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VIVIMED LABORATORIES

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2272
Printed Date: 24/Sep/2023 at 3:00am


Topic: VIVIMED LABORATORIES
Posted By: hit2710
Subject: VIVIMED LABORATORIES
Date Posted: 07/Aug/2009 at 12:05pm

Vivimed Labs Ltd (Vivimed) is a speciality Chemical Company with prime focus on the Home and Personal Care (H&PC) segment (covering oral care, sun care, skin care, hair care, preservatives, anti-aging molecule etc.). It holds an unique position in the global H&PC industry with supply-chain relationship with global leaders including - Unilever, L'Oreal, Procter & Gamble, Johnson & Johnson etc.

 

Having been incorporated in 1989 and manufacturing Specialty Chemicals and cosmetic ingredients like Triclosan, Avis etc. Vivimed is the 2nd largest manufacturer of Triclosan (an antibacterial used for oral care) globally and one of the top three companies for UV-A filter (sunscreens). Apart from its range of active ingredients for H&PC segments, Vivimed offers its expertise in synthetic organic chemistry to offer products that are broad spectrum anti-bacterial and antifungal biocides, aimed at catering to the needs of high growth sectors such as Plastic additives, Industrial preservatives, Construction and Paint Industries. Also through acquisitions of Creative Health Care and merger of associated company VVS Pharmaceuticals & Pharmaceuticals Pvt Ltd, Vivimed entered into the speciality pharma business.

 

Vivimed, driven by its long standing supply-chain relationship and collaborative product development practices with global peers, has emerged as the partner of choice in the H&PC industry. In fact, Vivimed has been supplying Triclosan and CaGP to Unilever/HLL group since 1995 and directly sells Chlorophenesin, a Cosmetic blend to Collaborative Laboratories Limited, USA.

 In early FY08, Vivimed has been approved as a Global Supplier to L'Oreal - France. This will propel Vivimed into a strong position as an actives supplier to the USD 7 billion, Global Sunscreen Market which is growing at the rate of 7-10% annually. Apart from these longterm supply contracts, it has a strong customer network both in the domestic market as well as for the international markets. The domestic customers include - HLL, Anchor Health Care, Marico Industries, Godrej, Karnataka Soaps and Detergents, Jyothi Laboratories. The top global customers include - Unilever, Arnaud SA France,BASF Harmet International Inc., USA, L'Oreal, Eco Labs, Microban, Sanitized AG, Benckiser North America, Arch Chemicals USA, ISP,Amore Pacific Korea MCA Switzerland, etc

 

CUSTOM  MANUFACTURING

 

Of late, major cosmetic & toiletries companies are focusing more on marketing activity and outsourcing the manufacturing stage to remain competitive, which throws open the outsourcing opportunity in the global market for industrial biocides, water treatment specialty chemicals, and preservatives (which is valued at US$5 billion.). In order to exploit this emerging opportunity of outsourcing, Vivimed has ventured into the custom manufacturing segment.

 

HOME AND PERSONAL CARE ACTIVES DIVISION

 

The H&PC Actives Division has been a key mover and the driver that has enabled Vivimed Labs build its international reputation. Known to global manufacturers across the world for its strength in synthetic organic chemistry the H&PC division has under its umbrella five areas:

 

1 Oral Care

2 Sun Care

3 Skin Care

4 Hair Care

5 Preservatives.

 

SPECIALITY PHARMA DIVISION

The Specialty Division has its inherent strengths in drug delivery ad drug discovery. They are focused on providing cures in the Oncology space, Arthritis, Syndrome X, Macular degeneration, Psoriasis and Stress.

JAMES ROBINSON

James Robinson Ltd., UK, is a leading global supplier of dyes used in a host of personal care and  Consumer products ranging from hair dyes, pharmaceuticals and photographic films/prints to ophthalmic sunglasses and fluorescent yellow tennis ba*ls.

James Robinson is an award winning company. It serves key markets in hair dyes, imaging and personal care sectors. It also offers a novel range of photochromic dyes for a wide variety of applications including ophthalmics, plastics, coatings and inks, and fluorescent dyes for both textile and non-textile applications.

 

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 Vivimedís strong portfolio of active ingredients for this sector and this acquisition will be EPS accretive.

 

HARMET INTERNATIONAL US is to increase the companyís footprint into the US markets.

