GUFIC BIOSCIENCE - (Great Potential)
Market Cap.: ₹ 549.96
Current Price: ₹ 71.10
Book Value: ₹ 5.87
P/E: 48.20
Dividend Yield: 0.07%
Face Value: ₹ 1.00
Promoter Holding - 69.98%
ABOUT
GUFIC is a 46 years old company with a strong presence in India, among the prescription pharmaceutical, Herbal and Bulk Drugs divisions. Company is also accelerating growth by concentrating its business activities on the field of Criticare and Ferticare divisions. They are the largest manufacturers of Lyophilized injections in India and have a fully automated lyophilization plant.
PROS
1. Company Objective
“Aiming to become agile, best-in-class global pharmaceutical company that puts the patient at the center”.
Gufic is the first to launch Doxycycline I.V for tropical fever and has introduced new life saving molecule like Caspofungin, Tigecycline and Colistimethate at very economically prices.
During the year 2015-16, Gufic had applied for three patents viz. Micafungin, Anidulafungin and Tigecycline and is in the process of applying many more. Recently the company recieved the patents from Govt. Of India for preparation of parental formulation of Anidulafungin and for the process of composition for Tigecycline. (Patents have also been applied in many other countries as well).
2. CSR Activities
Company promotes CSR activities by defining CSR policy in compliance with the laws in force. . They have contributed towards up gradation of research and development and education to the underprivileged.They have offered free sanitary napkins to underprivileged women and have held disease detecting camps at regular intervals in small towns.Link - http://gufic.com/wp-content/uploads/2016/05/Corporate-Social-Responsibility-Policy.pdf
3. Amalgamation With Gufic Stridden
Board Of Directors have approved amalgamation of Gufic Stridden Biopharma with Gufic Bio Science, for strengthening the financial positions of both companies with optimum utilisation of resources. Gufic Stridden Biopharma is primarily engaged in the business of international marketing and export of products manufactured by third party from WHO approved manufacturing plant. So , the amalgamation would provide direct and easy penetration in the export market to Gufic Bio Science.
4. SBI Mutual Fund Entry
SBI mutual fund plan under SBI Magnum children benefit plan bought around 6262000 shares (8.09%) in a bulk deal dated May 19 2017. This is certainly a huge positive, now mutual funds are also interested in this gem
Cons
1. Company planning to entry into US market, which shall bring a plethora of opportunities to explore. However US FDA issues and stiff competition are the challenges which will be faced by Gufic.
2.Debt outstanding but no provision being made by company
In the Audit Report, auditors have expressed their opinion about recovering a cumulative debt of around Rs 2.3 crore as on 31.03.2017, which is now outstanding for more than 3 years. However the management has not made any provision for the same and is continuing to state that they are good and recoverable in nature, so no provision is required. Due to absence of any appropriate audit evidence, auditors are unable to ascertain its recover ability. This results in over statement of profits by around 2.3 crore as on 31st March 2017.
3. Company had negative cash flow as on 31st March 2016, after generating years of consistent positive cash flow. Need to monitor cash flow statement as on 31st March 2017, when annual report will be published.
Market Cap.: ₹ 549.96
Current Price: ₹ 71.10
Book Value: ₹ 5.87
P/E: 48.20
Dividend Yield: 0.07%
Face Value: ₹ 1.00
Promoter Holding - 69.98%
ABOUT
GUFIC is a 46 years old company with a strong presence in India, among the prescription pharmaceutical, Herbal and Bulk Drugs divisions. Company is also accelerating growth by concentrating its business activities on the field of Criticare and Ferticare divisions. They are the largest manufacturers of Lyophilized injections in India and have a fully automated lyophilization plant.
PROS
1. Company Objective
“Aiming to become agile, best-in-class global pharmaceutical company that puts the patient at the center”.
Gufic is the first to launch Doxycycline I.V for tropical fever and has introduced new life saving molecule like Caspofungin, Tigecycline and Colistimethate at very economically prices.
During the year 2015-16, Gufic had applied for three patents viz. Micafungin, Anidulafungin and Tigecycline and is in the process of applying many more. Recently the company recieved the patents from Govt. Of India for preparation of parental formulation of Anidulafungin and for the process of composition for Tigecycline. (Patents have also been applied in many other countries as well).
2. CSR Activities
Company promotes CSR activities by defining CSR policy in compliance with the laws in force. . They have contributed towards up gradation of research and development and education to the underprivileged.They have offered free sanitary napkins to underprivileged women and have held disease detecting camps at regular intervals in small towns.Link - http://gufic.com/wp-content/uploads/2016/05/Corporate-Social-Responsibility-Policy.pdf
3. Amalgamation With Gufic Stridden
Board Of Directors have approved amalgamation of Gufic Stridden Biopharma with Gufic Bio Science, for strengthening the financial positions of both companies with optimum utilisation of resources. Gufic Stridden Biopharma is primarily engaged in the business of international marketing and export of products manufactured by third party from WHO approved manufacturing plant. So , the amalgamation would provide direct and easy penetration in the export market to Gufic Bio Science.
4. SBI Mutual Fund Entry
SBI mutual fund plan under SBI Magnum children benefit plan bought around 6262000 shares (8.09%) in a bulk deal dated May 19 2017. This is certainly a huge positive, now mutual funds are also interested in this gem
Cons
1. Company planning to entry into US market, which shall bring a plethora of opportunities to explore. However US FDA issues and stiff competition are the challenges which will be faced by Gufic.
2.Debt outstanding but no provision being made by company
In the Audit Report, auditors have expressed their opinion about recovering a cumulative debt of around Rs 2.3 crore as on 31.03.2017, which is now outstanding for more than 3 years. However the management has not made any provision for the same and is continuing to state that they are good and recoverable in nature, so no provision is required. Due to absence of any appropriate audit evidence, auditors are unable to ascertain its recover ability. This results in over statement of profits by around 2.3 crore as on 31st March 2017.
3. Company had negative cash flow as on 31st March 2016, after generating years of consistent positive cash flow. Need to monitor cash flow statement as on 31st March 2017, when annual report will be published.
Revenue increased 23% from 202 crores to 249 crores. Net Profit increased around 57% from 7.3 crores to 11.40 crores (yoy), resulting in increase of EPS from 0.95 to 1.48. Steady rise in topline and bottom line is observed over a period. The graph of growth of the Company is going upwards year by year , thus reaching near to the goal of becoming the best in class pharmaceutical industries.
One can look into this company with a long term view, it has capability to provide great returns from current levels.
Current Action - Buy (Range- Rs 65-75)
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