Strides Arcolab - another Lupin in the making
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=3130
Printed Date: 21/Apr/2025 at 6:28pm
Topic: Strides Arcolab - another Lupin in the making
Posted By: excel_monkey
Subject: Strides Arcolab - another Lupin in the making
Date Posted: 24/Dec/2010 at 10:05pm
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This company over the years has transformed itself into a specialized Pharma company operating in a high margin niche segment
Strides has the capacity and products registrations (ANDA) and agreements in place, it is a matter of time and scaling up the production to realize the full potential
ROE to expand as most of the capex would start paying
Earning visibility and stability as a result of deals with Pfizer and Glaxo
One of the largest product pipelines in the injectable segment it has 104 ANDA filings and 73 ANDAs awaiting approval
Strides has developed a product pipeline targeting generic and patented products with an opportunity size of US$11b
The product pipeline includes therapeutic segments like oncology, controlled substances, hormones, penems, penicillins and opthalmalogy.
not that it matters but for Rakesh Jhunjhunwala lovers : he owns 1% of the company
Excerpts from Motilal Oswal report
What the below report doesn’t capture is the immense opportunity of the product pipeline which could catapult the ROE to that of the likes of Lupin once the supply of registered products starts
http://www.myiris.com/shares/research/MOTOSW/STRARCOL_20101203.pdf -
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Year end Dec |
2009 |
2010 |
2011E |
2012E |
|
Net Sales (Rs b) |
13.0 |
18.2 |
23.5 |
26.3 |
|
EBITDA (Rs b) |
1.9 |
3.3 |
4.2 |
4.8 |
|
Adj. NP (Rs b) |
0.6 |
1.6 |
2.2 |
2.5 |
|
EPS (Rs) |
11.2 |
30.0 |
41.1 |
46.4 |
|
P/E (x) |
4.8 |
3.1 |
2.7 |
2.4 |
|
EV/EBITDA (x) |
16.4 |
9.5 |
7.8 |
6.9 |
|
EV/Sales (x) |
2.3 |
1.7 |
1.4 |
1.2 |
|
RoE (%) |
9.9 |
14.6 |
14.8 |
14.8 |
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Sr. No |
Name of the shareholder |
Number of shares |
% |
|
1 |
Goldman Sachs Investments (Mauritius) Limited |
481577 |
1.03 |
|
2 |
Reeshanar Investments Ltd |
500000 |
1.07 |
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3 |
Rakesh Jhunjhunwala |
500000 |
1.07 |
|
4 |
Carlson Fund - India |
500000 |
1.07 |
|
5 |
Sbi Life Insurance Co. Ltd |
700471 |
1.49 |
|
6 |
Emerging Markets Management Llc A/C The Emmumbrel |
707405 |
1.51 |
|
7 |
Citigroup Global Markets Mauritius Pvt Ltd |
775106 |
1.65 |
|
8 |
Blissup Holdings Limited |
966285 |
2.06 |
|
9 |
Sat Pal Khattar |
1173086 |
2.50 |
|
10 |
Reliance Capital Trustee Company Ltd A/C Reliance Growth Fund |
3054399 |
6.51 |
|
11 |
Zenith Pharmaceuticals Limited |
8284115 |
17.66 |
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Replies:
Posted By: nav_1996
Date Posted: 24/Dec/2010 at 10:22pm
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At similar valuations why should we not look at Torrent Pharma, which has much better financials, is a more integrated pharma company (New drugs, domestic, formulations, exports and CRAMS) and has similar growth prospects. Last 3 years EPS for Torrent has grown at 33%.
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Posted By: excel_monkey
Date Posted: 24/Dec/2010 at 10:41pm
Torrent is also a very good play
infact there is a good possibility that Torrent could be sold out like Piramal
Strides has made massive investments in 2006 - 2009 and would continue it till 2012
so the excitement comes from the impending expansion in ROE 2012 and beyond where as Torrent already has a healthy ROE
Strides is more of a play on US healthcare policy where the likes of Pfizer would source their products from India
where as Torrent has a mixed bag of themes
Originally posted by nav_1996
At similar valuations why should we not look at Torrent Pharma, which has much better financials, is a more integrated pharma company (New drugs, domestic, formulations, exports and CRAMS) and has similar growth prospects. Last 3 years EPS for Torrent has grown at 33%. |
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Posted By: datta.supratik
Date Posted: 25/Dec/2010 at 1:39pm
I think RJ also has stake in the company.
