72%.

Read More Here.

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Market News Top 10 News

Trading Halted on NSE For 4 Hours Due to Technical Glitch – Top Indian Market News

Trading halted on NSE due to technical glitch

Trading across all segments was halted for almost four hours today by the National Stock Exchange (NSE) due to a technical glitch. The exchange had received communication from both its telecom providers about issues with their links. Trading was halted between 11:40 am and 3:30 pm. At around 3:25 pm, an extension of the trading day till 5 pm was announced, with a pre-open session at 3:30 pm. 

Market regulator SEBI has advised NSE to carry out a detailed root cause analysis of the ‘trading halt’ witnessed today. It has also asked NSE to explain the reasons for trading not migrating to the disaster recovery site.

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Centre lifts embargo on grant of govt businesses to private banks

Finance Minister Nirmala Sitharman announced that the Centre has lifted the embargo on grant of government businesses to private banks. She stated that all banks can now be “equal partners in development of the Indian economy.” Private sector banks can now carry out government-related banking transactions such as taxes and other revenue payment facilities, pension payments, and small savings schemes.  

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Cabinet approves Rs 15,000 crore PLI scheme for pharma sector

The Union Cabinet has approved a production-linked incentive (PLI) scheme for the pharmaceutical sector for over a period of eight years (FY21-FY29). This scheme would bring in an investment of Rs 15,000 crore to the sector. It is expected to promote the production of high-value pharma products in the country and increase the value addition in exports. The government seeks to generate 20,000 direct jobs through this PLI scheme.

The Cabinet has also cleared a PLI scheme worth Rs 7,350 crore to boost the manufacturing of laptops, tablets, PCs, and servers. 

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Dilip Buildcon declared lowest bidder for projects worth Rs 2,439 crore

Dilip Buildcon Limited has been declared as the lowest (L1) bidder for two Hybrid Annuity Mode (HAM) projects worth Rs 2,439 crore. The projects consist of four-laning two sections of the Bangalore-Chennai Expressway. The tenders were floated by the National Highways Authority of India (NHAI) under the state-sponsored Bharatmala Parioyojana project. 

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Bharti Airtel enters advertising business, launches ‘Airtel Ads’

Bharti Airtel has announced its entry into India’s $10 billion (~Rs 72,328 crore) advertising industry with its latest platform ‘Airtel Ads’. The telecom company stated that Airtel Ads would allow brands to curate consent-based and safe campaigns for its subscribers. Airtel Ads has already enabled campaigns for more than 100 brands across categories like FMCG, banking, financial services & insurance (BFSI), digital startups, etc. 

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Aditya Birla Fashion announces strategic partnership with designer Tarun Tahiliani

Aditya Birla Fashion and Retail Ltd (ABFRL) has announced a strategic partnership with ace designer Tarun Tahiliani to form a new entity that will launch a contemporary men’s ethnic wear brand. ABFRL will hold an 80% stake in the new entity, while Tarun Tahiliani will hold the remaining 20%. ABFRL stated that the new brand will offer a range of high-quality celebration wear for men at accessible price points.

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Bosch to invest Rs 800 crore to upgrade Bengaluru facility to fully AIoT-enabled campus

Germany-based Bosch Group will invest Rs 800 crore to upgrade its existing campus in Bengaluru to a fully artificial intelligence of things (AIoT)-enabled ‘smart campus’. The campus is likely to house the second-highest number of Bosch employees in the world. The 75-acre campus is expected to be inaugurated in June 2022.

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Granules India receives USFDA approval for migraine drug

Granules India has received approval from the US Food and Drug Administration (USFDA) for its Abbreviated New Drug Application (ANDA) for Acetaminophen, Aspirin, and Caffeine (triple-combination product) tablets. The drug is indicated for treating migraines. The product will be manufactured at the company’s Hyderabad facility and is expected to be launched shortly.

