Things to know before investing in Glenmark Pharma

20/09/2021

If you are looking to invest in Glenmark Pharma, then here is all you need to know about the company, its business, and its growth prospects. 

About Glenmark Pharma

Incorporated in 1977, Glenmark Pharma is a research-based, global pharmaceutical company headquartered in Mumbai, India. It is a leader in the discovery of new molecules and is focused on inflammation and metabolic disorders. The company is into formulation across dermatology, internal medicine, respiratory, diabetes, paediatrics, gynaecology, ENT and oncology. They have generic drugs and formulation interests across 85 countries including India, USA, Europe, Latin America, Russia, Asia and Africa.

Why Invest?

  1. Over the last 2-3 years, the company has underperformed as compared to the broader health sector due to concerns of high debt, not enough cash flows, and increased spending on innovation and Research & Development (R&D). However, management has indicated that it intends on keeping a tight control on R&D and capital spends so that they can improve their cash flows and reduce their debt.
  2. Management aims to reduce approximately 50% of their debt with proceeds from the Glenmark Life Sciences IPO and internal cash. R&D and capex expenditure has also been curtailed. Glenmark also plans to divest its drug development arm, Ichnos. This was expected to happen in the second half of 2021 but has been delayed. In the meantime, Glenmark plans to target licencing deals for a couple of it’s auto-immune assets.
  3. Although overall volumes have been lower due to COVID-19 disruptions, Glenmark’s India volumes have done fairly well, specifically in cardiac products, raspatory franchise, diabetes, and anti-infectives. In addition to this, Glenmark is undergoing final trials for a Nitric Oxide Nasal Spray (licenced in India and other Asian markets) for the treatment of COVID-19. It is expected to launch early next year.
  4. Abroad, specifically the US, the company’s sales have remained fairly flat over the last 3 years. However, this year the dermatology division in the US is expected to deliver higher revenue due to new launches. Next year, there are a couple of niche, limited-competition products launching which also look promising for growth in revenue.
  5. It is worthwhile to note that Glenmark Life Sciences went public in July 2021 at a price of Rs. 750. This is the API arm of Glenmark Pharma. API is an active pharmaceutical ingredient contained in the medicine. Glenmark Life Science’s IPO was very well received and over-subscribed 14 times by retail investors. Today the stock is trading at Rs. 688.

Glenmark Pharma share

Glenmark Pharma’s stock is trading at about Rs. 514. The stock price had been falling from 2015 (Rs. 1200) until when the pandemic hit in March 2020 (Rs. 200). The stock has performed well since then. It is a stock worth adding to your portfolio to have some exposure in the pharma sector. It is a strong company that is tackling their problems and cleaning up the financial concerns that investors have had for a while. Fundamentally, this may be a good price to add to your portfolio.

 

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Investing in mid-caps? Here are 10 stocks where FIIs have upped stake

FII's most favourite midcap shares
by 5paisa Research Team 20/09/2021

Indian stock markets have hit a new high with a renewed flush of money moving towards large-cap counters as investors are looking at some comfort factor rather than bet on high-beta mid- and small-cap stocks.

Foreign portfolio investors (FPIs) or foreign institutional investors (FIIs) had become more cautious about investing in India but they did pump in more money into a clutch of mid-cap stocks for the last few months.

Quarterly shareholding data shows they pushed up their holding in as many as 83 listed companies that have a valuation of $1 billion or more. More than half of these companies are in the mid-cap pack.

A sector-wise analysis shows a vast spread but some sectors like chemicals and pharmaceuticals stand out. Around one in five of the mid-caps where FIIs increased their holding during the April-June quarter are in the pharmaceuticals sector. 

Among others, financial services, technology and engineering sectors also saw multiple mid-caps attract fresh money flow from FIIs.

Top mid-caps where FIIs bet

Navin Fluorine, one of the largest fluorochemicals makers in the country, was among the largest mid-caps that saw offshore portfolio investors turn bullish during the three months ended June 30, 2021.

Vinati Organics, a producer of speciality organic intermediates, monomers and polymers including prime raw material for the manufacture of the vital bulk drug ibuprofen, was another favourite.

FIIs also increased their stake in GMR Infrastructure, the parent of the company that operates the New Delhi international airport as lower rates of Covid-19 infections prompts authorities to ease curbs and air traffic improves.