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Posted By: bsk0404
Date Posted: 25/Dec/2010 at 5:28pm
their history is complicated in respect of creating the wealth towards shareholders. results are always unpredictable. i was tracking the results for 5 years and most of the time there were surprises. at this price mostly all positives are priced in. if some one has view on orchid the tell me because orchid has many assets which might make it lupin
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There are only 2 tragedies in market 1st buying a good stock at wrong price 2n buying wrong stock at any price.
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Posted By: excel_monkey
Date Posted: 25/Dec/2010 at 6:59pm
Both Strides and Orchid were in investment phase
they were small companies and invested a lot in research and manufacturing facilities
now is the time when their investments should start working for them
ROE for both the companies would expand in next 5 years
Originally posted by bsk0404
their history is complicated in respect of creating the wealth towards shareholders. results are always unpredictable. i was tracking the results for 5 years and most of the time there were surprises. at this price mostly all positives are priced in. if some one has view on orchid the tell me because orchid has many assets which might make it lupin |
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Posted By: excel_monkey
Date Posted: 31/Dec/2010 at 8:56am
http://www.business-standard.com/india/news/strides-arcolabs-opportunities-galore/419767/
Strides Arcolabs: Opportunities galore
Priya Kansara Pandya & Ujjval Jauhari / Mumbai December 28, 2010, 0:13 IST
A stake increase in Ascent Pharmahealth augurs well, looking at the opportunities in Australia and South East Asia.
Strides Arcolabs has been buzzing with news flows on FDA approvals and expansion since the start of the current financial year. The stock, too, has moved in tandem, appreciating 25 per cent in the period.
In its most recent move, trying to ensure full control over its Australian subsidiary, Ascent Pharmahealth, Strides last week raised its offer price for minority shareholders from $0.35 to $0.40 (Rs 15.82 to Rs 18.08) a share, translating into a 51 per cent premium over the closing price of Ascent on December 21.
While Strides already holds 58 per cent in Ascent, it plans to raise this to 94 per cent to tap opportunities in Australia and South-East Asia. Ascent sells over 400 drugs in eight countries and plans to expand in South East Asia.
Strides also marked a foray into bio-pharmaceuticals by acquiring 70 per cent stake in the Bangalore-based biotechnology firm, Inbrio solutions, which gives it immediate access to a pipeline of eight bio-similar products that are estimated to have global sales of $ 28 billion. It will make an investment of Rs 65 crore over a years for development and commercialisation of these products.
This year has been good on approvals, with 22 coming in, while another 15 have been filed. Total filings stand at 140, with 53 approvals obtained till now. The company received FDA nod for two strengths of Lidocaine injections in multi-dose vials (it already had approvals for single use vials) and various strengths of Midazolam (an anesthetic) in single dose vials in December alone.
Midazolam will be marketed by Sagent and Strides is developing and supplying 25 injectable products to Sagent to be marketed in the US.
For CY10, analysts expect the company to report a 35 per cent year-on-year jump in revenues to Rs 1,775 crore. At Rs 423.65, the stock trades at 11.7xCY10E estimated earnings.
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Posted By: excel_monkey
Date Posted: 31/Dec/2010 at 9:23am
http://www.thehindubusinessline.com/2010/12/31/stories/2010123151580200.htm
Pfizer buys Strides' US line-up of 22 drugs for $28 m
Our Bureau
Bangalore, Dec. 30
The pharma industry calls its US market applications ANDAs. Now, 22 such ANDAs or ‘golden eggs' nurtured by Strides Arcolab have hatched into a $28.2- million-plus (Rs 126-crore-plus) nugget for the Bangalore-based drug maker, thanks to the warmth from the large generics market appetite of Pfizer, the world's top drug company.
Pfizer, in a first with an Indian company, has bought 22 of Strides' ANDAs (Abbreviated New Drug Applications). They include 16 approved and six pending filings for sale of off-patent steriles and injections – said to be among the top on Pfizer's list.
The bonus
Strides on Thursday said the deal unlocked the entire portfolio of anti-bacterial and anti-infective injections built up for sales in the US by its marketing venture, Akorn-Strides LLC.
Strides' Rs 10 shares were up marginally to close at Rs 443.30 on the NSE.
