BSE: 512529 | NSE: SEQUENT | Pharmaceuticals & Drugs | Small Cap
Past 10 year's financial track record analysis by Moneyworks4me indicates that Sequent Scientific Ltd is a average quality company.
The key valuation ratios of Sequent Scientific Ltd's currently when compared to its past seem to suggest it is in the Fair zone.
The Price Trend analysis by MoneyWorks4Me indicates it is Weak which suggest that the price of Sequent Scientific Ltd is likely to Fall in the short term. However, please check the rating on Quality and Valuation before investing.
Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end.
| Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 | TTM | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ROCE % ⓘ | -3.9% | 2.5% | 1.1% | 4.8% | 9.2% | 12.6% | 16.2% | 7% | -9.7% | -0.6% | - |
| Value Creation Index ⓘ | -1.3 | -0.8 | -0.9 | -0.7 | -0.3 | -0.1 | 0.2 | -0.5 | -1.7 | -1.0 | - |
Growth Parameters ⓘGrowth Parameters Colour Code Guide ⓘ | |||||||||||
| Sales ⓘ | 443 | 606 | 684 | 848 | 1,039 | 1,179 | 1,362 | 1,413 | 1,421 | 1,370 | 1,449 |
| Sales YoY Gr. | - | 36.8% | 12.8% | 24% | 22.6% | 13.5% | 15.5% | 3.8% | 0.6% | -3.6% | - |
| Adj EPS ⓘ | -3.6 | -0.8 | -0.1 | 0.2 | 2.2 | 3 | 4 | 1.5 | -4.5 | -0.5 | 0.7 |
| YoY Gr. | - | NA | NA | NA | 1042.1% | 36.4% | 35.5% | -63.6% | -408.9% | NA | - |
| BVPS (₹) ⓘ | 3.8 | 38.7 | 39.4 | 25.9 | 27.9 | 27.1 | 29 | 26 | 25.8 | 23.2 | 27.4 |
| Adj Net Profit ⓘ | -54.2 | -19.6 | -1.6 | 4.7 | 53.6 | 73.4 | 99.6 | 36.4 | -112 | -12.1 | 17 |
| Cash Flow from Ops. ⓘ | -23.6 | -0.1 | -7.2 | 45.2 | 116 | 115 | 115 | 30.6 | 16.8 | 30.6 | - |
| Debt/CF from Ops. ⓘ | -20.1 | -5782.5 | -57.8 | 6.7 | 2.8 | 3 | 2 | 10.3 | 23.7 | 14.8 | - |
CAGR Colour Code Guide ⓘ
| 9 Years | 5 Years | 3 Years | 1 Years | |||||
|---|---|---|---|---|---|---|---|---|
| Sales ⓘ | 13.4% | 5.7% | 0.2% | -3.6% | ||||
| Adj EPS ⓘ | NA | -174.3% | -149.6% | NA | ||||
| BVPSⓘ | 22.4% | -3.6% | -7.1% | -9.9% | ||||
| Share Price | 5.1% | 13.2% | -0.7% | 16.7% | ||||
Performance Ratio Colour Code Guide ⓘ
| Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 | TTM | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Return on Equity % ⓘ | -73.2 | -3.8 | -0.2 | 0.6 | 7.9 | 10.5 | 14.1 | 5.1 | -16.2 | -1.8 | 2.6 |
| Op. Profit Mgn % ⓘ | 4.4 | 9.6 | 8.5 | 10.3 | 12.8 | 14.9 | 15.7 | 7.8 | 1.7 | 5.6 | 9.4 |
| Net Profit Mgn % ⓘ | -12.5 | -2.9 | -0.6 | 1.7 | 6 | 7.3 | 8 | 2.8 | -8 | -0.4 | 1.1 |
| Debt to Equity ⓘ | 8.3 | 0.3 | 0.4 | 0.5 | 0.5 | 0.5 | 0.3 | 0.5 | 0.6 | 0.8 | 0.4 |
| Working Cap Days ⓘ | 244 | 227 | 275 | 246 | 206 | 190 | 179 | 196 | 199 | 199 | 101 |
| Cash Conv. Cycle ⓘ | 66 | 79 | 93 | 89 | 79 | 73 | 80 | 95 | 102 | 105 | 32 |
Return on Equity has increased versus last 3 years average to 2.60%
Debt to equity has declined versus last 3 years average to 0.78
Sales growth has been subdued in last 3 years 0.20%
Net Profit has been subdued in last 3 years -149.62%
Sales growth is not so good in last 4 quarters at 2.49%
| Standalone | Consolidated | |
|---|---|---|
| TTM EPS (₹) | 0.7 | 0.7 |
| TTM Sales (₹ Cr.) | 179 | 1,449 |
| BVPS (₹.) ⓘ | 44.5 | 27.4 |
| Reserves (₹ Cr.) ⓘ | 1,065 | 636 |
| P/BV ⓘ | 3.63 | 5.91 |
| PE ⓘ | 236.79 | 245.79 |
| From the Market | |
|---|---|
| 52 Week Low / High (₹) | 91.85 / 240.90 |
| All Time Low / High (₹) | 0.40 / 336.40 |
| Market Cap (₹ Cr.) | 4,050 |
| Equity (₹ Cr.) | 50.1 |
| Face Value (₹) | 2 |
| Industry PE ⓘ | 40.7 |
| Pledged * | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|
Particulars |
Q1FY24 |
YoY Trend |
Comments |
|
Revenue |
333 |
-3% |
While formulations segment was flattish, API* segment declined |
|
EBITDA |
-8 |
NA |
|
|
EBITDA Margin |
NA |
NA |
|
|
PAT |
-35 |
NA |
|
Poor results, although EBITDA before exceptional items and acquisition cost was positive.