FIIs also bought shares of drugmakers JB Chemicals & Pharmaceuticals Ltd as well as Glenmark Pharmaceuticals. In the broader healthcare sector, the investors bet more on diagnostics chain Metropolis Healthcare.

In the financial services sector, offshore investors bought shares of Computer Age Management Services, underlining demand for shares of the mutual fund transfer agency as more and more Indians invest in capital markets.

Indian Bank and IIFL Wealth Management were the other financial services stocks that attracted FIIs.
In the IT sector, Firstsource Solutions saw buying from offshore investors.

Other favourite mid-caps

A number of mid-caps that command a market value between Rs 10,000 and less than Rs 20,000 crore also saw buying interest from FIIs. These include drugmakers Suven Pharmaceuticals and Eris Lifesciences.

Other companies in this list are Chambal Fertilisers, Welspun India, Affle (India), Amara Raja Batteries, Indigo Paints, Graphite India, Lux Industries, CG Power, Zensar Technologies, Tanla Platforms, Sterlite Technologies and PNB Housing Finance.

If we ignore the market value of the companies, a different list emerges of mid-cap stocks where FIIs bought a stake of 2% or more last quarter.

These include active pharmaceutical ingredients maker Solara Active, digital gaming venture Nazara Technologies, Great Eastern Shipping, Graphite India, Burger King India and HLE Glascoat. Of these, Nazara and Burger King have gone public over the past year while HLE Glascoat’s stock has jumped fourfold.

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Adani move sizzles media stocks. Is it Zee or NDTV on the radar?

by 5paisa Research Team 20/09/2021

The Adani Group has hired a new chief for its entry into the media sector, pushing media stocks higher to hit circuit breakers on Monday and fuelling speculation of an acquisition move by the Gujarat-based conglomerate.

The billionaire Gautam Adani-led group named journalist Sanjay Pugalia, until recently the president at Quint Digital Media, as the CEO and editor-in-chief of its media vertical during the weekend.

The group said Pugalia will lead its media initiatives and support the corporate communication team. He will report to group scion Pranav Adani and will work closely with Sudipta Bhattacharya, CTO of the group and CEO of its US operations. 

Pugalia comes with experience working in digital, television and print. Prior to Quint, he led the CNBC-Awaaz Hindi television channel that’s part of the TV18 group controlled by billionaire Mukesh Ambani, India’s richest man.

The Adani Group has been diversifying aggressively in the last five-seven years partly via an inorganic growth strategy. A senior appointment in a sector it has not been involved directly fuelled rumours that it is looking at some of the existing media houses as an entry point.

Zee or NDTV?

Two news media organisations saw their stock prices hit circuit breakers on Monday. New Delhi Television Ltd (NDTV) and Zee Media Corporation were the counters that saw their shares hitting the upper circuit.
Zee Media is the news business arm of the Essel Group, which is known for a string of TV channels including its flagship Zee Entertainment Enterprises Ltd.

NDTV’s share price rocketed nearly 10% to Rs 79.65 a share, valuing the company at Rs 513 crore. Zee Media’s share price rose about 5% to Rs 11.78 apiece, giving it a market capitalisation of Rs 737 crore.

NDTV had in the past faced heat over alleged tax evasion that the company denied. Zee’s parent Essel has been facing a financial crunch. Essel’s flagship firm Zee Entertainment, which houses its entertainment channels, has been facing shareholder activism over strategy and corporate governance.

The Essel group’s debt woes have meant it has been losing a grip on the listed companies. The promoter stake in Zee Media itself has shrunk from over 55% to under 15% in the last two years. This makes it a prime target given its brand recall and need for cash infusion to sustain its operations.

NDTV, which is still majority owned by its founders Prannoy and Radhika Roy, has been in the rumour mills for being a takeover target for several years now.

Ambani vs Adani in the making?

The impending move to enter the media business could also pitch Gautam Adani against Mukesh Ambani, who controls Network18 and TV18 with news channels like ETV and CNBC-TV18 among several others. 

Mukesh Ambani-led Reliance Industries had acquired control of Network18 after converting into equity the debt instruments it used to back its erstwhile promoter Raghav Bahl.