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Axis Bank’s subsidiary to acquire broking accounts of Karvy

Axis Securities, a subisdiary of Axis Bank, has emerged as the successful bidder for trading accounts (or broking accounts) held by Karvy Stock Broking Ltd with NSE, BSE, and Metropolitan Stock Exchange (MSE). The transfer of trading accounts is subject to the remittance of the bid amount and submission of necessary documents. Once the process is complete, the customer base of Axis Securities will increase from 2.5 million to over 3.6 million.

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Heranba Industries IPO subscribed 2.74 times on second day of bidding

The Rs 625-crore initial public offering (IPO) of Heranba Industries was subscribed 2.74 times on the second day of bidding. The issue received bids for 1.91 crore equity shares against an offer size of 69.81 lakh shares. The portion reserved for retail investors was subscribed 4.53 times. The portion set aside for non-institutional investors (NIIs) witnessed a subscription of 87%, while that of qualified institutional buyers (QIB) 1.01 times.

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RBI Governor raises ‘major concerns’ about cryptocurrencies

The Reserve Bank of India (RBI) said it is concerned that cryptocurrencies may impact the financial stability of the Indian economy. In the past, RBI had expressed concerns on digital currencies related to issues ranging from money laundering to funding terrorists. RBI Governor Shaktikanta Das said that they have communicated these concerns to the government. The Centre is planning to introduce a bill in Parliament to prohibit companies and individuals from dealing in cryptocurrencies. The government is also creating a framework for an official digital currency.

Read more here.

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Editorial

5 Reasons Why Nifty is Rising!

Nifty 50 hit a record high on November 9 as the index closed at 12,461.05, up by 1.61%. The next day, Nifty jumped again with spring and concluded at 12,631. There has been a remarkable rally in the past few days which has taken Nifty 50 to even cross its pre-covid highs. Today, as of 11 November, it has even touched 12,750.

But do we have the vaccine already? Not really. Is the global economy in a boom? Not at all. Then how are we witnessing higher highs in the Indian stock market? Here are the five reasons which are stimulating this boost in the stock market.

US Elections

As discussed in The Stock Market Show several times, the market was supposed to react positively if there was a clear winner in the US election. This is what happened. Democrat Joe Biden defeated Donald Trump to become the 46th President of the United States. To understand more about this, click here. His triumph was welcomed by the market participants. They believe that his democratic policies will help the Indian market to expand. This has instilled confidence in the investors even when India is finding it very tough to contain the spread of coronavirus. For how many days more this positive news can support Nifty is yet to be seen.

There is a constant worry lingering in the back as Trump refuses to accept defeat. Secretary of State Mike Pompeo, who is chief foreign affairs adviser to The President of The United States has even gone on to say that the Trump Administration is ready to move into a successful second term. Keep watching marketfeed for updates.

Bank Nifty Rally

Nifty Bank has been one of the key driving forces behind the Nifty rally. There are several reasons why Bank Nifty has moved on this consistent uptrend. The market was expecting not-so-great Q2 results for banks. Increased expenditure and high NPAs due to moratorium led to low expectations. But then, HDFC Bank and Kotak Bank came out with astounding numbers. Provisions for defaults were decreased which led to an increase in profits. A similar pattern was followed by every major private bank as they reported amazing numbers. The honourable Supreme Court also ruled in favour of banks in the interest-on-interest case. The government of India took the responsibility to pay the amount to the banks for some cases. The green candles in the chart below give you a look at how the index has rallied up.

Bank Nifty 1-Day Chart

COVID-19 Vaccine

The news which we were waiting for days finally hit the market last evening. US pharmaceutical giant Pfizer and German biotech firm BioNTech announced that they have registered an amazing response from their coronavirus vaccine. In the ongoing Phase 3 trials, the vaccine given to the infected patients has been 90% effective. The company is also optimistic to supply 50 million vaccine doses globally by the end of this year. This is a huge development which has taken all the global markets to go upwards. The US election is done and dusted and we believe that this positive news can take the market to even higher points in the coming days.

The Indian Festive Season

The people of the nation are struggling with the virus but that is not stopping them from celebrating the big Indian festivals. Should they refrain a bit? That’s a completely different debate. There are several festivals which are celebrated from October to December. Navratri, Dussehra, Diwali, just to name a few. Even in these uncertain times, people are venturing out to buy new goods, and boosting the economy.

