Reviews
Reviews
In this edition, we have reviewed Natco Pharma and Yash Papers. We suggest our reader-investors to HOLD in Natco Pharma and Yash Papers
We had recommended Natco Pharma in volume 33, issue no. 12, dated May 14–27, 2018, under the ‘Choice Scrip’ segment. The stock was trading at Rs.795.75 then and was recommended due to relatively insulated US portfolio, high emphasis on R&D and robust product portfolio. Natco Pharma Limited is a pharmaceutical company engaged in developing, manufacturing and marketing finished dosage formulations and active pharmaceutical ingredients.
The company’s product categories include domestic formulations, international formulations, APIs and blockbusters. The company manufactures over 20 products under contract.
On the consolidated financial front, the company posted net sales of Rs.556.7 crore in Q3FY19 as against Rs.562.2 crore, posting a marginal drop of 0.98 per cent from Q3FY18.
The profit before interest depreciation and tax (PBIDT) for Q3FY19 came in at Rs.208.4 crore, falling by 27.26 per cent as compared toRs.286.5 crore in Q3FY18. The profit after tax(PAT) stood at Rs.159.3 crore in Q3FY19, dropping by 26 per cent from Rs.217.4 crore in Q3FY18.
On the annual front, the company’s net sales increased by 8 per cent to Rs.2184.4 crore in FY18 as compared to Rs.2020.2 crore in FY17. The PBIDT grew substantially by ~ 40 per cent in FY18 to reach Rs.968.8 crore as against Rs.484.9 crore in FY17. The PAT jumped 43 per cent to Rs.695.2 crore in FY18 as compared to Rs.484.9 crore in FY17.
Since our recommendation, the price of the stock has fallen by 25 per cent. However, we expect the company to deliver on the bourses in the near future and thus recommend a HOLD.
We had recommended Yash Papers in volume 33, issue no. 15, dated June 25–July 8, 2018, under the ‘Low Priced Scrip’ segment. The stock was trading at Rs.75.40 then and was recommended as the paper industry showed growth, the packaging demand was on the rise and also we had taken into consideration the increasing consumerism.
Yash Papers Ltd is engaged in the manufacture of wrapping tissues in both brown and white varieties. The product range of the company includes hard tissues. wrapping grades and packaging/ stationery grades. These varieties are used in specialised downstream applications like soap wrapping, food wrapping, pharmaceutical covers, interleaving sheets, laminating sheets, paper bags, bidi wrapping, gum tape, notebook covering paper, PE coating in mattress, tube light packaging, among others.
On the standalone financial front, the net sales for Q3FY19 has climbed 40 per cent to Rs.70.39 crore on a YoY basis from Rs.50.12 crore. The PBIDT has also jumped 25 per cent YoY in Q3FY19 and came in at Rs.11.97 crore from Rs.9.51 crore. The PAT for Q3FY19 stood at Rs.4.38 crore as against Rs.5.06 crore in Q2FY18, down by 13.28 per cent.
On the annual front, the net sales were up by 15 per cent in FY18 to Rs.200.68 crore from Rs.173.85 core in FY17. The PBIDT stood 25 per cent higher at Rs.41.37 crore in FY18 from Rs.33.08 crore in FY17. The PAT reached Rs.12.48 crore, up by 60 per cent from Rs. 7.79 crore in FY17.
Since our recommendation the stock price has fallen around 27 per cent. However, in the current situation, investors need to be patient as we believe the price of the company is likely to gain in the coming period. We thus recommend a HOLD.