Bahl, who now runs Quint Digital, has a partnership with Bloomberg for its digital publication but has been unsuccessful in securing government approval to enter the TV news business.

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5 best swing trading ideas for the week

best swing trading ideas

5paisa research provides investors with the best short-term and long-term investing ideas. Every morning we offer 5 best stocks to buy, in the afternoon we provide five best buy today and sell tomorrow (BTST) ideas, while at the beginning of every week we provide five best swing trading ideas. We regularly update our success rate and issue special commentary during special market events.

Swing Trading

Swing Trading is a kind of fundamental trading strategy where positions are held for more than a single day. Since corporate fundamentals generally require several days or even a week to cause sufficient price movement to render a reasonable profit, most swing traders are also considered fundamentalists as well.

Some others also explain swing trading as a trading strategy in the middle of day trading and trend trading. While day traders hold stocks not more than a day the trend trader holds stocks as for a week or even a month or months based on fundamental trends. Swing traders trade in a particular stock based on intra-week or intra-month oscillations between pessimism and optimism.

Here is the list of 5 best swing trading strategies for the week

HLE GLASSCOAT (HLEGLASS)

Action: Buy

Current market price: 5175

Stop loss: 5040

Target 1: 5350

Target 2: 5520

Reason: Strong volumes seen for HLE Glass share

 

AVENUE SUPERMARTS (DMART)

Action: Buy

Current market price: 4240

Stop loss: 4100

Target 1: 4430

Target 2: 4600

Reason: Momentum is positive for DMART share

 

TATA ELXSI (TATAELXSI)

Action: Buy

Current market price: 5491

Stop loss: 5135

Target 1: 5650

Target 2: 5800

Reason: Further buying is expected for Tata Elxsi share

 

VENKEY'S INDIA (VENKEYS)

Action: Buy

Current market price: 3060

Stop loss: 2975

Target 1: 3130

Target 2: 3250

Reason: Sideways move is likely to end for Venkey’s India share

 

DCM SHRIRAM (DCMSHRIRAM)

Action: Buy

Current market price: 1037

Stop loss: 1000

Target 1: 1065

Target 2: 1110

Reasons: Uptrend is expected to start in DCM Shriram stock

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ITC stock zooms to 20-month high as Jefferies ups target

by 5paisa Research Team 20/09/2021

ITC Ltd, India’s biggest cigarette maker, touched its highest stock price level in 20 months after brokerage house Jefferies raised its forecast and the government kept taxes on tobacco unchanged.

The company, which has diversified into consumer goods, hotels, paper and other sectors over the last many years, has underperformed the stock market in recent years despite being among the picks of several analysts. 

However, its shares have rallied in the past few days and climbed as much as 4% to hit Rs 239.40 apiece on the BSE on Monday. This is its highest level since January 22, 2020, stock-exchange data show. The shares ended at Rs 233.6 apiece, up 1.1% from Friday’s close. 

The new milestone came after the company’s shares jumped 8% last Thursday. The stock’s rise on Monday can be attributed to two factors. One, the Goods and Services Tax (GST) Council kept the cess on tobacco unchanged at its meeting last Friday. 

“This is a positive development for ITC, which is also set to see a recovery in cigarette volumes and earnings in the coming quarters,” Jefferies said in a note.

ITC’s cigarette volumes were impacted during the April-June quarter, when India was hit hard by the second wave of the Covid-19 pandemic. However, volumes have been recovering since then as the rate of virus infections slowed.

The second factor was the Jefferies report itself. The brokerage house has an “outperform” rating on the ITC stock and revised its target higher to Rs 300 from Rs 275.

ITC makes almost four of five cigarettes in India. The cigarette vertical still accounts for a major chunk of its business even though it has expanded into a wide variety of areas ranging from FMCG and hotels to agribusiness and IT.

To be sure, the ITC stock is still nearly 30% below its peak in 2017 when it had reached Rs 339 apiece. ITC’s share price has been sliding for the last two years in particular, much before the onset of the coronavirus pandemic.

While most large-cap stocks in the BSE Sensex and the Nifty 50 had bounced back from the lows of early 2020, when the lockdown in the country hit most businesses, ITC just about recovered. The Sensex and Nifty 50 have more than doubled since March 2020 while ITC, even after the recent rally, is up 62% in the same period.

