Tag Archives: Glenmark Pharma

Weekly Portfolio Review: 26 December 2010

BSE Sensex ended the last week higher by 209 points to close at 20,074 and NSE Nifty 63 points at 6,012. Return on my portfolio in the past week was 1.76%. Hero Honda gained 15% in the past week. Other gainers in my portfolio were TIL, Graphite India, NIIT Tech, Divi’s Lab, and Swaraj Engines which gained from 5% to 8%. In the losers pack were Opto Circuits, Dr. Reddy’s Lab, and Crompton Greaves which lost 5% to 9%.

The surge in Hero Honda was after the Hero Group management allayed fears that there won’t be any impact on minority shareholders in Hero Honda after its split from the Japanese auto major Honda. The official disclosure of details of the parting of the joint venture with Honda ended all rumours that were going around for sometimes now.

NIIT Technologies acquired an electronic health records and referral management platform called “Preferr” to initiate its foray into the lucrative healthcare segment in the US. In another tragic incident, 2 persons died after inhaling poisonous gas at a manufacturing facility of Dr. Reddy’s Laboratories.

Good buys in my watch list

Script Sector 3 Years Target Current Price Expected Margin
KSB Pumps Engineering 1,072.00 521.95 105%
Zensar Tech IT 318.00 159.85 99%
Tata Sponge Iron Metal 700.00 357.10 96%
Oil Country Tubular Metal 173.00 90.70 91%
Graphite India Engineering 200.00 105.40 90%
Divis Laboratories Pharma 1,095.00 635.95 72%
Honeywell Automation Engineering 4,100.00 2,398.05 71%
Tractors India Ltd Construction 1,150.00 683.00 68%
Swaraj Engines Auto Ancil 850.00 505.95 68%
Amara Raja Batteries Auto Ancil 301.60 182.00 66%
Bharti Airtel Telecom 551.00 348.50 58%
BHEL Engineering 3,567.00 2,284.75 56%
Tech Mahindra IT 1,074.00 688.10 56%

I will be buying Zensar Technologies, Oil Country Tubular, Divis Laboratories and Honeywell Automation in this week. KSB Pumps and Tata Sponge Iron are already within my top 5 holding.

My plan is to limit number of companies in my holding to 30. At present I have 32 companies and when I buy Zensar Tech and Oil Country Tubular this week, it will reach 34. In order to align my portfolio with my plan, I will be selling shares of four companies in coming weeks.

I will sell Glenmark Pharma and Dr. Reddy’s in this week. My return on Glenmark Pharma is 47% in 9 months and on Dr. Reddy’s Laboratories is 23% in 4 months.

News Update

I am discontinuing this part from my weekly portfolio review. However I will share on twitter any news on companies that has been mentioned in ‘good buys in my watchlist’.  You may follow me on twitter at www.twitter.com/mvalappil

Interesting Read

Margins to remain under pressure at consumer goods firms

In a year during which food inflation stayed stubbornly high for the most part, packaged consumer goods companies engaged in a pitched battle for market share, driving up volumes with price wars, new launches and increased spending on high-decibel promotions even as margins got squeezed. http://www.livemint.com/2010/12/21045902/Margins-to-remain-under-pressu.html?atype=tp

Tariff-based bids to hurt power PSUs

Competition among power companies could become fiercer soon, with the Centre all set to introduce tariff-based competitive bidding for the allocation of projects from January 6. Consumers can rejoice as the new regime would bring down electricity tariffs across the country. Private sector players like Reliance Power, Tata Power, Sterlite, JSW Energy, Adani and Lanco Infratech, who are well-equipped to negotiate prices with vendors and also have access to secure fuel supplies, would be at an advantage when it comes to grabbing projects under the new regime. However, NTPC, despite its unmatched project-execution expertise, is expected to face the heat, at least initially. http://www.indianexpress.com/news/tariffbased-bids-to-hurt-power-psus/728274/

