KOPRAN LTD - Q1 FY 21 RESULTS REVIEW

 

KOPRAN LTD

Q1 FY 21  RESULTS REVIEW

 

COMPANY OVERVIEW

 

Kopran Limited manufactures both Active Pharmaceutical Ingredients and Finished Dosage Forms.

More than 100 Finished Dosage Forms covers Tablets, Capsules, Dry Powder, Suspension and Injectables.

Its facility is located at Khopoli, Raigad District, Maharashtra.

It manufactures a range of Active Pharmaceutical Ingredients, including Sterile Cephalosporins.

The Company also provides a range of specialty products, which include Macrolides and Cardiovascular range among others.

The Companys subsidiaries include Kopran Reesearch Laboratories Ltd., Kopran (H.K) Ltd. and Kopran Lifesciences Ltd..The company also engagged in the business of Pharmaceuticals, Consumer Care Division

 

The Active Pharmaceutical Ingredients Manufacturing facility at Mahad of Kopran Research Laboratories Limited, was inspected by the USFDA in January 2019 without any observation under Para 483.

 

The Company had filed the DMF of Atenolol which has been approved by the USFDA and the Company can commence supplies of the API Atenolol to the US market.

 

The Panoli Plant acquired by Kopran Research Laboratories Limited, could not be operational as necessary governmental permissions were not received due to Covid-19 pandemic situation.

Government of India has already announced in Apr'20, INR 10000 crore of investments to incentivise production of Active Pharmaceutical Ingredients (API) in India. Discussions are on regarding how this can be made even more attractive.

 

We need to remember, the rest of the world is also offering incentives to attract those looking for relocation and we need to offer a compelling proposition both for Indian and other companies.

 

Additionally, pharma companies have started re-visiting their API strategy and considering options around building capacity including partnerships with Contract Manufacturing Organizations.

 

The following challenges stand out:

Rising number of US FDA inspections. The number of inspections is at an all-time high. This comes as no surprise considering India has the most USFDA approved sites

Government Control on Drug pricing: This is directly impacting the confidence levels of companies to invest respectable amounts in R&D.

India's significant dependence on Chinese Active Pharmaceutical Ingredients (API): According to Bloomberg, 70% of India's imports of APIs come from China, totaling $2.4 billion of India's $3.56 billion in import spending for those products each year

Manufacturing units/warehouses not working at full utilisation, due to unavailability of staff.

Non-Availability or disrupted supply of raw materials and packing materials.

As with all industries, implementing effective and robust cyber security measures is a challenge in the work from home scenario.

Supply disruptions have eased out now, but still, there are difficulties regarding availability and movement of labour.

Outlook & Company Strategy

KOPRAN has responded to these challenging times by gearing up production of both APIs and Formulations.

New products like Nitroxiline and Ticagrelor have been commercialised.

Atenolol DMF has been approved by the USFDA and commercial supplies are commencing to various customers.

We have received approval for Pregabalin from the EU-GMP- and will be able to market the API in Europe. Company has filed USDMF for Azithromycin and Pregabalin.

 

The company continues to upgrade and automate its plants to increase production and reduce cost.

 

The company is constantly reviewing its costs and rationalize to bring cost efficiencies in its operations.

 

The company is expanding its API and Formulation portfolio and would be starting its sale of Atenelol in US market during 2020-21.

 

It expects to grow and improve its margin with new products, cost efficiencies and higher production.

 

Your company continues to pursue Automation and Expansion for growth for formulations and in its subsidiary Kopran Research Laboratories Ltd manufacturing APIs.

 

Surendra Somani  Executive Vice Chairman

 

Kopran (in Rs. Cr.)	Jun '20	Mar '20	Jun '19	YOY	QOQ
Net Sales	121	87	84	43.65	38.34
Raw Materials	58.48	57.9	57.2	2.18	0.93
Traded Goods	--	0.12	1.53
Increase/Decrease in Stocks	16	-15	-6	-346.3	-203.51
Employees Cost	9.13	8.78	9.62	-5.09	3.99
Depreciation	2.54	2.4	2.3	10.43	5.83
Other Expenses	17.52	24.19	14.56	20.33	-27.57
P/L Before Other Inc., Int., Excpt. Items & Tax	17.58	9.06	5.26	234.22	94.04
Other Income	3.52	0.18	2.48	41.94	1855.56
P/L Before Int., Excpt. Items & Tax	21.1	9.24	7.74	172.61	128.35
Interest	1.86	2.23	2.09	-11	-16.59
P/L Before Tax	19.24	6.46	5.64	241.13	197.83
Tax	5.01	1.65	1.42	252.82	203.64
Net PROFIT	14.23	4.81	4.22	237.2	195.84
Equity Share Capital	43.25	43.25	43.25	0	0
Basic EPS	3.29	1.11	0.95	246.32	196.4
MP	72
PE	5.471125
VOLUME	1,23,885
52 Wk L/H	16.15	78.05
BUY 0
SELL 0

 

 

Annual	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Sales	359	357	313	309	296
Other Income	0	3	9	10	2
Total Income	360	360	322	320	298
Total Expenditure	322	320	291	282	275
EBIT	37	40	31	38	23
Interest	8	8	8	13	12
Tax	7	7	2	4	0
Net Profit	21	24	20	19	10

 

 

SWOT ANALYSIS

 

STRENGTHS

• High TTM EPS Growth
•  (Bullish Reversal)
• Good quarterly growth in the recent results
• Growth in Net Profit with increasing Profit Margin (QoQ)
• Company with Low Debt
• Company with Zero Promoter Pledge
• Q1  Results : Growth in Operating Profit with increase in operating margins (YoY)
• Stock gained more than 20% in one month
• Rising net profit margins - quarterly as well as TTM basis
• Strong Momentum in Price

OPPORTUNITIES

• High ROCE and Low PE
• Negative to Positive growth in Sales and Profit with Strong Price momentum
• Highest Recovery from 52 Week Low
• Stock with Low PE (PE < = 10)
• RSI indicating price strength

THREATS

Increasing Trend in Non-Core Income

 

CHART

APRIL,2020 LOWEST POINT

THEN ONWARDS UPWARD MARCH

 

TECHNICAL RATING

Very Bullish

 

Valuation

 

Market Cap (Rs Cr.)

311.2

P/E

19.86

Book Value (Rs)

53.1

Dividend (%)

-

 

Industry P/E

35.82

EPS (TTM)

3.64

P/C

16.28

 

Price/Book

1.35

Dividend Yield.(%)

-

Face Value (RS)

10

Deliverables (%)

64.03

 

 

Historical Prices
	3 M BEF	Current Price	%Gain / Loss
Open Price	28.95	71.9	148.36
	1 YR BEF
Open Price	27.75	71.9	159.1
	2 YR BEF
Open Price	53.9	71.9	33.4
	3 YR BEF
Open Price	70.55	71.9	1.91

 

 

 

Share Holding Pattern in (%)
Standalone	Jun-20	Mar-20	Dec-19	Sep-19
Promoters	43.78	43.78	43.78	43.78
Pledged	0	0	0	0
FII/FPI	0	0	0	0
Total DII	12.44	12.84	10.15	10.35
Fin.Insts	2.41	2.41	2.57	2.56
Insurance Co	0	0	0	0
MF	0	0	0	0
Others DIIs	10.03	10.43	7.58	7.79
Others	43.79	43.38	46.07	45.87
Total	100.01	100	100	100