This is the 13th post in our quarterly result update series for Q3FY21.
In this post, we’re sharing the latest updates of the stocks from our watchlist. Please don’t treat this as a buy recommendation. We find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in the future. The purpose of this post is to bring clarity to our understanding of the businesses we are tracking. We make our notes on the quarterly results and conference calls. Putting it up here makes it easier for us to refer them at a future date.
You can see the earlier updates here.
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Please click on the read more button for more details on each stock.
Cadila has done well to maintain good growth in the India business while the US business has seen marginal decline QoQ. The company is on track with its Phase III trials for its COVID vaccine and should have its 120 million doses capacity by April. It is also expecting good potential from its Saroglitazar Mg drug in the next 3-5 years. It remains to be seen what the future holds for the pharma industry with the race to COVID-19 vaccine intensifying. The company also has to resolve the Moraiya issue pending which can delay its plans for the expansion in the transdermal space. Nonetheless, given the strong positioning of the company in various pharma and consumer product categories and its ever-increasing specialty product portfolio, Zydus Cadila is an important stock to watch out for in the pharma space.
Manappuram’s current quarter performance has been decent with 14.7% YoY overall AUM growth with continued growth momentum in gold loan segment. The company continues to see good traction in the online gold loan and it has also activated doorstep gold loan facility to all branches in India. The company has seen good revival in Asirvad and collections have improved to 99% in Dec. The vehicle finance division has also come back strong and posted collections around 110%. It remains to be seen whether the company will be able to sustain its growth momentum in the gold loan space with every big bank getting into this space and how will things pan out for Asirvad and the MFI industry. Nonetheless, given the company’s resilient customer base and gold loan AUM along with the rising star among MFIs in Asirvad Microfinance, Manappuram Finance seems like a pivotal finance stock to watch out for.
Suven Pharma has had a phenomenal quarter with >50% rise in revenues and 97% rise in profits. The management remains cautious on the fact that this performance should not be indicative of future performance as revenues are always lumpy in the CRAMS model. The company has indicated its intention to go into the innovation side in APIs but it will take some time for it to build itself up in this space. The management maintains that although the current EBITDA margin of 51% may not be sustainable, Suven can achieve at least a 40% margin going forward. It remains to be seen what obstacles Suven will face in its new business expansion and whether it will be able to successfully become an API innovator in the future, Nonetheless, given the rise of the CRAMS space in India, the company’s induction from smallcap into the midcap space by AMFI, Suven Pharma looks to be an exciting pharma prospect for investors.
Syngene has seen a good Q3 with revenues rising 12% YoY and EBITDA margins improving to 32%. The company has seen a good response to its CRO capability and this has resulted in its association with 3DC for its Integrated Drug Discovery platform. The management remains cautiously optimistic on its foray into contract manufacturing with the setup of the Mangalore facility. It remains to be seen how long will it take for the company’s foray into CMO to bear fruit and whether the company can continue its robust growth momentum on its current CRO capabilities. Nonetheless, given its scientific capabilities, its associations with industry leaders for drug discovery, and its expanding reach in the global pharma space, Syngene is a pivotal midcap pharma stock to keep in mind for all investors.
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