DEWAN HOUSING. Bliss GVS Pharma. Buy, On DIPS. Growing business at cheap valuation

Transcription

1 DEWAN HOUSING Bliss GVS Pharma Buy, On DIPS Growing business at cheap valuation

2 Bliss GVS Pharma Ltd 26-Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov-17 Bliss GVS Pharma Ltd. is an Indian pharmaceutical and company headquartered in Mumbai, India. Bliss GVS primarily develops, manufactures and markets products across various therapeutic categories including Anti-fungal, Contraceptive, Laxative, Anti-haemorrhoidal, Anti-spasmodic, Anti-malarial, Anti-biotic, Anti-microbial, Antiinflammatory, Antipyretic, Analgesic and several others. Bliss Gvs pharma is among the world leaders in Suppositories and Pessaries dosage forms with one of the largest portfolios in this segment. It has three decades of experience in suppositories and pessaries. It is the only EU-GMP certified suppositories and pessaries manufacturer in India. Suppository is a solid dosage form that is inserted into the rectum (rectal suppository), vagina (vaginal suppository) or urethra (urethral suppository), where it dissolves or melts and exerts local or systemic effects. Suppositories are used to deliver both systemically and locally acting medications. A Pessary is a medical device inserted into the vagina, either to provide structural support, or as a method of delivering medication. The other products include are Dry Powder for Oral Suspension, Liquid Preparastions, Oral Solids, Sachets, Parenterals, Topical Preparations along with other Healthcare product Results of operations: The Net Sales of the Company increased to Rs. 79, Lakhs from Rs. 54, Lakhs in the previous year, at growth rate of 46.23%. Profit before tax was Rs. 11, Lakhs as compared to Rs. 10, Lakhs in the previous year. Profit after tax and minority interest was Rs. 8, Lakhs as compared to Rs. 8, Lakhs in the previous year. The Company booked a profit of Rs. 1, Lakhs due to foreign exchange fluctuation and better Foreign Exchange management. During the year, the Company spent on R&D activities was about Rs Lakhs. Net profit of Bliss GVS Pharma rose 88% to Rs 394.4mn in the quarter ended September 2017 as against Rs 209.9mn during the previous quarter ended September Sales rose 40.73% to Rs mn in the quarter ended September 2017 as against Rs 1690mnduring the previous quarter ended September 2016 rising by 34.1%. EBITDA de-grew by14% to Rs 779.1mn in the quarter ended September 2017 as against Rs 773.6mn during the previous quarter ended September Outlook: The Company has established brand operations in existing markets that provide an ideal platform to extend the Bliss GVS product portfolio and with that, build new revenue streams. On the back of significant expansion across both Pharmaceutical & Healthcare verticals, the Company could be poised for an accelerated growth : Highlights: 1. Segment leadership in Antimalarial products across most African markets. 2. The only EU-GMP certified suppositories manufacturer in India. 3. Company continued to grow geographies in Kenya, Nigeria and France on the back of contract manufacturing and new product launch. 4. Bliss GVS Pharma's manufacturing facility (Unit-II) situated at Palghar, Maharashtra has successfully completed the re-audit as per EU - GMP guidelines by European Authorities. This inspection was completed without any deficiencies, hence a smooth flow of operations can be expected for the coming terms Manufacturing Capacity: The company has the capacity to produce million units/annum of Suppositories & Pessaries, 250 million units/annum of Tablets, 6 million units/annum Dry Syrup, 21.6 million units/annum units of Satchets, million vials/ annum of Dry Powder Injectable, Ampoules and 7.5 million tubes/ annum of Ointments, Creams & Gels. It has 4 Manufacturing units in Maharashtra, one in Daman, and another one is to be launched soon. Valuation: At CMP of Rs ,Bliss GVS Ltd. is trading at a P/E multiple of 15.2(x) compared to the industry peer of 28.6(x). The company has an upside potential of 20% to 25% in the next 12 to 18 months. We arrive at a target price in range of Rs257 to Rs.268. Thus we assign a BUY on DIPS rating on the stock. 1 Rating Matrix CMP Rating Holding Period Shareholding Pattern Particulars Sep'17 Jun'17 Mar'17 Promoters FPI DII Others Relative Capital Market Strength Dec 27, 2017 Rs214.5 Buy On DIPS 12 to 18 months Current Level Investment 52 week H/L Rs221.9/Rs Face value 1 Sector Pharmaceuticals Category Mid-Cap F&O Stock NO Bliss GVS Pharma Ltd. Sensex (Rs. Mn.) Q2FY18 Q1FY18 QoQ YoY OI 2, , % 34.1% EBITDA % 0.7% PAT % 88.0% 9, , , , , , , , , Revenue from Operations FY17 EBITDA (excl Other Income) FY16 PAT Source: Choice Research/ Annual reports; Financial data-ace equity