My Portfolio

Return

My Portfolio BSE Sensex NSE Nifty
This Week 1.76% 1.05% 1.06%
This month 1.55% 2.82% 2.53%
This Year 10.72% 14.94% 15.58%
Since 1-1-2009 126.71% 108.08% 103.16%
Since 1-1-2008 52.38% -0.66% -1.12%
Since 1-4-2007 89.31% 53.56% 57.31%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 8 3 Years 102
Graphite India Telecom 6 2 Months 9
HUL FMCG 5 5 Months 12
KSB Pumps Engineering 5 3 Months -6
Swaraj Engines Auto Ancillory 5 2 Months 9

Shares I bought this month

Company Average Cost
Tata Sponge Iron 364.43
Graphite India 95.62
BHEL 2,339.58
HUL 302.01
Tractors India Ltd 690.22
Swaraj Engines 491.85
KSB Pumps 506.95

Shares I sold this month

Company Average Price

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 218 2.6 Years
Dabur India 152 4.6 Years
Tata Global Beverages 111 2.0 Years
Berger Paints 168 3.8 Years
Infosys 102 3.0 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
Opto Circuits -14 2 months
Honeywell Automation -10 1 month
Tata Communication -25 11 months
Mangalam Cement -17 2 months
Divi’s Laboratories -10 2 months

Archive of previous portfolio reviews

Monthly Portfolio Review: August 2010

2010 continues to be a lackluster year for the stock markets with Sensex gaining just 2.90% year to date. My portfolio gained 6.09% during the same period. Five companies namely Tata Global Beverages, Gujarat Gas, Dabur India, Piramal Healthcare and Crompton Greaves contributed 72% of my total gain in the year to date, while Suzlon Energy took me down sucking 23% of my overall gain. It was a terrible mistake that I missed to offload Suzlon at right time. Huge debts on its balance sheet and poor performance of the wind power sector in America and Europe due to downturn put Suzlon in a mess. Almost all of shares that I bought during last three months are in negative. Q2 of 2010 was the best quarter as all my gain was registered during this quarter.

My Portfolio

In the month of August I invested in some small-mid cap stocks like KSB Pumps, Swaraj Engines, Mangalm Cements and Hindustan Zinc. I also added more on Dr. Reddy’s Lab, Hero Honda and Reliance Industries. During the coming weeks, I may consider adding some more of these stocks. There is no major change in my top 5 holding and top 10 holding is below 60% of total value. Average holding period is about 11 months and Dabur India being the highest with 4.38 years in my holding.

News Updates

Major news on companies during the last week

The stock of Reliance Industries has taken a beating as the company’s motive behind the stake purchase in EIH is not clear. The jury is still out over the decision of Reliance Industries (RIL) to buy a 14.12 per cent stake in East India Hotels (EIH). Reactions are mixed, as RIL’s intention behind the purchase is not clear. The markets did not seem happy with the Rs 1,021-crore outflow in an unrelated investment. Hence, the share price tanked. – Business Standard

NTPC and Bhel are jointly setting up a project to manufacture power plant equipment with an outlay of Rs6,000 crore at Mannavaram in Chittoor district. Government estimates claim that about 6,000 direct jobs would be created in the project in addition to about indirect employment to about 25,000 people. Prime Minister Singh would lay the foundation stone, after repeated postponements, for the project on September 1. – DNA

Telecom major, Bharti Airtel, today announced the launch of data services in Thailand and Malaysian markets.  “The launch…enables us to cater to two of the fastest-growing international bandwidth markets,” Bharti Airtel’s Chief Executive Officer for global data business, Ajay Chitkara, said. – The Economics Times

Maharashtra Seamless has reported a 9.5 per cent hike in the net profit for the year ended March 31, 2010 over the previous financial year ended March 31, 2009. The net profit has increased from Rs 259.91 crore for FY09 to Rs 284.60 crore for FY10. However net sales fell by 21 per cent, from Rs 2038.87 crore for the financial ended March 31, 2009 to Rs 1593.17 crore for FY10. – Business Standard

Glenmark Pharmaceuticals on Monday said it has discovered a new drug molecule, which could be used for treating pain and respiratory disorders. The new drug molecule, codenamed ‘GRC 17536′ has completed pre-clinical trials (animal tests) and will move into clinical trials (tests on humans) in the first quarter of 2011, the company said in a statement. – The Economic Times