The ANDA deal apart, Strides has inked a long-term agreement of undisclosed value with the US major to manufacture and supply the medicine (which then will be sold in the US as Pfizer brands.)
ANDAs are filings that pharma companies make with the US FDA seeking its approval to sell their drugs in that country, the largest drug consumer at $6 billion annual drug sales.
Strides said it “will be entitled to $28.2 million (around Rs 126 crore) in cash as its share of the consideration in addition to entering into supply agreement with Pfizer for manufacture and supply of these products.” The overall deal with the joint venture was for over $63 million.
Mr Arun Kumar, Executive Vice-Chairman and Group CEO of Strides, said, “The divestiture of these products has created significant value for the two joint venture partners. This transaction will further strengthen the strategic partnership between Strides and Pfizer.”
Four of the 22 products are selling in the US. “Akorn-Strides will continue to manufacture and distribute a limited number of the approved products until April 30, 2011,” the company said.
The drugs are part of Strides' 140-odd ANDA filings in the US, of which 53 have been cleared for sales. It has filed 26 through another US company, Sagent Pharma, of which 12 are approved. The rest are through other partners.
Returns significant
Mr T.S. Rangan, Strides Group CFO, told Business Line the returns were significant as the company had invested $2 million while forming the 50:50 venture in 2004 with Akorn Inc. It was to be a vehicle to take its small molecules, mainly steriles or injections, into the US.
Mr Rangan estimated the total US market for the 22 drugs in the range of $550-700 million and said Pfizer could be expected to create a significant volume of sales, thereby driving the production and supply of drugs back home, too.
The portfolio sale to Pfizer would show up in the company's balance sheet for the year-ending December; the money from the manufacturing contract will accrue when the supply was made. The cash would be used to reduce debt. The future of the joint venture would be decided after about three months.
Strides also opened the year with a Pfizer deal, striking a licensed sale arrangement for over 40 patent-expired injectable cancer drugs in January and later expanding the pact to six more countries. A $100-million licensing harvest is on the cards for the group that closed 2009 with turnover of Rs 1,330 crore.
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Posted By: mane.ramesh
Date Posted: 13/Jan/2011 at 1:20pm
member_profile.asp?PF=7984&FID=38 - excel_monkey
u r currently rocking on TED
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Posted By: shontou
Date Posted: 27/Oct/2011 at 9:28pm
Conference Call
Strides Acrolab
The company has revised revenue guidance to Rs 2500 crore for CY'11
Strides Acrolab has announced the results for the quarter ended September 2011 and held a teleconference call on 24th October 2011 to discuss the results and future growth strategies. The key takeaways of the call are as follows:
Financial Information:
Strides Acrolab Consolidated net sales surged by 87% to Rs 769.31 crore for the quarter ended September 2011, primarily on the back of sharp 266% rise in the R&D/Licensing Income to Rs 172 crore led by the Pharma business. Moreover, despite of higher other expenses (mainly due to the Rs 30 crore forex loss on receivables) operating profit had witnessed robust 72% growth to Rs 152.45 crore even though margins fell by 100 basis points to 19.6%. Further, Interest cost was higher by 25% to Rs 49.11 crore and depreciation by 42% to Rs 22.16 crore. As a result there is strong 143% growth in PBT before forex gain to Rs 81.38 crore. However, with forex loss of Rs 28.35 crore compared to forex gain of Rs 18.22 crore there is 2% marginal incline in the PBT to Rs 53.04 crore. The 44% decline in provision for the taxation led the 15% growth in PAT to Rs 46.83 crore. Further, After accounting minority interest Rs 0.36 crore compared to Rs 6.17 crore in the corresponding previous period net profit grew by 34% to Rs 46.47 crore.
Highlights of the call:
Consolidated net sales surged by 87% to Rs 769.31 crore for the quarter ended September 2011, on the back of robust growth across the segments coupled with the strong rise in R&D/Licensing Income led by the Pharma business.
Revenues from Pharma business grew by robust 60% to Rs 486 crore for the quarter ended September 2011, contributing 62% to the total sales.
Revenues from the Specialties business witnessed 131% jump to Rs 294 crore for the quarter ended September 2011, contributing 38% to the total sales.
Revenues include R&D/Licensing Income of Rs.172 Crores for the quarter ended September 2011 as against Rs.47 crore in the corresponding previous period.