Whether it’s the auto market or the consumer goods market, all are seeing a surge in sales after an almost-dead first quarter. The market has responded well to this change. Also, there’s a possibility that a new stimulus can be launched by the Indian government in the coming weeks. Any effective help from the government will surely make the market participants happier.

IT and Pharma 

Two sectors which got all the investment in the pandemic were the IT and Pharma sector. In October, both the sectors rallied Nifty to touch the levels of 12,000 three times. Strong Q2 results from the IT sector were offering a lot of boosts. TCS and Wipro announced share buybacks which signaled the success of tech companies to operate during the pandemic.

One sector which can easily transform to the work-from-home culture was the IT sector. With the help of in-built or third-party cloud-based technology, employees easily accessed the data sets. This helped them to reduce their rent cost and other fixed costs. With vaccines only the hope which can bring an end to Covid-19, people invested heavily in the pharma sector. All the pharma stocks have given staggering returns during the 6 months. This excessive demand has also made a few of the stocks in this sector overvalued. Once the vaccine is out, will these stocks correct themselves and go down? Yesterday, Nifty IT and Nifty Pharma went 3.86% and 4.33% down respectively. Is it a signal of what to come? Is a major correction in these two sectors just ahead?

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Editorial Editorial of the Day

Gland Pharma IPO: All you need to know

India’s biggest pharmaceutical Initial Public Offer will hit the primary market on 9th November. Hyderabad-based Gland Pharma has received the (SEBI) Securities and Exchange Board of India’s approval to launch its Rs 6,000 crore IPO. This will give birth to India’s largest IPO in the pharmaceutical sector to date. This IPO will include a fresh issue of Rs 1,250 crore. The company filed its draft red herring prospectus with SEBI in July 2020. You can find it here.

About Gland Pharma

Gland Pharma was founded in 1978 to manufacture and market Heparin injection for the domestic market. It entered the US market in 2007. In 2013, its Oncology formulations facility at Visakhapatnam received USFDA acceptance which is very crucial for pharmaceutical companies.

Gland Pharma has seven manufacturing facilities in India. Out of the seven, four facilities are for finished formulations and the rest three are Active Pharmaceutical Ingredient (API) facilities. The company is present in sterile injectables, oncology and ophthalmic segments.

It follows a business-to-business model (B2B) and is present in over 60 countries such as the US, India, Russia, etc. It has a portfolio of products across various therapeutic divisions such as anti-malaria, anti-diabetic, anti-infectives and more.

Strong fundamentals

66% of the company’s presence is in the US market and only 18% of the total revenue comes from the Indian market. The company looks fundamentally robust. The following images tell you the growth story of the company.

Source: Annual Report

Gland Pharma’s revenue from operations increased by 28.81% to Rs 2,633.24 crores in FY20. This rise was driven by 51 new product launches in the United States, Europe, Canada and Australia. Higher revenues boosted their bottom line. Their profit after tax (PAT) increased by 71.02% to Rs 772.95 crores in FY20. The company EBITDA Margin has increased from 34.9% to 40% in two years.

Company net worth has increased by more than 1.5 times in the last two years. This shows that the company is fundamentally sound and can be a great opportunity for investors. The money generated from the primary market will be used to fund capital expenditure and an increase in working capital. This is another signal that the pharma company has more plans to expand in the near future.

Source: Annual Report

About the IPO

Investors have a keen eye on this company because it is one of the first companies with a Chinese parent to go for a public listing. It is majority-owned by China’s Shanghai Fosun Pharma. In 2017, private equity firm KKR got an amazing opportunity to exit from Gland Pharma. They sold their stake to Shanghai Fosun Pharmaceutical Group for over $1.2 billion. In return, Fosun Pharma acquired around 74% of the total stake in Gland Pharma.

The factor of a Chinese parent in the Pharma company is important to discuss because of two reasons. Firstly, this IPO is talked about at a time when there is huge uncertainty in Indo-China relations. Both the neighbouring countries were involved in the military standoff at the borders which led to casualties on both sides. India followed their stance with a digital strike by banning 250 Chinese apps.

