Saturday, January 26, 2013

PANACEA BIOTECH - WORST IS OVER







Panacea Biotec was darling of Investors till 2008 .This is the first  pure biotechnology based pharma company listed in Indian stock exchanges in 1996. Company along with its subsidiary Chiron Panacea  is the second largest vaccine maker in India next to Serum Institute of India. In addition to vaccines  company also present in formulations. In the formulation segment company concentrating in pain management, cardiovascular disorders, diabetes management and organ transplant. Company having a strong R&D with more than 200 scientists and it introduced many ‘firsts’ in India. In the vaccine segment company introduced vaccines for Polio,H1N1 and Hepatetis B and company’s products were best sellers in the past. Its misfortune starts with the banning of its many vaccines by WHO . The combination vaccines EasyFive, Ecovac4 and EnivacHB were de-listed by WHO  due to some quality issues found during their routine inspection. This issue noticed in bulk drugs sourced from one of its subsidiaries  PanERA Biotec for manufacturing final products .Due to this issue company disqualified from supplying these vaccines to UN’s world Health programmes .For the past many years about 40 % of company’s income was from WHO supply and Easyfive was the highest margin product for the company. Due to this setback ,in the past few years company concentrated in other segments to develop their business . Last year company started a new production unit in Baddi ( Himachal Pradesh) exclusively for manufacturing medicines for oncology segment. During September 2012 ,company signed an agreement with US based Osmotica Pharmaceuticals for developing high entry barrier generics and branded formulations for US market. ( Interview of MD on this subject  HERE).During November 2012 Company signed another similar agreement with Kremers Urban Pharmaceuticals Inc (subsidiary of Belgium-based UCB) and launched its first product ‘Tacrolimus Capsule’ in US market. In a strategic diversification into related fields ,Company is going to start a hospital –Panacea New Rise Super Specialty Hospital – in  Gurgaon.This facility is expected to start full fledged operations  during the first half of 2013.



Now company claiming that they have sorted out all quality related issues connected with their vaccine facility . After a long gap of many years, in December 2012 company received a Rs.182 Cr order from Government of India for supplying Oral Polio vaccine. This order will be executed between December 2012 to May 2013 period .In an important development , now it is known that the WHO delegates will again inspect company’s facilities by next month. There is every chance to enlist company again in WHO ‘s qualified suppliers list ,post inspection. If it happens it will be a game changer for the company. Promoters are holding close to 75 % stake in its  Rs.6 Cr equity company and not pledged a single share so far. It is an interesting point to note that ,ever since its share price started its down trend in October 2008 ,India’s largest vaccine maker and Panacea’s arch-rival  Cyrus Poonawalla led Serum Institute of India acquiring Panacea’s shares from open market . Serum Institute’s stake in Panacea Biotech  increased from less than 4% in 2008 to the highest level of 13.39 % in latest September quarter.They started accumulation even at a price range of Rs.220+.I believe ,this is clear indication that even the main competitor who know the industry very well is fully  confident about the come back of  this company in near future .I think worst will be over for the company by this December quarter result . Since its floating stock is very low ,there is every chance for sharp appreciation once it back on track.It is a high risk high profit kind situation ,hence suggesting only for those with high risk appetite.Stock listed both in NSE and BSE and trading around Rs.108/-


 Link to Company website HERE

Link to latest annual report HERE

Disc : I have vested interest in PBL 

59 comments :

  1. Hello Sir,

    What do you think about Elgi Equipments and it's management?

    ReplyDelete
  2. VP Ji,

    In case, WHO doesn't approve the facility, then how much risk do you think this stock would have?

    ReplyDelete
    Replies
    1. Not expecting any risk because no run up in prices has happened based on this news.India Government's decision to resume sourcing of vaccines from this company itself is very positive .In addition to this , latest agreements for developing and marketing products for some US companies is also giving comfort.This agreement covers some mile stone payments too.Nothing to loose even if they are not getting the approval since it not discounted so far.

      Delete
  3. Sir, what do you think about Kokuyo Camlin?

    ReplyDelete
  4. Hello again Sir,

    Could you please share your light on buying Reliance communication and Reliance Power? Also, what are your thoughts about Idea Cellular? The reason I am asking about this because of 2G allocation and other things going on. Thanks in advance.

    Regards
    Vijay.

    ReplyDelete
    Replies
    1. Generally not tracking popular high volume stocks

      Delete
  5. dear value,

    i hold large in Opto Circuit, surprice by recent downfall and afraid also. can i hold for next some yrs or exit out?

    PATIDAR

    ReplyDelete
    Replies
    1. Recently comment about the situation ,more than once.

      Delete
  6. Sir, what do you think about AMTEK AUTO?
    I am posting my Q many times but you can't answer.

    so please reply.

    ReplyDelete
  7. dear vp kindly share ur views on sequent if the current price is a good entry.point ? thanks for replying in advance.

    ReplyDelete
  8. I have recommended Sequent Scientific @ Rs.138 which is around Rs.180.At CMP it is a HOLD for me.

    ReplyDelete
  9. Sir

    You recommended a buy on opto circuits in 2011 .Can we buy it at current price of Rs.90 level

    ReplyDelete
    Replies
    1. When I recommended this stock its total debt was around Rs.233 Cr which now stands around Rs.1060 Cr .It is really a challenging situation to service such a huge debt .So this stock is not recommending for an average risk taker now.

      Delete
  10. Sir,

    This update regarding Panacea seem to be very enterprising. Considering this and me being a new entrant to stock market, is it sensible if I vest for 100 shares in this? Yes, I am not one having a great amount of savings, but, from your experience, please advice.

