Investment Memo: 539872

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Our Rating: HOLD

Mehabe score: 6
G Factor: 5
Piotski Score: 6
The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 5 and Piotski score of 6.

Description

Established in the year 1993, Bajaj Healthcare Ltd is an estalished player in the Indian Pharmacuetical Industry and fastest growing mid-cap pharmaceutical companies in India.#

Main Points

Products
Company is into manufacturing and supply of API’s, Intermediates, Formulations and Impurities.#
With six API manufacturing facilities spread across different states, API’s contributes around 90% to the overall revenue mix. It has strong presence in more than 50 countries through exports of API’s with an aggregate manufacturing capacity of 726 MT per monthSite: 539872Main Symbol: BAJAJHCARE

Price Chart

Technical Analysis

• Stock trades at 941.0, above its 50dma 810.01. It also trades above its 200dma 595.78. The stock remains bullish on techicals
• The 52 week high is at 1023.80 and the 52week low is at 331.20

Price Chart

P/E Chart

Sales and Margin

Strengths

– is expected to give good quarter
– has delivered good profit growth of 58.72% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 26.14%
-Debtor days have improved from 73.70 to 54.94 days.

Weakness

– might be capitalizing the interest cost

Competition

– The industry trades at a mean P/E of 30.6x. Piramal Enterp. trades at the industry’s max P/E of 46.54x. 539872 trades at a P/E of 15.6x
– Industry’s mean G-Factor is 2.5 while the mean Piotski score is 9.0. 539872 has a G-Factor of 5 and Piotski scoreof 6.
– Average 1 month return for industry is -0.1%. The max 1- month return was given by Bajaj Healthcare: a return of 14.16 %

Quarterly Results

• Sales for period ended Jun 2021 is Rs 186.0 cr compared to Rs 140.0 cr for period ended Jun 2020, a rise of 32.9%
• Operating Profits reported at Rs 33.0 cr for period ended Jun 2021 vis-vis 25.0 for period ended Jun 2020 .
• Operating Margins contracted -11.5 bps for period ended Jun 2021 vis-vis Jun 2020 .
• The EPS for Jun 2021 was Rs 13.93 compared to Rs 15.42 for previous quarter ended Mar 2021 and Rs 11.08 for Jun 2020

Profit & Loss Statement

Profit&Loss Comments

• Company reported sales of Rs 703.0 cr for period ended TTM vis-vis sales of Rs 657.0 cr for the period ended Mar 2021, a growth of 6.5%. The 3 year sales cagr stood at 23.9%.
• Net Profit reported at Rs 90.0 cr for period ended TTM vis-vis sales of Rs 83.0 cr for the period ended Mar 2021, rising 7.8%.
• Company recorded a healthy Net Profit CAGR of 77.8% over the last 3 years

Balance Sheet Statement

Cash Flow Statement

Cash Flow comments

• CashFlow from operating activities was positive.
• CashFlow from operating activities: Rs 44.0 cr for period ended Mar 2021 vis-vis Rs 21.0 cr for period ended Mar 2020

Sales Growth

Profit Growth Statement

Profit Growth Statement

Stock Price CAGR

Return of Equity

General Comments

– The company has improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 41.0% compared to 26.0% over the last 3 Years.
– The stock has given a return of 167% on a 1 Year basis vis-vis a return of 65% over the last 3 Years.
– The compounded sales growth on a TTM bassis is 60% vis-vis a compounded sales growth of 26% over the last 3 Years.
– The compounded profit growth on a TTM basis is 270% vis-vis a compounded profit growth of 76% over the last 3 Years.

Ratios

Shareholding Pattern

– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 32.74% vis-vis 32.74% for Mar 2021

Conclusion

– is expected to give good quarter
– has delivered good profit growth of 58.72% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 26.14%
-Debtor days have improved from 73.70 to 54.94 days. – might be capitalizing the interest cost

• The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
• Technically, the stock remains above its 50 DMA 810.01 and is trading at 941.0, thus bullish price action wise.
• Thus, overall we retain a HOLD on the stock.

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