Sequent Scientific | Market Cap 6,250 Cr
CMP 252 | PE 38x FY22
Recommendation: Sell
Results: Sequent Scientific (Sequent) reported growth of 8% in Q1FY22 versus previous year. Operating profit declined 55% over same period due to lower growth and non-cash ESOP costs.
Key highlights:
Outlook: As per the management, the capacity expansion has been completed at Vizag & Mahad and this can maintain business growth momentum. The company has a long term arrangement with major animal health company for CDMO and product supplies– co investments at Vizag to be commercialized in 2023. It expects to focus on top-line growth and maintain high ROCE. It will focus on injectables and formulations business over API for future growth. Margins may not see expansion versus guided earlier.
There were concerns on notes to accounts about restating a part of sales of previous year albeit a small amount on absolute basis. We believe since it highlighted and addressed in conference call, it is not a problem. Usually the management who do not address/acknowledge if such thing has happened tends to raise a red flag. In this case, it has been addressed and corrected. With Carlyle group as promoter, we can assume there is reason to believe less of such malpractices.
MoneyWorks4me Opinion: We had recommended Sequent Scientific at ~120/share as it was expected to grow its sales at 12% CAGR over next 3 years while operating profit is expected to grow at 17% CAGR. Two primary reasons that are aiding its sales growth are i) low cost manufacturing from scale benefit in API and ii) innovator drugs going off patent in animal pharma will help Sequent to introduce generic formulations in regulated markets starting FY22. It is expected to continue delivering but in linear fashion versus what stock price indicates.
We had recommended 100% SELL On Sequent Scientific at 270/share as we intended to reduce exposure to small and mid-cap stocks. We had communicated in previous note “The stock has rallied fast, above our expected growth rate. ... We believe the opportunity size is large, but we can’t expect flawless execution and quarter after quarter blockbuster growth. Growth will be linear versus exponential.”
Sequent’s stock price correction might be a knee jerk reaction to results. Sequent stock price was factoring very high growth which was not the case post quarterly results. We have always written disclaimers for Booster Stocks.
For Booster stocks, even if the future potential is large; execution, competition and governance can lead to disappointment. If we find such risks outweigh future prospects, we will recommend an exit. We will continue to focus on consistency of portfolio returns versus individual stock return or timing exact buy and sell.
Our take is one cannot take similar stance on Booster stocks and Core Stocks. Core stocks can be held all through bad phase and still generate good return but it doesn’t hold true for Booster stocks as risks are relatively higher.
It has come to our notice that few of you did not sell Sequent Scientific on our advice. It is ok to not act on 2-3 of our calls. It wouldn’t make a big difference on overall portfolio return as long as rest of the actions are taken. Today if you wish to hold on small allocation in Sequent Scientific, you may with a caveat that it may or may not deliver very high returns from current price.
We often emphasize to focus on overall portfolio versus individual stocks. Batting for every stock to deliver is a tall ask. Let analysts keep track of individual stock, but as investor you must focus only on portfolio growth.
We had recommended Sequent Scientific at ~110-125/share (20x FY21 P/E then) as the company has series of good launches and high margin potential.