During the quarter, EBITDA grew by robust 73% to Rs 152.65 crore despite Rs 30 crores Forex loss adjusted on the receivables are included in the other expenses. The break up of the segments to the forex loss contribution is Rs 25.4 crore from the Specialties business and Rs 4.3 crores from the Pharma business.
Further, Net sales witnessed strong 48% growth to Rs 1838.05 crore for the nine months ended September 2011, on the back of strong 35% growth in R&D/Licensing Income to Rs 358 crore.
Revenues from the Pharma business grew by 38% to Rs 1142 crore and Specialties business grew by 57% to Rs 737 crore for the nine months ended September 2011, contributed 61% and 39% to the total sales respectively.
EBITA grew 31% to Rs 399.59 crore for the nine months ended September 2011, despite Rs 13 crore forex loss adjusted on the receivables are included in the other expenses. The break up of the segments to the forex loss contribution is Rs 10 crore from the Specialties business and Rs 3 crore from the Pharma business.
Interest cost grew by 25% to Rs 49.11 crore for the quarter ended September 2011 and has grew more than expected on the back of restatement of FCCBs.
During the quarter, It has launched one oncology product and expected to launch 2 more products in Q4'CY 11.
It's Brazil JV expected to achieve breakeven this year and the performance during the quarter has been impacted due to the depreciation of Brazilian Real. Further, the key geographies contributing to the revenue are US, Brazil and Australia contributes more than 20% revenues from each.
The vancomycin product has 17-20% market share and further it has all the four strengths in the market.
The management insisted that it has no capacity constraints and has enhanced capacities to meet its orders.
It expects increase in demand in Specialties business as the one of the major player (Hospira) facility has witnessing production related problems.
The Company originally guided revenue of Rs 2200 crore for the CY'11 with a guidance for licensing income of Rs. 270 crore. However, Considering the strong YTD performance, it revises the guidance to Rs 2500 crore for the CY'11, as the company expects Rs 400 crore Licensing Income mainly on account of new licensing income on Pharma business.
Further, The Company originally guided EBITA of Rs 440 crore for the CY'11 now revised it to Rs 480 crore.
The company is confident of exceeding the higher end of guidance inspite of volatile currencies in its key markets and difficult macroeconomic conditions.
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Every day, self-proclaimed stock market "experts" tell us why the market just went up or down, as if they really knew. So where were they yesterday?
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Posted By: datta.supratik
Date Posted: 27/Jan/2013 at 10:55pm
Agila's sale of 1000cr for nine months (~1250 annually).
If pfizer's deal goes through, and the sale is equivalent to piramals' deal (which happened at ~9 times), it could fetch strides ~11000Cr.
Agila is only 74% of Strides which currently is ~6000Cr mcap. Looks interesting.
~Supratik
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Posted By: j2eeprofessiona
Date Posted: 27/Jan/2013 at 12:01pm
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i would also have a look at sequent scientific....its a company now promoted by strides promoter group...
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Posted By: fastnswift
Date Posted: 02/Feb/2013 at 11:20pm
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Dear All, does anyone have an idea when the sale of Agila is likely to happen? There is a lot of news circulating around the likely sale. However, despite the many news articles circulating around, the price does not seem to reflect the possibility of the deal
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Posted By: datta.supratik
Date Posted: 03/Feb/2013 at 6:31pm
Market rumors say the deal might be done by mid Feb and pegged at 1.78 Billion$. I do not have links though for this.
~Supratik
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Posted By: Kabootar
Date Posted: 23/Jan/2014 at 9:13pm
Awesome excel_monkey. strides investment came through for us and yes, even current ex-dividend price is higher than the price when you recommended!
Hats off to you buddy.
Whats the secret behind your clear pharma analysis? Do you work in the industry.
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Verbal diarrhoea! A most deadly disease.
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Posted By: breeze
Date Posted: 23/Jan/2014 at 6:53am
I echo what Kabootar says, if I remember right, you were spot on about Wokhardt also.
Originally posted by Kabootar
Awesome excel_monkey. strides investment came through for us and yes, even current ex-dividend price is higher than the price when you recommended!
Hats off to you buddy.
Whats the secret behind your clear pharma analysis? Do you work in the industry. |
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You just have to be opportunistic, and try to figure out what creates value.. where the bottom is, what creates incremental value,
and in what combinations" John Malone
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