Aarti Drugs

Leading API manufacturer to benefit from capacity expansion ADL is a leading supplier of APIs and intermediates, deriving 64 per cent of its revenues from domestic market and 36 per cent from exports. ADL has entered into the manufacture of formulations as forward integration strategy and derives 13 per cent revenues from the formulation business. ADL has enhanced its ciprofloxacin capacity to 1,800 tonne per annum (tpa) from 1,620tpa and plans to increase it further to 2,100tpa by FY19. The metformin capacity has been increased to 8,400tpa from 7,200tpa and would increase to 14,400tpa by FY19. In Q1FY19, ADL had done capex of Rs 18 crore and is likely to spend Rs 68 crore during the fiscal. This would result in higher revenues and profitability for the company.

Over FY16-FY18, the company’s revenue, Ebitda and Adj. PAT witnessed CAGR of 5 per cent, 7 per cent and 9 per cent respectively. In Q1FY19, ADL’s revenue grew by 35.0 per cent YoY to Rs 374 crore led by 52 per cent growth in domestic & 27 per cent in export volumes.

IndoStar Capital Finance

In a transformational phase

The company has transformed from being a corporate lender to foraying into the SME space in FY15, and then into becoming a diversified lender, in FY18, with entry to vehicle finance (VF) and housing finance (HF). Over FY15-18, the on-balance sheet loans witness a CAGR of 21.1 per cent leading to a growth in NII and net profit at 22.2 per cent and 14.6 per cent p.a., respectively. For Q1FY19, while the NII grew 11.6 per cent YoY, the pre-provisioning profit and net profit declined 11.2 per cent and 38.2 per cent, respectively. During Q1FY19, the AUM growth of 54 per cent YoY (23 per cent QoQ) was led by disbursements increasing 3x to Rs 2,261 crore led by 3.6x increase in corporate lending, 2.1x in retail lending and a run-rate of Rs 110 crore a month in VF. The asset quality improved with gross and net NPAs declining 10bps QoQ to 1.2 per cent and 1.0 per cent, respectively as on June 30, 2018.

KEC International

Business synergies in place

Ebitda margins have improved from 8.1 per cent in FY16 to 10 per cent in FY18. The Ebitda margin expansion was on the back of execution of better margin orders and performance across all business segments. During Q1FY19, despite higher raw material cost, Ebitda margin witnessed improvement to 10.3 per cent (vs 9.5 per cent in Q1FY18). On a consolidated basis, for Q1FY19, KEC’s revenue grew by 13 per cent YoY to Rs 2,105 crore, which was supported by growth in the railways, cables business and SAE business despite a decline in the T&D (excluding SAE) space. Ebitda grew 23 per cent to Rs 216 crore, with Ebitda margins expanding by 77bps to 10.3 per cent. Net profit grew 38 per cent to Rs 87 crore. Given the RBI restriction on rollover facilities, buyer’s credit, liquidity tightness by vendors and volatility in commodity prices, KEC stated that net working capital as of June 30, 2018 stood at 123 days (vs 93 days as of 31 Mar’18).

Natco Pharma

R&D focus with strong product pipeline

NPL has well-established presence in domestic formulations market, particularly in gastro hepatology (with market leadership in Hepatitis C drugs) and oncology therapeutic areas (one of the major companies in India). Further, during FY17, NPL has also diversified their portfolio into Cardiology and Diabetology therapeutic areas. In Indian market, Natco offers 28 oncology medicines (11 for blood cancers + 17 for solid tumors) and 5 medicines in the hepatitis therapeutic area. In addition to existing products, it has a pipeline of 29 approved ANDAs and 16 para IVs pending to be launched in US. Over FY16-18, NPL’s revenue and net profit registered CAGR of 44 per cent and 110 per cent, respectively. Ebitda grew 85 per cent with margins increasing to 43.1 per cent in FY18 compared to 26 per cent in FY16. For Q1FY19, consolidated revenue grew by 27.8 per cent YoY to Rs 574 crore and net profit grew by 92.5 per cent to Rs 181 crore.

Source: Centrum Wealth Research