    Regards
    Vijay.

    ReplyDelete
  11. vp sir i hv pitti lam at rs 61 what future pitti lam?

    ReplyDelete
    Replies
    1. User industries are going through a tough time.Scrip may move only range bound

      Delete
  12. Sir,

    Can you please share view on Puneet resins...

    ReplyDelete
    Replies
    1. Puneet recommended around Rs.30 and requested to book profit around Rs,45.Not seeing any compelling reason to re-enter in it now.

      Delete
  13. Sir, what do you think about IP Rings, an Amalgamation Group company?

    ReplyDelete
  14. Sir Whats your view on simran farms, is it a buy at CMP?

    ReplyDelete
    Replies
    1. As you are aware maize price is ruling at higher level ,so not expecting any wonders .Stock may rule range bound for some more time.

      Delete
  15. hello sir isint panacea a loss making company.

    ReplyDelete
    Replies
    1. Yes currently it is a loss making company.

      Delete
  16. Can you please let us know your views on ion exchage atleast now after the results?

    ReplyDelete
  17. Can you give your views on Sakthi sugar and Balrampur chini, considering the recent correction after MSP of cane raised by UP govt.

    Regards,
    Manmohan Garg

    ReplyDelete
    Replies
    1. Delay in sugar price de-control decision and recently released sugar production data may result a range bound movement in sugar stock for short term.

      Delete
  18. Sir, do what do you think about Zodiac Clothing? Can it be added into your brand picks list?

    ReplyDelete
  19. Can you give your views link regarding sabero post q3 results. I could not locate it after searching your blog.

    Regards.
    Manmohan

    ReplyDelete
  20. Sir,I have been holding ion exchange since two years .Pls share your views after the results .Aditya

    ReplyDelete
  21. Hi VP,

    Deccan chronicle suspended and Delisted from BSE and NSE..

    I invested Rs.10000 and I bought at the price Rs. 7.56

    Will Deccan chronicle will be recalled into BSE in later

    period???

    If completely de listed , how can I get my balance

    cash out . Please help me Sir

    My Firend said about your blog sir and You are doing an

    excellent job..

    Thanks!

    ReplyDelete
    Replies
    1. Not tracking DCHL closely.It seems still trading in BSE.If suspended from both exchanges it is difficult to recover your investment and should wait till it re listed which depends on an early compliance of listing norms by the concerned company.

      Delete
  22. sir do you belive that hotel sector will have a turnaround what are your views on indi. hotels and EIH ltd.


    thanks in advance
    mayank

    ReplyDelete
    Replies
    1. May take more time.If you have enough patience ,try in SIP mode.

      Delete
  23. Themis Medicare has fallen signifncalty from it high of 120 and trading at around 80 levels, Is this a buy at current price or are we expecting some bad news in this counter??

    ReplyDelete
    Replies
    1. Nothing specific,but its last quarter result was a tad below expectation.If you have not entered ,wait till latest result and then take a decision.

      Delete
  24. vpji today i got a transaction report deliverd to me by postal mail stating that i own sharekhan some amount as due for some past transaction ,though my(sharekhan acc) account had the balance for that and money is already deducted from my account(sharekahan),since there customercare is not responding could you please tell me what could be that.

    ajay kumawat

    ReplyDelete
    Replies

    1. It is not clear from your question that - charges are for what service.Is it AMC for DP account ? .If it is so submit a DP account closing form to their nearest branch and collect an acknowledgement for the same.

      Delete
  25. Dear Sir, what is your recent views on Orient Bell - falling continueously. Any updates on fundamentals views?
    -Mayur

    ReplyDelete
    Replies
    1. No updates at this point and no change in previous opinion.

      Delete
  26. Hello Sir,

    EPC Irrigation standalone turnover of Rs 50.11 crore and a net profit of Rs 2.70 crore for the quarter ended Dec 12. What is your views on results ?

    Thanks

    ReplyDelete
    Replies
    1. Long term investors can still HOLD it.

      Delete
  27. sir what are are views on muthoot capital...and for long term how is it?

    ReplyDelete
    Replies
    1. I am not sure how market will take its business model where company running its business through the branches of their unlisted company Muthoot Fincorp without opening independent branches for their own.

      Delete
  28. sir your view on warren tea they are considering bonus on 30th of this month can i get bonus shares if i buy tommarow then after that how the price will be adjusted?
    thank u

    ReplyDelete
    Replies
    1. Any buyer who buys before XB ( Ex Bonus)date will get bonus and the rate will be adjusted in proportion to the bonus ratio on XB date.

      Delete
  29. Dear Sir,

    Please suggest me what to do with Yuken. I was waiting for this quarter result but this quarter result has also disappointed. From last three quarter top line and bottom line both has declined. Is there any chance of reform ?
    Please suggest me.

    ReplyDelete
    Replies
    1. Hydraulic industry is very sensitive to Industrial Growth .Nothing wrong in buying this stock in an SIP mode but some long wait may need to get significant gain.

      Delete
    2. Thanks Sir.
      But i am concern for decline in margin. Margin was 6.8% in same quarter of last year while for this year it is only 1.7%. Do you have idea why it is struggling to maintain margin ?

      Delete
    3. They can't pass the increased raw material and other costs to end customers due to sluggish demand .This may be a reason.

      Delete
  30. Sir,

    Do you track superhouse ? It looks very attractive at current price. Quarter on Quarter its sell has increased. Can you please give your view.

    ReplyDelete

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