This is because the company has been facing the ire of some institutional funds that base their investment decisions given their environmental, social and governance (ESG) norms. While ITC has a large business that is ESG-compliant, these funds tend to discount the company due to its cigarettes business that still contributes a bulk of its profits.

Brokerage ICICI Securities summed up these concerns at the time of ITC’s June quarter earnings. “Investor perception of the cigarette business and its long-term prospects have been one of the biggest drags for the stock price performance in the last five years,” the firm said.

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Paras Defence IPO off to flying start as retail investors lead the rush

Paras Defence IPO
by 5paisa Research Team 21/09/2021

The initial public offering (IPO) of Paras Defence and Space Technologies Ltd made a strong start on Tuesday with the issue getting subscribed more than eight times within the first three hours.

The offering of 71.4 lakh shares, excluding anchor allotment, was covered 16.6 times after receiving bids for 11.8 crore shares at the end of the first day.

Retail investors led the bidding. Their quota of 35.86 lakh shares was covered 31.36 times after getting bids for 11.24 crore shares. The non-institutional investors’ quota was subscribed 3.77 times while institutional investors mostly stayed on the sidelines.

The defence engineering company’s IPO began today as it seeks to benefit from bullish sentiment that has pushed stock markets to record highs. The IPO will close on Thursday. It has set a price band of Rs 165-175 a share for the IPO.

Ahead of the IPO, the company raised Rs 51 crore from anchor investors including existing investor Abakkus. It had also mopped up Rs 34 crore through a pre-IPO sale.

Paras is the 42nd company to float an IPO in 2021, underlining the rush among Indian firms to launch share sales this year. In addition, an equal number of companies have filed their draft red herring prospectuses (DRHPs) and are awaiting approval from the Securities and Exchange Board of India.

This IPO rush comes even as benchmark indices continue to touch new highs. The 30-stock BSE Sensex, for instance, hit another record on Friday, going past 59,700 before cooling off. On Tuesday, the Sensex was trading around the 58,600 level.

The Paras IPO comprises a fresh issue of shares worth Rs 140.6 crore and an offer for sale of up to 17.24 lakh shares by its existing shareholders including the promoters Sharad Virji Shah, Munjal Sharad Shah and Ami Munjal Shah.

The founders—chairman Sharad Virji Shah and managing director Munjal Sharad Shah—hold a 59.53% stake in Paras Defence. The total promoter and promoter group stake in the company is 79.4%.

The company plans to use the money raised from the fresh issue to buy machinery and equipment. It also plans to fund working capital requirements, repay debts and use the money for general corporate purposes.

Paras Defence’s business

The company designs, develops, manufactures and tests a range of defence and space engineering products. It caters to four major segments—defence and space optics, defence electronics, electro-magnetic pulse (EMP) protection solutions, and heavy engineering.

It is also the sole Indian supplier of critical imaging components such as large-sized optics for space applications. It has two manufacturing facilities in Maharashtra, located at Nerul in Navi Mumbai and Ambernath in Thane.

The Nerul plan is an advanced nano-technology machining centre to produce high-quality optics and ultra -precision components. The Ambernath facility makes heavy engineering products such as flow-formed motor tubes, vacuum brazed cold plates, titanium structures and assemblies. The company is expanding the Nerul facility.

Paras gets most of its revenue from defence public-sector undertakings and government organisations involved in space research. Its customers include Bharat Electronics Ltd, Hindustan Aeronautics Ltd, Bharat Dynamics Ltd, Hindustan Shipyard Ltd, Electronic Corporation of India Ltd, Tata Consultancy Services Ltd and Solar Industries India Ltd. Its foreign customers include Advanced Mechanical and Optical Systems of Belgium and Tae Young Optics Company of South Korea.

Paras Defence’s financials

The company’s top line hasn’t grown in the last two years and its profit has fallen.

Its consolidated total income was Rs 144.6 crore for the year ended March 31, 2021, down from Rs 149 crore and Rs 1,57.17 crore for the previous two years.

Its consolidated profit after tax fell to Rs 15.78 crore in 2020-21 from Rs 19.66 crore the year before and Rs 18.97 crore in 2018-19.

The company had an order book of Rs 305 crore as of June 30, 2021.