 

Financial results

 

                                                       March 09               march 08

Sales   (crores)                                 280                      181

Net profits                                        22                         16

Equity                                               9.4                         9.4

Eps                                                   23.4                        16.97   

For q1 fy10 sales was 78.96 crores (q1 fy09  52.41)

Net profit for q1 fy10  6.96 crores (q1 fy09  4.2)

POSITIVES

NICHE SEGMENT WITH STRONG PRODUCT PORTFOLIO

GOOD GROWTH DURING LAST FOUR FINANCIALS AND FIRST QUARTER FY10

ACQUISITION  ADDING TO COMPANYíS GROWTH

CHEAP VALUATIONS FOR AN FMCG (ancillary) COMPANY

NEGATIVES

HIGH DEBT BURDEN (presumably for acquisition of James Robinson)

Promoters have pledged 19 percent of their stake

STOCK IS IN TRADE TO TRADE CURRENTLY SO LOW LIQUIDITY

 

   



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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.



Replies:
Posted By: smartcat
Date Posted: 07/Aug/2009 at 2:00pm
I like the business they are in and I would have bought this stock if the dividend yield was higher than the current 1.3% - especially since the P/E is lower than 5.
 
When you buy a small/micro-cap, you need to keep the yield factor in mind - because the markets can ignore (or undervalue) this stock for a long long  time. You need to show something for holding such stocks. Micro-cap stocks with no or low div yield has no bottom.


Posted By: hit2710
Date Posted: 07/Aug/2009 at 2:31pm
I am buying the stock for purpose of future dividends. At present they have debt burden which they need to address and I would have been more happy if they paid back some debt instead of giving dividend.

what lured me into buying was the business which they are in and its scalability and the possibility of generating lots of free cash once its debt burden lightens. Let's see how it goes. By the time dividends increase the share price may have appreciated.



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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.


Posted By: sajanvm
Date Posted: 07/Aug/2009 at 2:33pm
Have you looked at the cash flows ? Are they enough to payout good dividends ?

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Sajan


Posted By: hit2710
Date Posted: 07/Aug/2009 at 4:11pm
Originally posted by sajanvm

Have you looked at the cash flows ? Are they enough to payout good dividends ?
Hi
Not much data available on cash flows.
Here is what I got from religareonline.com
 
VIVIMED LABS LTD. CASHFLOW STATEMENT
You can view Cash Flow Statement of Vivimed Labs Ltd.
(Rs in Cr.)
  Mar ' 08  Mar ' 06 
Profit Before Tax   19.27  12.99
Net CashFlow-Operating Activity   -4.58  -3.58
Net Cash Used In Investing Activity   -45.98  -17.23
NetCash Used in Fin. Activity   60.98  21.23
Net Inc/Dec In Cash And Equivlnt   10.42  0.41
Cash And Equivalnt Begin of Year   4.83  0.04
Cash And Equivalnt End Of Year   15.25  0.46
For fy09 company has declared dividend of 1.5 per share.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.


Posted By: sajanvm
Date Posted: 07/Aug/2009 at 4:18pm
Cash Flow from ops is -ve. How will they sustain dividends ?

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Sajan


Posted By: hit2710
Date Posted: 07/Aug/2009 at 7:33pm
I concentrate more on the earnings and here is last few quarters earnings
 
here is the results of last few quarters with comparisions with same quarters in earlier years in brackets

                JUNE08      SEP08            DEC08             MARCH09      JUNE09

SALES      52.41         80.7(68.2)     77.6(50.7)       65.4(55.6)      79(52.4)

NET P       4.2             7.6(6.4)          6.24(4.8)           4.1(4.03)        7(4.2)

I studied these and even during difficult year of fy 09 the company did remarkably well both on sales and profitability front. Hence I feel company is worth taking the risk and at this price it is available at around 77 and expected eps for fy 10 around 28 gives you a pe of around  3 at which I feel some of the negatives are built into the price.
 
Regarding negative operating cash flows the data is for fy08 and earlier of fy 06 (couldn't get fy07) . But i assume in growing phase a company would have these negative operating cash flows which could start turning positive 2-3 years down the line.


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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.


Posted By: hit2710
Date Posted: 07/Aug/2009 at 7:42pm
Originally posted by sajanvm

Cash Flow from ops is -ve. How will they sustain dividends ?
Regarding positive cash flows, you can have a look at Oil country tubular ltd, which seems to have positive cash flows and little if any debt. I bought it today.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.


Posted By: hit2710
Date Posted: 08/Aug/2009 at 2:00pm
Here is an article published on valuenotes.com today. Most of the details are covered in our discussion except for the new info about buyback of fccbs. And I wouldn't agree with buying for 50-60 percent appreciation. I feel one should go longer term. Debt issue if resolved, can lead to rerating of the scrip.

