In The Pink Of Health - Twilight Litaka Pharma
By Kaustubh Ghotikar |
9/27/2010 5:06 PM Monday
In a market which is marching briskly to test its all-time highs, if you come across a scrip that is growing at three-year CAGR of 34 per cent and 32 per cent in the topline and bottomline and yet available at a PE of 9.6x of its trailing numbers, it does make sense to pursue it further. We are talking about Twilight Litaka Pharma (TLP) and this is exactly what we did once it was short-listed for our analysis column. In a bid to get more insights on this pharma company we had a tete-a-tete with Gopal Ramourti, Managing Director, Twilight Litaka Pharma (TLPL) at their Andheri headquarters.
The initial discussion itself threw up some interesting points in the course of which Ramourti informed us that the broader business segments for the company included contract research and manufacturing services (CRAMS), domestic formulations, and exports. He further stated that the CRAMS segment has been the biggest contributor in terms of revenues and accounts for 57 per cent of the sales of the company. “TLPL has been involved in contract manufacturing for large companies in the pharmaceutical space which includes Novartis, Wockhardt, Cipla, Lupin, Serum, Pfizer, Herbalife, etc,” Ramourti informed. However, with top client contribution at 8-10 per cent, the segment is fairly de-risked and none of the revenue is skewed in favour of any single client. The company manufactures drugs and formulations in the form of tablets, ointments, liquids, capsules, etc. and focuses on categories such as anti-inflammatory, anti-asthmatic, antibiotics, vitamins, antioxidants, etc. That apart, TLPL has also been working on the food and nutrition space over the last 12 years. However, general medicine forms 80 per cent of the total CRAMS revenues while the balance 20 per cent is derived from food and nutrition.
As the discussion moved forward, Ramourti introduced us to the domestic formulation business. This segment contributes up to 35 per cent of the total revenue and has five divisions. This includes Centrum (35-40 per cent to segment revenue) and Nucleus (25-30 per cent) which together focus on servicing pediatricians, physicians, surgeons, and orthopedic surgeons. It has a number of life-saving antibiotics used in surgeries and ICUs. The company’s Nutra division (10 per cent) is exclusively devoted to nutritional therapy that helps improve the quality of life.
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