Currently the price already reflects all the positives. You can read our view on Sequent Scientific Click here. With high valuation and limited upside potential, we recommend SELL.* This also helps us to reduce our small and mid cap exposure as valuation have run ahead of their fundamental growth.
We will keep looking for other opportunities that are more attractively priced.
*We had recommended partial Sell at ~290/share.
Sequent Scientific | Market Cap 6,990 Cr
CMP 283 | PE 43x FY22
Recommendation: Sell Partially
Results: Sequent Scientific (Sequent) reported growth of 20.4% in Q4FY21 versus previous year. Operating profit grew 19.5% over same period thanks to favourable operating leverage.
The revenue grew 15.5% on full year basis for FY21.
Key highlights:
Outlook: As per the management, the capacity expansion has been completed at Vizag & Mahad and this can maintain business growth momentum. The company has a long term arrangement with major animal health company for CDMO and product supplies– co investments at Vizag to be commercialized in 2023. It expects to focus on top-line growth and maintain high ROCE. It will focus on injectables and formulations business over API for future growth. Margins may not see expansion versus guided earlier.
MoneyWorks4me Opinion: We had recommended Sequent Scientific at ~120/share as it was expected to grow its sales at 12% CAGR over next 3 years while operating profit is expected to grow at 17% CAGR. Two primary reasons that are aiding its sales growth are i) low cost manufacturing from scale benefit in API and ii) innovator drugs going off patent in animal pharma will help Sequent to introduce generic formulations in regulated markets starting FY22. It is expected to continue delivering but in linear fashion versus what stock price indicates.
The stock has rallied fast, above our expected growth rate. We have recently reduced allocation due to valuation. We believe the opportunity size is large, but we can’t expect flawless execution and quarter after quarter blockbuster growth. Growth will be linear versus exponential.
For Booster stocks, even if the future potential is large; execution, competition and governance can lead to disappointment. If we find such risks outweigh future prospects, we will recommend an exit. We will continue to focus on consistency of portfolio returns versus individual stock return or timing exact buy and sell.
Sequent Scientific | Market Cap 3,791 Cr
CMP 153 | PE 24x FY22
Recommendation : Hold
Results: Sequent Scientific (Sequent) reported growth of 21.8% in Q2FY21 versus previous year. Operating profit grew 58% over same period thanks to favourable operating leverage.
Key highlights:
Outlook: Sequent expects sales growth to be in mid teens and low teens over medium term in API and formulation business respectively. Backed by sales growth, it also expects lower expense growth aiding profit growth higher than sales growth.
MoneyWorks4me Opinion: Sequent Scientific is a booster stock, operating into generic API and formulations for Animals. Sequent is expected to grow its sales at 12% CAGR over next 3 years while operating profit is expected to grow at 17% CAGR. Two primary reasons that are aiding its sales growth are i) low cost manufacturing from scale benefit in API and ii) innovator drugs going off patent in animal pharma will help Sequent to introduce generic formulations in regulated markets starting FY22.
For Booster stocks, even if the future potential is large; however, execution, competition and governance can lead to disappointment. If we find such risks that outweigh future prospects, we will recommend an exit.
Investors must have received the above email in their mailbox from Sequent Scientific. We recommend you to ignore this email. According to "The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011" rule any investor who buys 25% stake in any company has to announce an open offer for 26% minority shareholders at more or less similar price. However, the minority shareholders has option to ignore if he thinks fair price is higher than offer price. (Same thing can't be done in delisting offer.)
When the new investor of Sequent Scientific acquired the company, it did at Rs. 85/share. The price at which the current open offer is announced is below the fair price of the company. Hence we recommend to ignore this email as we plan to hold this company for its underlying growth over next 2-3 years.
MoneyWorks4me’s employees may be invested in the securities mentioned in the above mail/report/article. For a detailed disclosure click here.