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-58.5%), 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.

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 3.3 times x its FY09 earnings (Rs 23.4) and at 2.6 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.



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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.


Posted By: hit2710
Date Posted: 03/Sep/2009 at 1:38pm
ANNOUNCEMENT ON BSEINDIA.COM BY VIVIMED LABS.

Vivimed Labs - Buy-Back of FCCB and Issue of Equity Shares against part conversion of FCCBs

Announcement:     Vivimed Labs Ltd has informed BSE that the Company has successfully completed buyback of its foreign currency convertible bonds (FCCBs) of USD 15.0 mn issued in April 2007, maturing for redemption in April 2012.

The bonds are convertible into equity shares at a price determined as per terms of Offer subject to floor price of Rs 185 per share. 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.

THE COMPANY SEEMS TO BE DOING ALL THE RIGHT THINGS BY REMOVING THE FCCB OVERHANG.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.


Posted By: hit2710
Date Posted: 30/Jan/2010 at 2:37pm
http://www.bseindia.com/xml-data/corpfiling/announcement/Vivimed_Labs_Ltd_300110_Rst.pdf - VIVIMED Q3 FY10 RESULTS

Good steady results from Vivimed Labs.

9month eps at around 23 as compared to 19 for 9m of earlier year.

Full yr eps could be around 30.
Stock available at pe of about 5.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.


Posted By: hit2710
Date Posted: 06/Feb/2010 at 5:12pm
Announcement by the company on bseindia.com. on 6 feb 2010.

Vivimed Labs Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 05, 2010, passed resolution to call for and convene Extra Ordinary General Meeting of the shareholders on March 05, 2010, to obtain consent / approval of the members for:

Issue of upto 15,00,000 Warrants on preferential basis at a issue price of Rs. 150 per warrant determined in accordance with relevant SEBI Regulations, convertible into Equity Shares of Rs. 10 fully paid up for each warrant, at the option of warrant holders, within 18 months from the date of allotment of warrant.



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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.


Posted By: vivekbhauka
Date Posted: 26/Sep/2010 at 8:29am
vivimed caters to fmcg and a host of industries.it will have good consistent growth over next 10 years.with low market cap even after the rise to 320 levels ....it could be a above 2000-3000 cr market cap co with sales being target above 1000 cr next few years.

i have been recommending from 170 levels....may be it has much higher levels....targets could be above 2000 over a period of time.......add at all declines................


Posted By: excel_monkey
Date Posted: 14/Dec/2010 at 6:38am
http://www.vivimedlabs.com/pdf/Vivimed%20Labs%20Ltd%20-%20Investors%20Presentation%20%20-%2014-09-10.pdf


Posted By: photophobic111
Date Posted: 15/Dec/2010 at 5:01am
Do you think it is still reasonable enough to buy this at this levels?

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Doing best is the essence and improving your best is the key to everything....


Posted By: excel_monkey
Date Posted: 15/Dec/2010 at 5:20am
Hitesh bhai might have be in a better position to answer
but according to me no

Originally posted by photophobic111

Do you think it is still reasonable enough to buy this at this levels?


Posted By: photophobic111
Date Posted: 15/Dec/2010 at 6:28am
Excel Bhai,

Can you share ur insights into why are you saying "No'?

Just trying to get arguments here...


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Doing best is the essence and improving your best is the key to everything....


Posted By: excel_monkey
Date Posted: 15/Dec/2010 at 7:21am
As one can find better Pharma plays especially in formulations

look at Unichem or Ajanta or even Claris (if it lists at a substantial discount)

Vivimed type of companies which provide chemicals to Pharma and FMCG companies are more of commodity plays as compared to Formulation companies which are more of branded plays and hence more stable

it is not that one can not make money in such companies many TEDies have made good money in Vinati which again is a commodity pharma company

Hitesh bhai might have more knowledge of the compound that the company makes and have a better idea of demand and supply of that commodity

Originally posted by photophobic111


Excel Bhai,Can you share ur insights into why are you saying "No'?Just trying to get arguments here...


Posted By: photophobic111
Date Posted: 16/Dec/2010 at 10:44pm
I was more of thinking that this company has got some moat due to long relationships but I am all novice, but this was my basis to look into company more. Now is this has got some moat, this should be treated at better valuations than other companies.

Not sure, about its competitors and how easily they can breach its forte and grab its competitors.

I will also dig into more of this, but do u know Also, how much % of revenue comes from each of its competitors and from its products. Trying to understand its revenue break down and see if its dangerously concentrated or not.

