A clean laser focused Company
The simplest but most relevant analysis you will find on the Company. Read slowly, think carefully & you might agree !.... Do comment at the end for any clarification/ views.
Information last updated - June 29, 2020
Decent long term compounding story.
😘 Flavor of the season.
🙂 Decent business growth, stable margins, ok cash generation. Low debt.
🙂 Long term chart broken out in Jan 20 and retested the breakout in Mar and May 20
🙂 Good promoter driven Company with a solid professional board.
🙂 Closer to the lower end of historical valuation band.
🙂 Decent. Institutions have been accumulating from public.
- Amongst top ten pharma companies in India
- Leadership position in anti infectives segment
- Able management with strong professional board
- Low net debt levels
- Consistent business growth and stable margins
- Significant (40%) business is from overseas
- Cash flow from operations are volatile vis-a-vis business growth and margins
- Valuations are not overly attractive
- Disruptions caused due to Covid2019. Surgeries are postponed impacting Company's anti infectives
- Regulatory approvals
- Improving performance in the chronic therapy segments like Neuro / CNS, Derma and Anti-Diabetes
- Significantly growing Vitamins/ Minerals / Nutrients segment. This segment shall continue to find more and more acceptance in the post Covid2019 world
- As on March 31, 2020, the Company has filed a total of 144 ANDAs (including 2 NDA) with the US FDA and has received 89 approvals (including 13 tentative approvals and 2NDAs)
- Alkem is currently run by Sandeep Singh (MD). He is from the promoter family and is associated with the Company since 2003.
- Based on my reading so far, he seems reasonable and well regarded.
- The pedigree of people on the Board further testifies towards the corporate governance standards at the Company.
Auditors - B S R & Co. LLP
Bankers - Citi, HDFC, HSBC, Kotak Mahindra, SBI & others
Credit Rating - Crisil (AA+ Stable, A1+), Fitch - IND A1+
- Company has a strong credit rating
- Revenues have grown consistently though with higher base the rate of growth is slowing down
- Margins are stable and return on capital is good
- Cash flow from operations have got hit in the current year but that maybe because of COVID2019 impact. I will be watching this very closely.
- Debt levels are comfortable
- Valuations are neither too low nor too high. From current levels, upside potential is more than significant downside risk. (Note: March 20 valuations are calculated at Rs 2,282/ share. Accordingly, please adjust the same as per current market price)
Other Important Observations
Long Term Chart - a key parameter to understand the true nature of any Company
Interactive Chart & Current Technicals
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