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 443 | 606 | 684 | 848 | 1,039 | 1,179 | 1,362 | 1,413 | 1,421 | 1,370 |
| Operating Expenses ⓘ | 425 | 551 | 641 | 765 | 914 | 1,009 | 1,152 | 1,303 | 1,409 | 1,308 |
| Manufacturing Costs | 78 | 99 | 70 | 74 | 101 | 108 | 125 | 128 | 129 | 109 |
| Material Costs | 225 | 299 | 357 | 462 | 543 | 605 | 695 | 793 | 834 | 760 |
| Employee Cost | 61 | 87 | 106 | 114 | 146 | 165 | 187 | 231 | 258 | 251 |
| Other Costs ⓘ | 61 | 67 | 107 | 115 | 125 | 131 | 145 | 152 | 187 | 189 |
| Operating Profit ⓘ | 18 | 55 | 43 | 83 | 125 | 170 | 210 | 109 | 12 | 61 |
| Operating Profit Margin (%) | 4.1% | 9.1% | 6.3% | 9.8% | 12.0% | 14.4% | 15.4% | 7.7% | 0.8% | 4.5% |
| Other Income ⓘ | 10 | 13 | 11 | 17 | 9 | 10 | 10 | 11 | 6 | 11 |
| Interest ⓘ | 43 | 38 | 28 | 33 | 33 | 36 | 24 | 16 | 36 | 48 |
| Depreciation ⓘ | 32 | 46 | 40 | 41 | 42 | 51 | 51 | 52 | 56 | 62 |
| Exceptional Items ⓘ | -17 | 0 | 0 | -2 | 0 | 0 | -9 | 0 | -65 | -17 |
| Profit Before Tax ⓘ | -63 | -15 | -14 | 24 | 59 | 94 | 137 | 53 | -138 | -55 |
| Tax ⓘ | 3 | 3 | -1 | 13 | 2 | 12 | 32 | 8 | -16 | -25 |
| Profit After Tax | -67 | -18 | -14 | 10 | 57 | 82 | 104 | 45 | -122 | -30 |
| PAT Margin (%) | -15.1% | -3.0% | -2.0% | 1.2% | 5.5% | 7.0% | 7.7% | 3.2% | -8.6% | -2.2% |
| Adjusted EPS (₹) | -0.7 | -0.8 | -0.6 | 17.3 | 2.0 | 2.8 | 3.8 | 1.7 | -4.9 | -1.4 |
| Dividend Payout Ratio (%) | 0% | 0% | 0% | 1% | 10% | 0% | 13% | 0% | 0% | 0% |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
Equity and Liabilities | ||||||||||
| Shareholders Fund | 57 | 922 | 961 | 630 | 688 | 673 | 720 | 645 | 642 | 579 |
| Share Capital ⓘ | 30 | 48 | 49 | 49 | 49 | 50 | 50 | 50 | 50 | 50 |
| Reserves ⓘ | 27 | 874 | 912 | 581 | 638 | 623 | 670 | 595 | 593 | 529 |
| Minority Interest | 147 | 2 | 17 | 37 | 40 | 45 | 49 | 48 | 50 | 56 |
| Debt | 455 | 267 | 360 | 256 | 275 | 297 | 197 | 282 | 332 | 389 |
| Long Term Debt | 250 | 211 | 165 | 104 | 148 | 150 | 94 | 122 | 150 | 143 |
| Short Term Debt | 204 | 56 | 195 | 152 | 127 | 147 | 103 | 160 | 182 | 246 |
| Trade Payables | 91 | 144 | 203 | 160 | 209 | 220 | 227 | 258 | 244 | 260 |
| Others Liabilities ⓘ | 172 | 203 | 362 | 259 | 189 | 228 | 251 | 254 | 214 | 178 |
| Total Liabilities ⓘ | 922 | 1,538 | 1,904 | 1,343 | 1,402 | 1,463 | 1,443 | 1,487 | 1,484 | 1,462 |
Fixed Assets | ||||||||||
| Gross Block | 596 | 644 | 790 | 582 | 638 | 762 | 753 | 825 | 940 | 959 |
| Accumulated Depreciation | 122 | 57 | 105 | 106 | 140 | 186 | 218 | 261 | 335 | 367 |
| Net Fixed Assetsⓘ | 474 | 586 | 684 | 476 | 498 | 577 | 536 | 564 | 605 | 592 |
| CWIP ⓘ | 39 | 24 | 33 | 18 | 23 | 13 | 31 | 12 | 55 | 16 |
| Investmentsⓘ | 59 | 428 | 428 | 239 | 180 | 171 | 83 | 38 | 0 | 4 |
| Inventories | 94 | 135 | 161 | 159 | 200 | 219 | 264 | 348 | 346 | 346 |
| Trade Receivables | 115 | 192 | 255 | 258 | 278 | 319 | 346 | 329 | 341 | 336 |
| Cash Equivalents | 38 | 25 | 47 | 42 | 72 | 76 | 56 | 59 | 42 | 70 |
| Others Assetsⓘ | 101 | 148 | 296 | 150 | 151 | 88 | 127 | 136 | 94 | 99 |
| Total Assets ⓘ | 922 | 1,538 | 1,904 | 1,343 | 1,402 | 1,463 | 1,443 | 1,487 | 1,484 | 1,462 |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
