A Detailed Equity Research Report on Venus Remedies Ltd

Summary

A Detailed Equity Research Report on Venus Remedies Ltd with a tagline Indian Pharmaceutical Company.

VENUS REMEDIES LIMITED

KEY STOCK STATISTICS:

Market Capitalization (crs):  315/-

Book Value: Rs.345.30 /-

Face Value: Rs.10 /-

52 week High/Low:  301.80/145

P/E Ratio: 15.30

Industry P/E: 43.95

P/BV: 0.7/-

Dividend Yield: 0.00/-

Company Background:

Ø  Venus Remedies Ltd is an Indian Pharmaceutical company with a presence in domestic and international markets. It is primarily engaged in the business of pharmaceutical products manufacturing.

Ø  Venus Remedies Limited, a leading Indian pharmaceutical company committed to providing innovative and affordable healthcare solutions to people around the world. From antibiotics to anti-cancer drugs, we offer a wide range of products that are trusted by healthcare professionals and patients alike.

Ø We leverage science for a better tomorrow by using our R&D capabilities, experience and innovation program to develop solutions that remedy human ailments. We touch the lives of patients with our innovative solutions in the domains of antimicrobial resistance (AMR), oncology, skin & wound care, neurology, anticoagulants, pain management, herbal portfolio and disinfectants.

Shareholding Pattern: 

Returns(%):

Source: Company, KFO Research 

Industry Outlook:

INDIA is the third largest pharmaceutical industry in the world, with the present value of the sector estimated at US$50 billion. Current projections forecast that the revenue of the nation’s pharma sector will grow to US$130 billion by 2030, according to the Indian Pharmaceutical Alliance (IPA).

As India enters the ‘Amrit Kaal’, it is expected to remain one of the faster-growing major economies in the world owing to robust domestic demand. Deal activity is anticipated to increase with the pharmaceutical and healthcare sector with a promise for further investments in 2023. India looks forward to nurturing a more advanced and globally renowned pharmaceutical industry and all government policies, regulations, and initiatives are targeted towards this goal.

Proactive Quality Management System: The Indian pharmaceutical industry needs to look more closely at advanced tracking systems and introduce better tracing-related technologies. This is owing to India’s growing presence in the global pharmaceutical space and widening spread across the world. As a result, Pharma companies are likely to progressively focus on strengthening their self-monitoring systems recognising their moral responsibility.

Government support to the pharmaceutical sector :India’s aspiration to become the pharmacy of the world has received a big boost from the provisions of the union budget 2023-24. Specifically, the allocation to the health sector has been increased by H2,954 crore, from H86,200.65 crores in FY23 to 89,155 crores in FY24.

FUTURE OUTLOOK:

The Indian pharmaceutical and healthcare sector is anticipated to register a growth of 8-10% in FY24. Pharmaceutical businesses will continue to reassess the risk of their dependencies on global supply chains, given the resurfacing of the COVID-19 pandemic in some nations and the recent Russia-Ukraine war that has significantly impacted the operations of pharmaceutical companies globally. In FY24, there may be more diverse deals across value chains, from manufacturing, and R&D to product marketing and distribution. It is expected that 2023 will see more capability-driven deals providing access to newer technologies as large pharma companies seek to divest non-core assets and optimise their portfolio. The Indian pharma sector is not immune from global developments. The US government’s budget has recently announced a reduction in the prices of drugs. This will, in all likelihood, impact the Indian players. India also faces stiff competition from other emerging economies in the South-East Asian and Arab regions where Chinese companies are working hard to gain a greater market share of API manufacturing.

Source: Company, KFO Research 

BUSINESS HIGHLIGHTS & ANALYSIS: 

PROS

• Company is almost debt free.
• Stock is trading at 0.76 times its book value
• Company has delivered good profit growth of 23.4% CAGR over last 5 years.

  CONS

  • Though the company is reporting repeated profits, it is not paying out dividend
  • Company has a low return on equity of 8.67% over last 3 years.
  • Debtor days have increased from 31.9 to 50.7 days.

   

Growth Drivers:

Ø  Making Venus products available in the hospital formulary has been a significant achievement for us. Having made inroads in some corporate and government institutions, we look forward to encashing this opportunity in the coming year. We plan to work more aggressively on this project in FY’24 .

Ø  A big unexplored market exists for government business in states and union territories of India. We aim to cover government institutions pan-India in FY’24 .

Ø  Antimicrobial Resistance (AMR) is a serious global problem. Our research products provide a solution to this unmet need of the medical fraternity. The government institutions have started recognising the need to procure these products. This creates a massive opportunity for us in the years ahead.

Ø   Our patented products provide a credible moat against the competition.

VALUATIONS:

ü  On the basis of Discount Cash Flow Valuation Method, we are recommending ‘Buy’ for the stock. Since the stock offers good opportunity, we initiate a ‘BUY’ signal on the stock with 12-month price target of Rs 307/- share an upside of 28.45 % from current levels.

PEER COMPARISON:

Source: www.sharescart.com

Balance Sheet ( Rs. in Crores):

Cash Flow Statement (Rs. in Crores):

Profit and Loss Account ( Rs. in Crores):

Source: www.sharescart.com