Analysis of ipca laboratories 1.Company and its industry
2.Management and its business model
3.Fundamental
4.Growth
5.Valuation
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Company
Overview of a company - IPCA laboratories is a pharmaceutical company& it was established in 1949.
- The 19th largest formulation company in India.
- The company have 350 formulation and 80 API.
- Leading brand in pain,rheumatology,anti-malarials and hair care therapy in India.
- They are sell their products in over 120 countries across 6 continents.
Subsidiary of a company -
Name - holding
1. Ipca pharmaceutical (USA) - 100%
2.Ipca laboratories (UK) - 100%
3.Ipca pharma Nigeria - 100%
4. Ipca pharma (AUSTRALIA) - 100%
5. Ipca pharmaceutical (MEXICO) - 100%
6. Ramdev chemical (INDIA) - 100%
7.Onyx scientific (UK) - 100%
8. Pisgah laboratories (USA) - 100%
9. Bayshore pharmaceutical (USA) - 80%
10. Ipca pharma (NEW ZEALAND) - 100%
11. Avik pharmaceutical (INDIA) - 49%
12. CCPL software (INDIA) - 28.95%
13. Trophic wellness (INDIA) - 19.26%
14. Krebs biochemical (INDIA) - 39.69%
Share- holding of promoter(%)
Share holdings of FII(%)
Share holdings of DII(%)
Employees and their salary -
Total no’ of employees- 14651
Total salary- 921 crore
Extra information
1. Company spends 1.08% on corporate social responsibility (CSR).
2. Company R&D expenditure is 2.35% of the turnover.
Industry
1. Indian pharmaceutical industry is the 3rd largest pharmaceutical industry in terms of volume and 14th by value.
2. Global pharmaceutical industry is growing with the rate of 5% cagr.
3. The India domestic pharmaceutical industry, with a strong network of 3000 drug companies and more than 10500 manufacturing units.
4. Indian pharmaceutical industry supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of medicines in UK.
5. Indian pharmaceutical company will expected to grow to US $100 billion by 2025.
6. Domestic pharmaceutical industry turnover reaches 1.4 lakhs crore in 2019.
7. Indian expenditure on healthcare increased to 1.6% in FY2020.
8. Medicine spending in India is projected to grow 9-12% over next five years.
Business model
1.Break-up of sales
2. Continents wise exports
3. Company turnover composition
4. Area wise Revenue composition
Management Management talks(as per march 2020)
Outlook, Risks and Concerns
The Indian pharmaceuticals industry is globally respected and is one of the most successful industries in the country. It has contributed significantly to the global healthcare by ensuring quality, accessible and affordable generic medicines around the globe. It has also immensely contributed to India’s economic growth.
Although economic woes of certain geographies are impending the pharmaceutical market growth, the long term outlook for the industry remains positive. The industry growth is driven by ageing population and ever growing middle income group in emerging economies boosting demand for the pharmaceuticals. Additionally, the emergence of new viruses, the latest being SARS-CoV-2 and drug resistant infections, biological agents, immune therapies, etc. will spur research and development activities providing the industry with more products in their drug pipeline with revenue and growth streams.
The Indian pharmaceuticals market is the third largest in terms of volume. India is the biggest provider of generic medications internationally and enjoys a significant position in the world pharmaceuticals sector. The country also has a huge talent pool and scientists having the capability to steer this industry forward to a much greater degree. The cost efficiency also continues to create opportunities for Indian pharmaceutical companies in the emerging global economies. The Indian pharmaceutical industry is expected to outperform the global pharmaceutical industry and grow in the next couple of years and thereby emerge as one of the top 10 pharmaceutical market globally by absolute size. India is also the largest provider of vaccines and generic drugs in the global market.
Indian pharmaceutical companies are focusing on global generic and API business, R&D activities, contract research and manufacturing alliances. India is also fast emerging as a preferred pharmaceuticals manufacturing location. Increasing use of pharmaceutical generics in developed markets to reduce healthcare cost will also provide attractive growth opportunities to Indian generic formulations manufacturers and thus Indian pharmaceutical industry is poised for an accelerated growth in the coming years.
However, poor public healthcare funding and infrastructure, low per capita consumption of medicines in developing and under developed countries including India, currency fluctuations, regulatory issues, government mandated price controls, inflation and resultant all round increase in input costs are few causes of concern.
During the year under report, there was no change in the nature of Company’s business.
New update -
New APIs manufacturing unit at Dewas (M.P.)
The Company is in the process of setting up a new APIs manufacturing unit at Dewas (M.P.) with an initial capital outlay of about Rs. 250 crores. The land for this project has been acquired and the Company is currently in process of obtaining the environmental approvals.
Management team and theirs salary
Total management salary- 22.57 crore (ceiling as per act- 81.65 crore)
1.
Return on capital employed
2. Return on equity
3. Return on assets - 15%
Fundamentals
1. Market-Cap - 26,855 crore
2. Book value - ₹370.62
3. Debt to equity - 0.12
4. Borrowing5. Intrest-coverage ratio - 42.67 6. Resevers
7. Assets
9.Contingent liability- 2.19 crore 10.Current ratio - 2.18
11.Fixed assets- 2714.86 crore(2020)
12.Intangible assets-230 crore(2020)
13.Total investment- 272 crore(2020)
14. Sales
Profit Growth
17.Profit margin
18. Cash&Cash equivalent - 58.46 crore
19.Cash flow to profit ratio (4year average) - 1.3
20. Inventory turnover ratio
Share price growth
Valuation
PEG ratio (1year) - 1.30
Price to book value (PB ratio)- 6
* Intrinsic value formula(by Benjamin graham) - ₹6600
# intrinsic value formula:-(2*G + 8.5) * EPS
Where G stand for growth(5years)
EPS stand for earn per share
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