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Dalal Street Investment Journal - - CONTENTS -

HERE IS WHY

Con­sis­tent fi­nana­cial per­for­mance Ex­pected Growth in spe­cial­ity pharma and ayurveda seg­ment Strong R&D ca­pa­bil­i­ties

The phar­ma­ceu­ti­cal in­dus­try is one of the biggest and fastest grow­ing in­dus­tries in In­dia. Gufic Bio­sciences Lim­ited is one of the fast grow­ing com­pany in the pharma sec­tor. The com­pany is en­gaged in the man­u­fac­ture of phar­ma­ceu­ti­cals, medic­i­nal chem­i­cals and botan­i­cal prod­ucts.

Gufic is one of the largest man­u­fac­tur­ers of lyophilized in­jec­tions in In­dia and has a fully au­to­mated lyophiliza­tion plant in Gu­jarat with an an­nual ca­pac­ity of 30 mil­lion vials, with scope of in­creas­ing to 42 mil­lion in the near fu­ture. Its lyophilized prod­uct in­cludes an­tibi­otic, an­ti­fun­gal, car­diac, in­fer­til­ity, an­tivi­ral and pro­ton-pump in­hibitor seg­ments.

Gufic is plan­ning to en­hance its global fo­cus by deep­en­ing its pres­ence in the pri­or­ity mar­kets of In­dia, Ger­many, Switzer­land, South Africa, Rus­sia, Europe and key coun­tries within the emerg­ing mar­ket ter­ri­to­ries. Strong Re­search & De­vel­op­ment: Gufic has in­vested to­wards en­hance­ment and de­vel­op­ment of R&D in the last many years to de­velop new for­mu­la­tions and life-sav­ing drugs and im­prove the process used for ex­ist­ing prod­ucts. The com­pany in FY17 was granted with two process patents viz., Tige­cy­cline and Anidu­la­fun­gin. Gufic has also filed her­bal patents for her­bal treat­ment for chronic ail­ments .

Backed by in­creas­ing con­sumer spend­ing, ris­ing health­care in­sur­ance and rapid ur­ban­i­sa­tion, the In­dian phar­ma­ceu­ti­cal mar­ket is ex­pected to grow re­mark­ably by 2025. Also, the gov­ern­ment’s steps to re­duce costs and bring down health­care ex­penses will help the sec­tor in com­ing times.

Fi­nan­cials: On the fi­nan­cial front,

Gufic Bio­sciences posted a 14.37 per cent in­crease in its rev­enue to

63.42 crore in Q1FY18 from

55.45 crore in Q1FY17. Also, the com­pany’s PBDT im­proved 34.58 per cent from 5.06 crore in the first quar­ter of FY17 to 6.81 crore on a yearly ba­sis. The com­pany’s net profit also soared from 2.55 crore in Q1FY17 to 3.54 crore in Q1FY18, an in­crease of 38.83 per cent.

On an an­nual ba­sis, the com­pany’s rev­enue rose 23.28 per cent to 249.44 crore in FY17, as com­pared to the pre­vi­ous fis­cal. The com­pany’s PBDT im­proved 44.85 per cent to 21.70 crore in FY17 on a yearly ba­sis. The com­pany’s profit af­ter tax also in­creased from

4.26 crore in FY16 to 11.41 crore in FY17.

On the val­u­a­tion front, the share price of Gufic Bio­sciences is cur­rently trad­ing at PE ra­tio of 56.83x. The com­pany’s ROE and ROCE stood at 28.93 per cent and 27.06 per cent, re­spec­tively. The stock price has jumped 120.97 per cent in the last one year.

The com­pany has shown con­sis­tent profit growth of 49.46 per cent over the last five years. We ex­pect the growth in spe­cialty pharma and Ayurveda seg­ment to re­main buoy­ant. We rec­om­mend our reader-in­vestors to BUY the stock.

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