Is Balaxi Pharma The Next Aurobindo Pharma?

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Overview

Balaxi Pharma is engaged in the business of International wholesale distribution of Pharmaceutical Formulations, Buildersʼ hardware and FMCG Products.

The Pharmaceuticals segment contributed 63% of the Companyʼs revenues at INR 2871 Lakhs.

These were contract manufactured at WHO-GMP approved manufacturing plants in India, in line with the company’s asset-light business model that focuses on leveraging distribution expertise and front-end presence of the Group.

FMCG segment contributed 32% at INR 1452 lakhs, Builders’ hardware contributed 5% at INR 240 lakhs. This year, the company’s wholly-owned subsidiary in Dubai has commenced contract manufacturing of pharmaceutical formulations at WHO-GMP manufacturing plants in China and Portugal as well.

Also, Balaxi Pharma has acquired front-end distributors of the group to further boost the distribution, revenues, and value-addition elements.

The value chain of the company’s healthcare business encompasses and controls the procurement, supply chain, distribution, and point of sales aspects throughout all the verticals.

Headquarters is located in Dubai with procurement & branding offices in countries like China and India.

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Balaxi’s team comprises of 400+ people across the offices, warehouses and Sales Points across four continents.

Product Portfolio

Amoxy Plus
Diclopara
Lumox
Poska

Management Board of Balaxi Pharma

Ashish Maheshwari: Managing Director & Chief Financial Officer

Starting from supplying to various importers, Visionary Ashish (also the co-founder), with his vision and hard work has made Balaxi Group into a conglomerate that spans 4 continents.

Minoshi Maheshwari: Non-Executive Director

Minoshi (also the co-founder) has more than 20 years extensive business experiences in Pharmaceutical industry and other allied business fields.

Nidhin Jose: Company Secretary

Shareholding Pattern

Promoters: 72.864 down from73.236 at the start of the year.

FPIs (Foreign Portfolio Investors)– 19.01%

Retailers and others– 8.12%

Balaxi Pharma Shareholding Pattern
Balaxi Pharma Shareholding Pattern

Management Discussion & Analysis

Balaxi Pharma currently operates in Angola, the Caribbean and Central America.

The companyʼs business comprises of three different verticals (Pharma, FMCG, Builder’s hardware) out of which Pharmaceutical formulations is the fundamental driver of revenue, earnings and growth.

The company’s expertise lies in product registrations with the respective authorities of these countries (Angola, Dominican Republic, Guatemala) and the expansive on-ground distribution networks. Companies get OEM manufacturing done for our products in WHO-GMP certified plants.

The company’s more than 90% of funds are in liquid assets or finished goods.

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This enables the company to regularly invest in a vast product portfolio across all therapeutic segments and dosage forms.

Company capture most parts of the value chain from importing, distributing, branding and wholesaling.

Financials of Balaxi Pharma

Balaxi Pharma Revenues
Balaxi Pharma Revenues
Balaxi Pharma EPS
Balaxi Pharma EPS

As we can deduce from the charts above, company took a huge jump in terms of profitability and return and assets in the FY19 and evenmore in FY20.

Company’s share price has jumped from around 70/share in May to 1040/share on 13 October this year, with last 1-year return of about 1000%.

However, the company’s PE AND PB ratios at 95 and 39 respectively is much higher than the industry average of around 32 and 4 respectively.

This growth is all because of aggressive expansion in product categories with the help of liquidity available to the company.

Past investments and expansion policies have started reaping fruits for the company by making it profitable from loss-making a few years before.

No dividend and Debt free Company, thus company looks in great shape in terms of future growth and that has been reflecting in the results from past few years as their businesses tends to stabilize across different countries in different continents.

Also Watch: Balaxi Pharma Analysis

Opportunities

  • New product introduction across different segments provide a good platform to grow.
  • Penetration in FMCG distribution in Angola has great opportunities available.
  • Growing product basket in Dominican Republic and Guatemala.
  • Branding initiatives and expansion in other markets shows a positive way ahead.
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Risks

  • Crash in Oil prices would hurt Angola’s purchasing power.
  • Shortage of foreign currency in Angola, however, is gaining stabilization slowly.
  • Threat of new entrants and price war because of the cheap products available from new entrants or competitors.

However, Pharma is a priority sector and hence the trend is expected to get better.

Government support in the countries where Balaxi is operational, whether in manufacturing or distribution, will also play a major part in the future.

This post has been written by Anshul Galav for FinMedium Research Desk.

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