While searching for a stock in similar business as Karuturi Global, I came across Pochiraju Industries. Since it was in same business of cut flower production as Karuturi, I got interested in knowing more about it, because we all know that how Karuturi performed during preceding years.
So Pochiraju Industries Ltd (PIL) was established in 1995 and was initially incorporated as Pochiraju Flori Tech Ltd.
Till 2007 it was into only business of cut flower production, however, the company is currently focusing on three business segments – Agri Business, Pharmaceuticals and Bio-Technology & Life Sciences.
Talking briefly about all 3 divisions :
Pharmapil is the Pharma Division of PIL, operating its range of Pharmaceutical Formulations. Pharmapil has two divisions, the General and the Specialty divisions and market products in tablet, capsule, liquid, injectable, powder and ointment dosage forms.
Biopil is the Biotechnology Division of PIL. As per the management a plant is under construction spread over 3.86 acres of land in the S. P. Biotechnology Park situated at Turkapally, Shamirpet, Hyderabad. This plant shall utilize cell fusion techniques, hybidomas recombinant DNA technology, protein engineering and structure based molecular design which are part of modern Biotechnology. The product range shall include Biosimilar products, such as Erythropoietin, G-CSF, Interferon Alpha, Interferon Beta, Human Growth Hormone and Recombinant Human Insulin.
Agropil is the Agricultural Division of PIL. This is the division under which cut flower production is carried out. The company is further contemplating getting engaged in developing hybrid varieties and genetically modified seeds, bio-fertilizers, bio-pesticides and plant growth stimulants in agriculture.
The kind of diversification the company is going through is not going down well with me because I find no synergy between cut flower production (the basic business of the company), and production of pharmaceutical formulations. However till now, that is quarter ending Sep'09 it is only the cut flower production business that is major contributor to the revenue of the company, as the pharma division contribution is very less while the Bio-pharma division is yet to start.
As per the proposed utilization of Rs 37 cr that the company raised through IPO, Rs 5.4 cr were meant for Pharma division which has already been deployed, while Rs 21 cr were meant for Bio-pharma division, that have although been deployed for the same, but the plant is yet to commence operation. Also pharma division sales are too less to be even considered worthy of discussion.
Talking more on results, company has shown consistent revenues over the last three years with revenue ranging b/w Rs 30-35 cr. On the net profit front too they have maintained it at same level at Rs 9-10 cr, however one must take notice of the fact that margins have been excellent at 25%. Also at the current market capitalization of 34 cr, the company seems fairly valued with a very bleak possibilty of downside. The next growth driver for the company could be its Bio-pharma division, provided they execute well (remember, this is the new line of operation for the company).
So Pochiraju Industries Ltd (PIL) was established in 1995 and was initially incorporated as Pochiraju Flori Tech Ltd.
Till 2007 it was into only business of cut flower production, however, the company is currently focusing on three business segments – Agri Business, Pharmaceuticals and Bio-Technology & Life Sciences.
Talking briefly about all 3 divisions :
Pharmapil is the Pharma Division of PIL, operating its range of Pharmaceutical Formulations. Pharmapil has two divisions, the General and the Specialty divisions and market products in tablet, capsule, liquid, injectable, powder and ointment dosage forms.
Biopil is the Biotechnology Division of PIL. As per the management a plant is under construction spread over 3.86 acres of land in the S. P. Biotechnology Park situated at Turkapally, Shamirpet, Hyderabad. This plant shall utilize cell fusion techniques, hybidomas recombinant DNA technology, protein engineering and structure based molecular design which are part of modern Biotechnology. The product range shall include Biosimilar products, such as Erythropoietin, G-CSF, Interferon Alpha, Interferon Beta, Human Growth Hormone and Recombinant Human Insulin.
Agropil is the Agricultural Division of PIL. This is the division under which cut flower production is carried out. The company is further contemplating getting engaged in developing hybrid varieties and genetically modified seeds, bio-fertilizers, bio-pesticides and plant growth stimulants in agriculture.
The kind of diversification the company is going through is not going down well with me because I find no synergy between cut flower production (the basic business of the company), and production of pharmaceutical formulations. However till now, that is quarter ending Sep'09 it is only the cut flower production business that is major contributor to the revenue of the company, as the pharma division contribution is very less while the Bio-pharma division is yet to start.
As per the proposed utilization of Rs 37 cr that the company raised through IPO, Rs 5.4 cr were meant for Pharma division which has already been deployed, while Rs 21 cr were meant for Bio-pharma division, that have although been deployed for the same, but the plant is yet to commence operation. Also pharma division sales are too less to be even considered worthy of discussion.
Talking more on results, company has shown consistent revenues over the last three years with revenue ranging b/w Rs 30-35 cr. On the net profit front too they have maintained it at same level at Rs 9-10 cr, however one must take notice of the fact that margins have been excellent at 25%. Also at the current market capitalization of 34 cr, the company seems fairly valued with a very bleak possibilty of downside. The next growth driver for the company could be its Bio-pharma division, provided they execute well (remember, this is the new line of operation for the company).
Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.
To contact the Lead Associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com
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