3 Financial Analysis Particulars FY13 FY14 FY15 FY16 FY17 CAGR (FY13-FY17) Revenue from Operations 3, , , , , % Growth Rate (%) 48.5% -13.1% 18.1% 34.3% 46.2% EBITDA (excl Other Income) 1, , , , % EBITDA Margin (%) 28.0% 20.7% 25.4% 28.5% 24.2% PAT , , % NPM (%) 15.0% 11.9% 15.1% 18.3% 14.5% Net Worth 2, , , , , Total Assets 5, , , , , Debt 1, , , , , Cash Flow from Operations , , Current Ratio(x) D/E(x) Profitability ratios (%) ROCE (%) 28.5% 15.4% 22.0% 28.8% 28.7% RoE (%) 23.1% 14.3% 18.2% 24.3% 24.1% ROA (%) 10.4% 5.9% 9.3% 11.5% 10.6% Efficiency ratios (x) Receivable days Inventory Days Payable days Peer Comparison Companies (Rs. Mn.) CMP RoE (TTM) 12M R EPS EBIDTA M. Cap BVPS (%) (TTM) Margin (%) NPM (%) M.Cap/ Debt Bliss GVS Pharma Ltd % % 15.6% 8.8 Hikal Ltd % % 6.2% 3.5 Morepen Laboratories Ltd % % 4.5% Nectar Lifesciences Ltd % % 3.3% 1.1 Strides Shasun Ltd % % 9.8% 2.2 Suven Life Sciences Ltd % % 23.6% 46.5 Average P/Sales EV/EBIDTA PAT EBIDTA Sales Companies (Rs. Mn.) P/E (x) P/BV (x) D/E EV/ Sales (x) (x) (TTM) (TTM) (TTM) Bliss GVS Pharma Ltd Hikal Ltd Morepen Laboratories Ltd Nectar Lifesciences Ltd Strides Shasun Ltd Suven Life Sciences Ltd Average Quarter Results (Q2FY18): Particulars (Rs. Mn.) Q2FY18 Q1FY18 QoQ(%) Q2FY17 YoY(%) Revenue from Operations 2, , % 1, % EBITDA (excl OI) % % PAT % % 2 Source: Choice Research/ Annual reports; Financial data-ace equity

4 Profitability Margins Particulars Q2FY18 Q1FY18 FY13 FY14 FY15 FY16 FY17 Revenue Growth Rate (%) 0.4% -12.7% 48.5% -13.1% 18.1% 34.3% 46.2% EBITDA Growth Rate (%) -14.0% 35.1% 55.8% -35.9% 45.2% 50.5% 24.4% EBITDA Margin (%) 34.4% 40.1% 28.0% 20.7% 25.4% 28.5% 24.2% EBIT Growth Rate (%) -14.5% 29.7% 55.3% -42.4% 52.2% 54.6% 21.8% EBIT Margin (%) 32.2% 37.9% 26.5% 17.6% 22.6% 26.0% 21.7% PAT Growth Rate (%) 6.9% 0.1% 13.4% -31.1% 49.6% 63.1% 16.2% PAT Margin (%) 17.4% 16.4% 15.0% 11.9% 15.1% 18.3% 14.5% Expenditure Break up Values in Rs. Mn. Particulars Q2FY18 Q1FY18 %age change FY17 FY16 %age change Cost of material consumed % % Purchase of Stock In Trade % % Changes in Inventory % % Excise Duty % % Employee Cost % % Finance Cost % % Depreciation and Amortisation % % Other Expenses % % Total NA NA Company Profile: Bliss GVS Pharma Ltd.is engaged in the manufacture of a wide range of Pessary Formulations, Suppository Formulations, Calcium Preparation, Protein Powders, Iron Preparation, Antibiotics, Analgesic & Antipyretics, Respiratory, Anti-inflammatory, Dermatological Preparations, Anti-Diarrhoeal products. The company s most unique product is Today Vaginal Contraceptive, a safe female contraceptive. Therapeutic Areas: Anti-haemorrhoidal, Erectile Dysfunction, Laxatives, Anti-inflammatory, Anti-emetic, Anti-depressant, Antimigraine, Vaginal Contraceptive, Antifungal, Anti-bacterial, Anti-spasmodic, Lubricant, Anti-malarial, Anti-infective, Haematinic, Appetiser, Vitamin Supplement, Nutritional Supplement, Antacid Analgesic, Anti-helmintic, Anti-pyretic, Health Suppliments, Anit-Biotics, Anti-Ulcer, Anti-Septic, Laryngitis, Pharyngitis Bliss GVS manufacturing plants are certified to be GMP compliant by local and international standards: EU GMP, WHO GMP, OHSAS : 2007 and ISO-14001:2004. This Company is the only EU-GMP certified suppositories manufacturer in India. 2 Source: Choice Research/ Annual reports; Financial data-ace equity

5 Choice s Rating Rationale The price target for a large cap stock represents the value the analyst expects the stock to reach over next 12 months. For a stock to be classified as Outperform, the expected return must exceed the local risk free return by at least 5% over the next 12 months. For a stock to be classified as Underperform, the stock return must be below the local risk free return by at least 5% over the next 12 months. Stocks between these bands are classified as Neutral. Don t be an Investor by Force, Be an investor by CHOICE Create a Wealth Building Portfolio with the help of CHOICE Fundamental Research. CHOICE Fundamental Research will handpick stocks for you to invest in an oversold market by helping you build positions in heavily beaten down fundamentally strong stocks. Opportunities to invest in fundamentally strong stocks at a low arise only 2-3 times in a full year cycle. Investors are advised to sell the stock if the recommended upside potential achieves. If recommended upside potential remains under-achieved, investors are advised to consider the update report on suggested stock. OUR TEAM Fundamental Research Team Name Designation id Contact No. Sunder Sanmukhani Head-Fundamental Research sanmukhanis@choiceindia.com Satish Kumar Research Analyst satish.kumar@choiceindia.com Rajnath Yadav Research Analyst rajnath.yadav@choiceindia.com Aman Lamba Research Associate aman.lamba@choiceindia.com Devanshi Shah Research Associate devanshi.shah@choiceindia.com Shrey Gandhi Research Associate shrey.gandhi@choiceindia.com Dhvanit Wadia Research Associate dhvanit.wadia@choiceindia.com customercare@choiceindia.com 4

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