Vivimed Labs Ltd (Rs 92)
(BSE Code- 532660 NSE Code- VIVIMEDLAB)
(P/E- 3.3, Promoter's stake- 58.44%, Mkt Cap- Rs86 cr)
Vivimed Labs Ltd (VLL) is a leading manufacturer and exporter of an API, viz. Triclosan. Apart from Triclosan, it also manufactures other Specialty Active Ingredients such as Avis, Chlorophenesin, NDGA and CaGP. Vivimed caters to both domestic as well as Export markets and its major customers are Hindustan Unilever Ltd., Anchor Healthcare, Marico Industries, Unilever, Harmet International Inc., USA, Benckiser (North America) etc. Vivimed has a strong product portfolio catering to need of various segments like: Oral care (Triclosan - anti microbial agent, Calcium Glycerophosphate - dental enamel protection), Skin care (clinbazole - anti fungal agent, Vicrol - hair dye coupler) and Hair care (Avis- UV protection cream). VLL manufactures ingredients mainly for the Cosmetic industry which has been growing at an accelerated pace for the last few years. Due to this, the company is experiencing continuous increase in demand for its products
VLL is based out of Karnataka with its manufacturing plants in Bidar (Karnataka), Medak and Bonthapally (AP). The Research and Development (R&D) which is the key success factor for this company was set up to support its manufacturing. Vivimed has a state of art laboratory in Hyderabad with about 35 highly qualified professionals with experience in diverse fields of organic synthesis, analytical knowledge, microbiology & formulations, who conduct and supervise research. Triclosan (Viv-20) is the bread earner for Vivimed. It is the most widely used antibacterial, which goes into Oral care, personal hygiene and cosmetics. In July 2005, Vivimed came out with a public issue at Rs 70 per share for the expansion of Triclosan capacity. Globally Ciba Speciality Chemicals, Switzerland is a largest player in Triclosan with 75% market share while Vivimed has 12% market share. Another speciality product manufactured by VLL is Avis, which improves UV absorbing ability of Sunscreen and make them more effective. L' Oreal is a main client for Avis. It has also approved Vivimed as Global Supplier to L'Oreal- France.
For the year ended March 2009, the company had posted net sales of Rs 280 cr.. and net profit of Rs 22 cr. on consolidated basis. On a equity capital of 9.4 cr.(Promoters'stake-58.44%), the EPS stood at Rs 23.4 and the dividend declared is 15%. For the Q1 ended June 2009, VLL has posted a 65% rise in net profit to Rs 6.96 cr. on a 50% rise in net sales to Rs 78.96 cr. on consolidated basis. During the first quarter, FCCB's of USD 12.5 million were bought back and cancelled. Of the total issue, bonds worth USD 12.5 mn were bought back and Bondholders opted for conversion of balance Bonds worth USD 2.5 mn into equity shares. The Company in its Board Meeting held on August 31, 2009 considered allotment of equity shares to the Bondholder and has issued 5,63,918 equity shares of the Company, converted at Rs 185 per equity share.
Vivimed Labs is a niche player focused on manufacturing of ingredients for various segments of cosmetic products. It has show a steady growth in its revenues and earnings over the past four years and also established itself as a supplier to some globally leading cosmetic companies like L'Oreal, Revlon etc. Vivimed has a sustainable business model, which is scaleable .The demand for products are buoyant with little pressure on the pricing. In February 2008, Vivimed announced acquisition of James Robinson, a subsidiary of UK-based global chemicals major Yule Catto & Co. for about $30 million. The company has a leadership position in the Hair Dyes and Intermediate segments. The Personal Care products of James Robinson complement Vivimed's strong portfolio of active ingredients for this sector and this acquisition will be EPS accretive.
Going forward, VLL has decided to introduce new products at regular intervals. It has short-listed six active ingredients in the Sunscreen range for development, marketing & sales. It's also exploring the possibilities of offering `custom blends' for large personal care product manufacturing company. Vivimed's vision is to become a major supplier for speciality chemicals. Focus remains on personal care and cosmetics and this is a good proposition. With its R&D and high skill expertise VLL is set for decent growth. In terms of valuations, the scrip is available at 3.9 times x its FY09 earnings(Rs 23.4) and at 3.1 times FY10E earnings(Rs 29-30) and holds good potential for appreciation in the medium term. Investors can start accumulating the stock at current levels and add more on declines for decent returns of 50%-60% over the next 6-8 months.