State-run utility NTPC Ltd on Monday signed a preliminary agreement with Bangladesh Power Development Board (BPDB) for developing the power sector in the neighbouring country. NTPC may consider setting up a 1,320 megawatts coal-based power plant in Bangladesh in a joint venture with BPDB, subject to techno-economic viability, NTPC said in a statement. – The Economic Times

In a strategic move, FMCG major Hindustan Unilever Ltd (HUL) is consolidating its brand building strategy for its entire packaged foods business under the master brand ‘Knorr’. With the proposed foray of Tata Global Beverages into the packaged foods sector, competition will hot up soon. The Rs 50,000 crore packaged foods industry is currently growing at the rate of 15%. – The Financial Express

The stock markets cheered the price hikes by Hindustan Unilever (HUL) and Marico, with a majority of stocks in the FMCG (fast moving consumer goods) Index rising one-four per cent on Wednesday. While the move to raise prices is a positive, it will only be able to cover the increase in input costs. – Business Standard

Mahindra & Mahindra Wednesday said it will set up a new tractor facility by 2012-13 fiscal with a production capacity of up to one lakh units per annum, for which it is looking at South India, including Tamil Nadu. The company currently has four facilities in Nagpur, Mumbai, Jaipur and Chandigarh with a total production capacity of two lakh units annually. – The Economic Times

B K Birla Group company Mangalam Cement on Tuesday (24th August) said its board has given in-principle nod for the merger of sister firm Mangalam Timber Products with itself. Mangalam Timber Products went into the red last fiscal with a net loss of Rs 1.23 crore against a Rs 1.5 crore net profit in the previous fiscal. Mangalam Cement, which has a two million tonnes per annum facility at Kota in Rajasthan, had recorded net profit in the last fiscal Rs 118.81 crore against Rs 97.16 crore in the previous fiscal. – The Economic Times

Bharti Airtel, which acquired the African assets of Zain Telecom in February, has started the process of giving orders for setting up new telecom towers there. The company had already sought bids to set up towers in countries like Nigeria, Kenya and Tanzania, said sources. Bharti is giving these orders market wise, instead of one bulk order. They said the contracts for passive infrastructure equipment and turnkey projects to build towers were likely to be awarded next month. – Business Standard

Archive of previous portfolio reviews


Pharma may log modest growth in Q4

The pharma sector is expected to log a modest performance for the quarter ended March 2010. Mid-sized pharma companies like Cadila Healthcare, Lupin, Piramal Healthcare, Biocon, Glenmark Pharma are likely to outperform sector biggies like Cipla and Ranbaxy. – A report in Economic Times says.

Aggressive product launches in the US, growth registered in the emerging markets and revival in contract manufacturing are likely to trigger this growth. Though rupee appreciation is negative for export oriented companies, the companies with foreign debts will benefit.

Read complete report of Economic Times

Related Link

Biocon | Cadila Healthcare | Glenmark Pharma | Pharma


Glenmark Pharmaceuticals

Glenmark PharmaGlenmark Pharmaceuticals Limited was incorporated in the year 1977. Glenmark Pharma is a mid-sized Indian pharma company with focus on niche therapeutic areas of dermatology, gynaecology, paediatrics and diabetics. The domestic formulations business contributed about 29% to the company’s revenue in FY09. On the international front, while exports to the semi-regulated markets have been growing at a strong pace, the company is also strengthening its presence in the US and European generics market on its own and through the partnership route. The company is also focusing on R&D.

Glenmark is a leading player in the discovery of new molecules both new chemical entity and new biological entity with eight molecules in various stages of clinical development. The company has a significant presence in branded generics markets across emerging economies including India. Its subsidiary, Glenmark Generics Limited has a fast growing and robust US generics business. The subsidiary also markets APIs to regulated and semi-regulated countries. Glenmark employs nearly 6000 people in over 80 countries. It has twelve manufacturing facilities in four countries and has five R&D centres.

Investment Rationale

While first three quarters of the financial year 2009-10 has seen a lukewarm performance reported by the company, the scenario is expected to improve fourth quarter onwards as the businesses begin to pick up. Glenmark Pharma is expected to report strong growth going forward as its generics business in the US, Latin America, Europe and semi-regulated markets scales up. Management’s ability to strike out-licensing deals for its molecules and a strong R&D pipeline at present with potential going forward makes Glenmark’s prospects bright.