| Cash Flow From Operating Activity ⓘ | -24 | 0 | -7 | 45 | 116 | 115 | 115 | 31 | 17 | 31 |
| PBT ⓘ | -8 | -14 | -17 | 446 | 59 | 94 | 145 | 53 | -138 | -55 |
| Adjustment ⓘ | 36 | 84 | 123 | -314 | 84 | 91 | 84 | 94 | 221 | 145 |
| Changes in Working Capital ⓘ | -54 | -71 | -104 | -78 | -28 | -58 | -71 | -89 | -52 | -46 |
| Tax Paid ⓘ | 3 | 1 | -9 | -9 | 1 | -12 | -44 | -27 | -15 | -14 |
| Cash Flow From Investing Activity ⓘ | -155 | -316 | -116 | 7 | -68 | -72 | 10 | -96 | -65 | -6 |
| Capex | -113 | -96 | -75 | -45 | -24 | -40 | -45 | -31 | -75 | -12 |
| Net Investments | 51 | -119 | 7 | 48 | 12 | -39 | 53 | -41 | 24 | -8 |
| Others ⓘ | -92 | -101 | -48 | 4 | -56 | 7 | 2 | -23 | -14 | 14 |
| Cash Flow From Financing Activityⓘ | 179 | 309 | 147 | -57 | -20 | -43 | -139 | 67 | 32 | -1 |
| Net Proceeds from Shares ⓘ | 36 | 540 | 41 | 1 | 2 | 2 | 10 | 11 | 0 | 0 |
| Net Proceeds from Borrowing ⓘ | 78 | -29 | 20 | -51 | 45 | 0 | -74 | 36 | 22 | -4 |
| Interest Paid ⓘ | -49 | -40 | -37 | -33 | -26 | -33 | -23 | -16 | -36 | -45 |
| Dividend Paid ⓘ | 0 | 0 | 0 | -5 | 0 | -5 | 0 | -12 | 0 | 0 |
| Others ⓘ | 114 | -162 | 124 | 31 | -40 | -7 | -53 | 48 | 46 | 48 |
| Net Cash Flow ⓘ | 1 | -7 | 24 | -5 | 28 | 0 | -14 | 2 | -16 | 23 |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
| Ratios | ||||||||||
| ROE (%) | -159.4 | -3.67 | -1.47 | 1.28 | 8.63 | 12.06 | 15 | 6.56 | -18.95 | -4.85 |
| ROCE (%) | -3.91 | 2.5 | 1.05 | 4.84 | 9.24 | 12.59 | 16.24 | 7.01 | -9.71 | -0.6 |
| Asset Turnover Ratio | 0.6 | 0.51 | 0.4 | 0.52 | 0.77 | 0.84 | 0.96 | 0.98 | 0.98 | 0.96 |
| PAT to CFO Conversion(x) | N/A | N/A | N/A | 4.5 | 2.04 | 1.4 | 1.11 | 0.69 | N/A | N/A | Working Capital Days |
| Receivable Days | 78 | 90 | 118 | 110 | 93 | 90 | 87 | 85 | 84 | 88 |
| Inventory Days | 77 | 67 | 78 | 69 | 62 | 64 | 64 | 78 | 87 | 90 |
| Payable Days | 167 | 143 | 178 | 144 | 124 | 130 | 118 | 112 | 110 | 121 |
P I Drugs & Pharmaceuticals Ltd. established in 1991 is a leading manufacturer, exporter of specialized quality formulations having an objective of fulfilling the diverse demands of pharmaceutical industry.
P I Drugs & Pharmaceuticals Ltd. specializes in the manufacturing of the formulation belonging to anthelmintic & anti-parasitic segment.
In September 2007 PI Drugs purchased the pharma division of Transchem Limited.
The company is engaged in the business of human health & animal health and enjoys high Image for distribution in domestic as well as international markets.
They have a specialized and dedicated WHO - GMP accredited manufacturing plant for the manufacture of API's. It exports to all major markets like Europe, South America, Australia, Asia and Africa.
They started with the introduction of Albendazole and has developed core competency in chemistry of Benzimadazole in very short time.
Product range of the company includes:
Human / Veterinary Formulations
Honey Bee Medicine
Human / Veterinary API's
Veterinary API’s
Human API's
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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