Secondly, the pharma sector has seen large investments during Covid times. The companies are supported with good valuations due to the optimistic future of the industry. We have already seen a bunch of companies launching their IPOs this year. But no pharma companies have taken this road in 2020. Gland Pharma will be the first pharma company in India to take the primary market route this year.

The Details

IPO DateNov 9, 2020 – Nov 11, 2020
Price BandRs 1,490-1,500 per share
Issue SizeAggregating up to Rs 6,479.55 crore
Issue TypeBook Built Issue IPO
Offer for SaleAggregating up to Rs 5,229.55 crore
Fresh IssueAggregating up to Rs 1,250.00 crore
Face ValueRs 1 per equity share
Market Lot10 shares
Listing AtNSE, BSE

Kotak Mahindra Capital, Citi, Nomura and Haitong Securities are the book running lead managers for the issue.

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Editorial Market News

The Rally of the Pharma Sector- COVID19

The Pharma sector has boomed. It is not difficult to guess why. It’s because of the ripples of the COVID-19 pandemic. The NIFTY Pharma happened to move sideways around the new year until March 2020, when the stock price fell for a short period. The NIFTY Pharma Index captures the performance of the pharma sector. This was because of the global economic slowdown. Moreover, indecisiveness on part of leaders to declare a lockdown in their country made the incident even more uncertain for the Pharma sector.

Nevertheless, the pharmaceutical market managed to meet the sudden peak in the demand for PPE Kits, Drugs, Safety Kits, Masks, Sanitizers and the paramount need to find a cure or a vaccine for it.

Investors, promoters, philanthropists, institutions and governments infused huge amount of funds into these Pharmas for R&D and mass production of safety kits.

The NIFTY Pharma stocks performed as given below:

Captured on TradingView.

The chart shows the percentage return between the start of lock-down in India i.e. 23-03-2020 and 21-07-2020(DD-MM-YYYY). It shows NIFTY Pharma performance in the topmost frame and the top four pharma stocks(by market cap) in the frame below it. On the right is the percentage return in various colour schemes.

It was such that when the entire market fell Pharma came to rise. The following is the price action for 6 months comparing NIFTY and NIFTY PHARMA. As the confirmation for a COVID vaccine is nears you can expect a highly bullish sentiment on Pharma.

Following are the top 5 performers by

Stock %Change in last 3 months Net Profit Qtr Growth YoY %Net Profit QoQ Growth %
Aurobindo Pharma Ltd. 24.18%
48.24%
23%
Biocon Ltd.19.41%
-34.21%
-28.27%
Cipla Ltd.11.86%
-35.14%
 -31.47%
Cadila Healthcare Ltd.6.00% -13.71%
13.47%
Lupin Ltd.4.82%32.35%146.39%
Source:Trendlyne
TABLE 1

You can obtain more fundamental data regarding the stocks given above by clicking here

What can be deduced from the above table(TABLE 1)?

  • Lupin recorded the highest Net Profit Qtr Growth QoQ
  • Whereas, Aurobindo pharma recorded the highest % change in price in the last 3 months. Additionally, it also recorded the highest Net Profit Qtr Growth YoY %

It can be seen that the pharma as a sector overall hasn’t performed well on a YoY basis in terms of profit generation and revenue generation. This could be temporary, yet a very long-lived bubble which was inflated due to uncertainty and volatility in the market surrounded by COVID.

CIPLA rallied when it was announced that it was going to launch its own version of the COVID drug Remdesivir along with its competitor Mylan(Not listed in India).

What are the challenges faced by Pharma?

According to Charu Sehgal, Partner and Leader, Lifesciences and Healthcare, Deloitte India, in an interview with Economic Times, the the industry faces the following issue

  1. Manufacturing units/warehouses not working at full utilisation, due to unavailability of staff.
  2. Non-Availability or disrupted supply of raw materials and packing materials.
  3. Absence of seamless internet data connectivity with staff is creating issues in day to day work.
  4. The marketing staff of pharma companies are having problems generating sales due to lack of logistics and communication channels since they are not able to conduct meetings in-person.
  5. The companies that have operations across the globe are facing issues concerning their operations and staff in those locations. Every country has devised its policies and guidelines.
  6. As with all industries, implementing effective and robust cybersecurity measures is a challenge in the work from home scenario.

