Span Diagnostics Limited

Transcription

1 Span Diagnostics Limited Date: 5 th January, 216 Stock Performance Details Shareholding Details October 215 Current Price : ` 96.7^ Face Value : ` 1 per share 52 wk High / Low : ` 96.9 / Total Traded Volumes: 2,423 shares^ Market Cap : ` 52.8 crore^ Sector : Pharmaceuticals EPS (H1 FY16) : `.2 per share Equity Share Capital : ` 7.3 crore P/E (TTM) :. (x)^ P/BV (TTM) :.88 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : SPANDIAQ BSE Scrip Code : ^ As on 1 st January, 216 Particulars Shareholding Nos. (%) Promoter & Promoter Group Holding 32,14, Total Institutional Holdings (FIIs & DIIs). Public Holdings 22,47, Total 54,61, Background Span Diagnostics Limited was founded as Desai Laboratories to develop and manufacture a comprehensive range of ready-made diagnostics product needed by various segments of healthcare. The Company caters to several different sections of diagnostics like Immunology, Biochemistry, Microbiology, Serology, Histopathology and instrumentation. Span's extensive distribution network comprising four regional offices and more than 25 distributors across the country, caters to India and its neighboring countries. Span launched E-Spanol which is an interactive portal for on-line purchase of Span products across the globe and offers transparent transactions with totally secured payment gateway and convenient on-line ordering system. The Company s products are CE registered as well as certified under ISO 13485:23 and manufactured in its state-of-the-art production facilities which are well equipped to undertake contract manufacturing. The Company has, via a slump sale transferred its In Vitro Diagnostics Business undertaking, which roughly accounts for 85% of its revenues; to M/s. Arkray Healthcare Pvt. Ltd. due to which Span Biotronics Ltd has ceased to be a subsidiary of Span Diagnostics Ltd. pursuant to the transfer of shares from Span Diagnostics Ltd. to Arkray Healthcare Pvt. Ltd. It is in the process of exploring setting up a new business in the Food and Healthcare segment for which it has incorporated Dryfruit Factory LLP during the quarter and the setting up process has been initiated. The Company disinvested its entire 45% stake held in a Joint Venture Company named Span Nihon Kohden Diagnostics to Nihon Khoden Corporation, Japan on 19 th November 215 for consideration of Rs. 8 million. An Initiative of the BSE Investors Protection Fund1

2 Financial Snapshot Particulars Consolidated (` Million) Income Statement H1 FY16 H1 FY15 Income from Operations Y-o-Y Growth (%) (95.8) 29.7 EBITDA (12.5) 4.7 Y-o-Y Growth (%) (13.7) EBITDA Margin (%) (63.8) 8.7 Net Profit 1.5 (2.4) Y-o-Y Growth (%) NPM (%) 7.7 (.5) Balance Sheet Fixed Assets Cash and Bank Balances Inventories Net Working Capital (113.1) Net Worth Balance Sheet Ratios ROCE (%) (1.81) 2.83 RONW (%).24 (1.8) Source:Capitaline From the Research Desk of LKW s Gurukshetra During H1 FY16, the Company s Income from Operations dropped by 95.8% on a y-o-y basis from Rs million to Rs million in H1 FY16. Material Cost dropped by 97.6% on a y-o-y basis to Rs. 4.6 million in H1 FY16 from Rs million reported in H1 FY15. Employee Benefit Expenses too dropped from Rs million in H1 FY15 to Rs. 4.7 million in H1 FY16. Other Expenses decreased by 83.4% y-o-y from Rs million in H1 FY15 to Rs million in H1 FY16. The Company reported an Operating Loss of Rs million on account of lower Sales for the period under review. The Operating Profit for H1 FY15 stood at Rs. 4.7 million. Despite the subdued performance at the EBIDTA level, Net Profit of the Company stood at Rs. 1.5 million in H1 FY16 as compared to a Net Loss of Rs. 2.4 million in H1 FY15. This is mainly on account of higher Other Income reported in H1 FY16 which stood at Rs million. PAT Margins for H1 FY16 stood at 7.7%. Sundry Debtors decreased to Rs million in H1 FY16 from Rs.154 million reported in H1 FY15. The same as a percentage of Total Revenues remained on the lower side and stood at 2.1% in H1 FY16 against 18.9% in H1 FY15 respectively. An Initiative of the BSE Investors Protection Fund2