Recently the company got final approval from US Food & Drug Administration for Ropinirole Hydrochloride tablets in multiple strengths. Ropinirole Hydrochloride tablet is the generic version of GlaxoSmithKline’s Requip tablets. The drug is used for treating signs and symptoms of idiopathic Parkinson’s disease. The annual sales of the drug in the US is about $500 million.

As in any business, there are risk factors too to be considered when investing in Glenmarks Pharma’s shares. The high debts position, realisation from R&D front, increased competition and price erosion in the US generic markets are some of the risk factors going forward. Due to the global financial crisis and its impact on companies, revenues from the out-licensing deals may not be as forthcoming for some time as they once were. This will have an impact on Glenmark’s margins.

The company continues to be in talks with global pharma majors to garner some out-licensing deals. The fact that the company was able to bag such a deal with Medicis Pharmaceuticals USA is an encouraging sign.

Company is already working towards reducing the debt burden. The cash generated from the improved performance of its business will go towards paying off this debt. Besides this, the company has filed a draft prospectus with the SEBI for listing Glenmark Generics and part of the proceeds from this listing will also be used to retire debt.

Related Link

Updates

About the Company

Investor Relation

Market Information

Investment in Glenmark Pharma

Glenmark PharmaGlenmark Pharma looks attractive for investment with an expectation of 45% return in 2-3 years.  I added Glenmark Pharma to my portfolio buying a few shares today at Rs. 239.40 per share. It is third company in my portfolio from pharma sector, other two being Piramal Healthcare and Biocon. With this investment, pharma sector constitutes 10% of my total Indian equity portfolio at current market price.

Reasoning for investment

While first three quarters of the financial year 2009-10 has seen a lukewarm performance reported by the company, the scenario is expected to improve fourth quarter onwards as the businesses begin to pick up. Glenmark Pharma is expected to report strong growth going forward as its generics business in the US, Latin America, Europe and semi-regulated markets scales up. Management’s ability to strike out-licensing deals for its molecules and a strong R&D pipeline at present with potential going forward makes Glenmark’s prospects bright.

Recently the company got final approval from US Food & Drug Administration for Ropinirole Hydrochloride tablets in multiple strengths. Ropinirole Hydrochloride tablet is the generic version of GlaxoSmithKline’s Requip tablets. The drug is used for treating signs and symptoms of idiopathic Parkinson’s disease. The annual sales of the drug in the US is about $500 million.

As in any business, there are risk factors too to be considered when investing in Glenmarks Pharma’s shares. The high debts position, realisation from R&D front, increased competition and price erosion in the US generic markets are some of the risk factors going forward. Due to the global financial crisis and its impact on companies, revenues from the out-licensing deals may not be as forthcoming for some time as they once were. This will have an impact on Glenmark’s margins.

The company continues to be in talks with global pharma majors to garner some out-licensing deals. The fact that the company was able to bag such a deal with Medicis Pharmaceuticals USA is an encouraging sign.

Company is already working towards reducing the debt burden. The cash generated from the improved performance of its business will go towards paying off this debt. Besides this, the company has filed a draft prospectus with the SEBI for listing Glenmark Generics and part of the proceeds from this listing will also be used to retire debt.

About Glenmark Pharma

Glenmark Pharmaceuticals Limited was incorporated in the year 1977. Glenmark Pharma is a mid-sized Indian pharma company with focus on niche therapeutic areas of dermatology, gynaecology, paediatrics and diabetics. The domestic formulations business contributed about 29% to the company’s revenue in FY09. On the international front, while exports to the semi-regulated markets have been growing at a strong pace, the company is also strengthening its presence in the US and European generics market on its own and through the partnership route. The company is also focusing on R&D.

Glenmark is a leading player in the discovery of new molecules both new chemical entity and new biological entity with eight molecules in various stages of clinical development. The company has a significant presence in branded generics markets across emerging economies including India. Its subsidiary, Glenmark Generics Limited has a fast growing and robust US generics business. The subsidiary also markets APIs to regulated and semi-regulated countries. Glenmark employs nearly 6000 people in over 80 countries. It has twelve manufacturing facilities in four countries and has five R&D centres.