What do I take from here?

  1. It is evident that the only entity keeping the pharma market afloat is the COVID-19 Pandemic.
  2. India’s active pharmaceutical ingredient (API) industry is expected to generate $6 billion in revenues by the end of 2020.
  3. India has been meeting more than 20 per cent of the world and almost 50 per cent of the US’s generic drug requirements.
  4. India relies heavily on China for Pharma raw materials, this is about to change after political tensions have given rise to “Aatmanirbhar Bharat” and “Make In India”.
  5. The only major shortfall for the Indian Pharma Market is SCM or Supply Chain Management. Watch out for transport and logistics stocks.
  6. China has been losing credibility and momentum in the global market due to its lack of transparency about the COVID situation in the country.
  7. The Physicians and other doctors were closed so far.The number of surgeries and demand for surgical instruments had reduced. As these avenues open up and the need for other drugs and instrument rises the dependency of Pharma market on COVID shall decrease.
  8. According to Research and Advisory firm Firm Nirmal Bang: In the US, there is a sharp drop in patients visiting physicians, especially in the ophthalmology and dermatology categories, which should have an adverse impact on Sun Pharma and Glenmark
  9. There was also a substantial decline in hospitalization (non-COVID patients), which should affect injectable sales of Aurobindo Pharma and Dr Reddy’s.

Finally, The demand has slumped since clinics all around the country remain slumped, yet the Pharma Benchmark continues to rise. Once a conclusive vaccine is found and till the time it doesn’t saturate the market you can expect quite some price action.

Categories
Market News

Granules India Q1 FY21 results:

Granules

One sector which is getting most of the attention during the pandemic is the Pharma sector. The investors are keeping a track of which companies are moving in the direction of developing a COVID 19 vaccine. It is highly expected that the stocks of Pharma companies may provide good returns to the investor in the foreseeable future.

Granules India released their Q1 results for this financial year. The bottom line (net profit) increased by 34% to take the net profits at Rs 111.44 crore for the quarter which ended on 30th June 2020. Consolidated revenue worth Rs 735.59 crore was registered as compared to Rs 595.27 crore for the same period a year ago.

EBITDA or earnings before interest, taxes, depreciation, and amortization tells about the operating profitability and is one of the important financial measures for any company. This measure grew by more than 50% in this quarter.

Their results were welcomed positively by the market as their share price went up by 8%. Also, Granules have declared its first interim dividend of 25 paise per share which will boost earnings of shareholders, both in the form of a rise in share price and the dividend offered.

About Granules India

Hyderabad based drug firm, Granules India, is a vertically integrated pharmaceutical manufacturing company which has the vision to become a global leader in its domain. It was set up in 1984 and took only three years to become the second Indian company to export pharmaceutical products to the U.S.

They manufacture products across Active Pharmaceutical Ingredient (APIs), Pharmaceutical Formulation Intermediates (PFIs) and Finished Dosages (FDs). Few of the core products which the company manufactures are Paracetamol, Guaifenesin, Metformin and Ibuprofen.

What led to strong Q1 results?

Granules India was able to register this growth due to the robust increase in production and demand. The resumption of Paracetamol exports has boosted revenue growth in the last quarter. This quarter Granules Pharmaceutical Inc (GPI) launched two products: Colchicine tablets and Butalbital APAP caffeine tablets. These new products have been well received by the consumer. Also, the expansion of the market share of the existing products has contributed to higher revenues for the manufacturing company this quarter.

“This is the result of operational excellence and a vigilant watch over our margins through optimisation of the product mix and by increased capacities and optimal capacity utilisation.” – Granules India Chairman and MD Krishna Prasad Chigurupati

The street will be eagerly waiting for the results of other pharma companies who has seen a surge in demand in recent times.