(BSE Code- 532660 NSE Code- VIVIMEDLAB)
(P/E- 3.3, Promoter's stake- 58.44%, Mkt Cap- Rs86 cr)
Vivimed Labs Ltd (VLL) is a leading manufacturer and exporter of an API, viz. Triclosan. Apart from Triclosan, it also manufactures other Specialty Active Ingredients such as Avis, Chlorophenesin, NDGA and CaGP. Vivimed caters to both domestic as well as Export markets and its major customers are Hindustan Unilever Ltd., Anchor Healthcare, Marico Industries, Unilever, Harmet International Inc., USA, Benckiser (North America) etc. Vivimed has a strong product portfolio catering to need of various segments like: Oral care (Triclosan - anti microbial agent, Calcium Glycerophosphate - dental enamel protection), Skin care (clinbazole - anti fungal agent, Vicrol - hair dye coupler) and Hair care (Avis- UV protection cream). VLL manufactures ingredients mainly for the Cosmetic industry which has been growing at an accelerated pace for the last few years. Due to this, the company is experiencing continuous increase in demand for its products
VLL is based out of Karnataka with its manufacturing plants in Bidar (Karnataka), Medak and Bonthapally (AP). The Research and Development (R&D) which is the key success factor for this company was set up to support its manufacturing. Vivimed has a state of art laboratory in Hyderabad with about 35 highly qualified professionals with experience in diverse fields of organic synthesis, analytical knowledge, microbiology & formulations, who conduct and supervise research. Triclosan (Viv-20) is the bread earner for Vivimed. It is the most widely used antibacterial, which goes into Oral care, personal hygiene and cosmetics. In July 2005, Vivimed came out with a public issue at Rs 70 per share for the expansion of Triclosan capacity. Globally Ciba Speciality Chemicals, Switzerland is a largest player in Triclosan with 75% market share while Vivimed has 12% market share. Another speciality product manufactured by VLL is Avis, which improves UV absorbing ability of Sunscreen and make them more effective. L' Oreal is a main client for Avis. It has also approved Vivimed as Global Supplier to L'Oreal- France.
For the year ended March 2009, the company had posted net sales of Rs 280 cr.. and net profit of Rs 22 cr. on consolidated basis. On a equity capital of 9.4 cr.(Promoters'stake-58.44%), the EPS stood at Rs 23.4 and the dividend declared is 15%. For the Q1 ended June 2009, VLL has posted a 65% rise in net profit to Rs 6.96 cr. on a 50% rise in net sales to Rs 78.96 cr. on consolidated basis. During the first quarter, FCCB's of USD 12.5 million were bought back and cancelled. Of the total issue, bonds worth USD 12.5 mn were bought back and Bondholders opted for conversion of balance Bonds worth USD 2.5 mn into equity shares. The Company in its Board Meeting held on August 31, 2009 considered allotment of equity shares to the Bondholder and has issued 5,63,918 equity shares of the Company, converted at Rs 185 per equity share.
Vivimed Labs is a niche player focused on manufacturing of ingredients for various segments of cosmetic products. It has show a steady growth in its revenues and earnings over the past four years and also established itself as a supplier to some globally leading cosmetic companies like L'Oreal, Revlon etc. Vivimed has a sustainable business model, which is scaleable .The demand for products are buoyant with little pressure on the pricing. In February 2008, Vivimed announced acquisition of James Robinson, a subsidiary of UK-based global chemicals major Yule Catto & Co. for about $30 million. The company has a leadership position in the Hair Dyes and Intermediate segments. The Personal Care products of James Robinson complement Vivimed's strong portfolio of active ingredients for this sector and this acquisition will be EPS accretive.
Going forward, VLL has decided to introduce new products at regular intervals. It has short-listed six active ingredients in the Sunscreen range for development, marketing & sales. It's also exploring the possibilities of offering `custom blends' for large personal care product manufacturing company. Vivimed's vision is to become a major supplier for speciality chemicals. Focus remains on personal care and cosmetics and this is a good proposition. With its R&D and high skill expertise VLL is set for decent growth. In terms of valuations, the scrip is available at 3.9 times x its FY09 earnings(Rs 23.4) and at 3.1 times FY10E earnings(Rs 29-30) and holds good potential for appreciation in the medium term. Investors can start accumulating the stock at current levels and add more on declines for decent returns of 50%-60% over the next 6-8 months.
Source: Internet (Valuenotes by Sanjay Chhabria)
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