3 During H1 FY16, final settlement has been agreed for a slump sale transaction. Hence, difference in consideration accounted in 31 st March, 215 financial statements and actual receipt has been considered as an exceptional item. Performance on the Bourses % Stock Performance Span Diagnostics BSE Small Cap as on 29th December, 215 Peer Comparison Span Diagnostics is engaged in the business of manufacturing, marketing and trading of diagnostics reagents, diagnostics instruments and allied products. The ever increasing competition in the in-vitro diagnostics market and the challenges in regulatory landscape put constant pressure for investment in new technology and facility. The table mentioned below gives a snapshot of the Company s performance to those of its peers which operate in a similar business segment in the listed space for H1 FY16. (` In millions) Particulars Span Shree Mercury Diagnostics # Pacetronix Ltd Laboratories Income from Operations EBIDTA (12.5) Net Profit EBIDTA Margins (%) (63.8) PAT Margins (%) Book Value Per Share P/E P/BV (x).55^ RONW (%) Source: Capitaline;# Financials on Consolidated Basis ; ^ On a Consolidated Basis as on September 215 (TTM Basis) On a Standalone Basis as on September 215 (TTM Basis) An Initiative of the BSE Investors Protection Fund3

4 About the Industry Management Outlook The Indian pharmaceuticals industry is the third largest in terms of volume and thirteen largest in terms of value. It is estimated to grow at 2% CAGR over the next five years. Presently, the market size of the pharmaceutical industry in India stands at US$ 2 billion. Healthcare has become one of the India s largest sectors in revenue as well as employment. It comprises of areas such as medical devices, clinical trials, hospitals, medical equipments, health insurance, telemedicine, medical tourism etc. The sector is growing at a brisk pace due to its strengthening coverage, favourable demographics and increasing expenditure by public as well as private players. The overall Indian healthcare market today is worth US$ 1 billion and is expected to grow to US$ 28 billion by 22 at a CAGR of 22.9%. Healthcare delivery, which includes hospitals, nursing homes, diagnostics centres, and pharmaceuticals, constitutes 65% of the overall market. The hospital and diagnostic centers attracted Foreign Direct Investment (FDI) worth US$ 3.14 billion between April 2 and June 215, according to data released by the Department of Industrial Policy and Promotion (DIPP). The Government of India has reduced the approval time for new facilities to boost investments. Further, it has introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines. The Government of India plans to set up a US $64 million venture capital fund to boost discovery and strengthen pharmaceutical infrastructure. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the healthcare companies. The private sector has emerged as a vibrant force in India's healthcare industry, lending it both national and international repute. There are ample of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. The demand for healthcare services in India is increasing owing to favourable demographics. There is significant scope for enhancing healthcare services considering that healthcare spending in the country, as a percentage of GDP is rising. Rural India, which accounts for over 7% of the population, is set to emerge as a potential demand source for these services. Span Diagnostics, which is engaged in the business of manufacturing, marketing and trading of diagnostics reagents, diagnostics instruments and allied products, witnessed a downward momentum in growth in FY due to higher capital expenditure and aggressive competition. As a result, the Company decided to transfer its In Vitro Diagnostics undertaking to M/s. Arkray Healthcare Private Limited. Since, the Company has exited and transferred the IVD (In-Vitro Diagnosis) business in March 215; currently there is neither any research nor manufacturing activity taking place. It is now exploring business alternatives in Food and Healthcare segment. The Company has incorporated Dryfruit Factory LLP during the current quarter and the setting up process is initiated. The Indian Food industry is poised for huge growth due to the increasing demand, purchasing power and Export potential for the products. The Government has approved proposals for joint ventures (JV), foreign collaborations; industrial licenses and 1% export oriented units to encourage investments in the sector. Given the favourable outlook of the sector, the Company might fare satisfactorily in its new business. However, a clear picture of the Company s position in the market can be drawn only after it starts its business operations in this sector. An Initiative of the BSE Investors Protection Fund4

5 Financial Graphs 5 4 Net Income from Operations ` in Million H1 FY H1 FY16 EBIDTA & EBIDTA Margins ` in Million % -2 H1 FY15 EBIDTA H1 FY EBIDTA Margins ` in Million PAT & PAT Margins % 2-2 H1 FY15 H1 FY16 PAT PAT Margins An Initiative of the BSE Investors Protection Fund5

6 Disclaimer All information contained in the document has been obtained by LKW s Gurukshetra from sources believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and LKW s Gurukshetra in particular makes no representation or warranty express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements based on available data, and LKW s Gurukshetra shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our company and should not be construed as any indication of our recommendation to buy, sell or invest in the company under coverage. Disclosure Each member of the team involved in the preparation of this report, hereby affirms that there exists no conflict of interest. The report has been sponsored and published as part of Initiative of BSE s Investors Protection Fund About Us LOTUS KNOWLWEALTH (LKW) commenced business in 1991 and is currently engaged in providing CAPITAL MARKET RESEARCH, INVESTMENT ADVISORY and STRATEGY services. GURUKSHETRA is the Research and Training arm of LKW. LKW Investment Advisers is the SEBI registered Investment Advisory arm of LKW. 5 Contact Us LOTUS KNOWLWEALTH Pvt. Ltd. Regd.Office:B Wing, 55-56, Fairlink Centre, Off Andheri Link Road, Andheri (W), Mumbai enquiry@lotusknowlwealth.com Tel: Website: An Initiative of the BSE Investors Protection Fund6