Thanks


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Doing best is the essence and improving your best is the key to everything....


Posted By: kushal.masand
Date Posted: 16/Dec/2010 at 12:24pm
supplying to companies like Loreal, should mean sumthng...???


Posted By: photophobic111
Date Posted: 16/Dec/2010 at 12:36pm
Kushal,

Not able to understand your questions, coudl you please eloborate it?


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Doing best is the essence and improving your best is the key to everything....


Posted By: kushal.masand
Date Posted: 16/Dec/2010 at 4:40am
wat i actually meant that, its supplies to companies  like Loreal, thus shows high quality standards and good reputations and relations...


Posted By: photophobic111
Date Posted: 19/Dec/2010 at 11:16pm
I think other questions would be that how many other suppliers are there which has same reputation, history, cost efficency which can give pressures to vivimed.

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Doing best is the essence and improving your best is the key to everything....


Posted By: prashantkamani
Date Posted: 20/Dec/2010 at 7:16pm
I completely agree with u  Clap

at what level did u entered?


Posted By: photophobic111
Date Posted: 20/Dec/2010 at 9:09pm
If you are asking me, i did not buy any position yet in stock..still not sure how sustainable its moat is and whether margins going to improve or not...

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Doing best is the essence and improving your best is the key to everything....


Posted By: commnman
Date Posted: 31/Jan/2011 at 12:27pm
...And the margins are improving !

Q3 results out and reasonably good.

Total Income up 18.3% to 105.66 Cr from 89.29 Cr.
EBIDTA up 43.6% to 24.24 Cr from 16.88 Cr.
Net Profit up 67.1% to 13.31 Cr from 7.97 Cr.

EBIDTA margin is 22.94% V/s 18.91% (DQ-09) and 20.29% (SQ-10)
NET Pr margin is 12.6% V/s 8.93% (DQ-09) and 12.8% (SQ-10)

Total raw material costs as a %ge to Income is 57.58% V/s 60.51% (DQ-09) and 62.61% (SQ-10)
Employees costs gone up 40% to 6.5 Cr from 4.65 Cr.
Interest costs, compared DQ-09 stable at 6.02 Cr V/s 5.71 Cr, but up from SQ-10 of 3.79 Cr.

Y-t-D 9-month 2010 to 9-month 2009:
Total Income up 12.5% to 296.36 Cr from 263.43 Cr (FY10 Full year 350 Cr)
EBIDTA up 27.6% to 63.29 Cr from 49.62 Cr (FY10 Full year 69.61 Cr)
Net up 59.5% to 36.66 Cr from 22.98 Cr (FY10 Full year 31 Cr)

Reported Nine month EPS is 31.45 V/s 23.06 (FY10 Full year 31.12)
Both Speciality Chemicals & Pharma segments are doing equally well.

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main toh aam aadmi hun... jo sunta hoon wohi sach maanta hoon


Posted By: values
Date Posted: 31/Jan/2011 at 12:30pm
Commnman

Can I ask you how u track so many results up yourself ? its quite impressive..but was thinking how ur doing it..


Posted By: commnman
Date Posted: 31/Jan/2011 at 5:37pm
MS Excel is my friend!

Every Quarter I wait for results like a vulture. As soon as they are out, I feed on it into the sheets. Then apply formulas at the sides and bottoms. The company horoscope is ready

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main toh aam aadmi hun... jo sunta hoon wohi sach maanta hoon


Posted By: prashantkamani
Date Posted: 31/Jan/2011 at 5:49pm
This company has great future.


Posted By: photophobic111
Date Posted: 24/Mar/2011 at 8:43pm
Anybody still interested in this company? I like the company and price has dropped too but being novice, I dont know how to calculate fair value for a stock.. Do you think it is avail to discount to it fair value or is it reasonable to start buying at this level?

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Doing best is the essence and improving your best is the key to everything....


Posted By: koolvalue
Date Posted: 05/May/2011 at 10:46pm
Hi,

     I have this stock in my portfolio.The company is
doing reasonably well.There was a news in the market of
a private placement happening at 370 to 390.Now it seems
that the placement may happen at 270 to 280 levels.
     Due to news based buying stock rallied from 180 levels
to 370 levels.As these opportunist investors are exiting
the stock is sideways to corrective mode.
     I am planning to hold this stock for five years and
expecting 25% CAGR.


Posted By: photophobic111
Date Posted: 17/Jun/2011 at 9:54pm
Hello,

Can any one help me understand why ROCE is low for this company at 16%?

Also, If I go by Prof Bakshi calculation method of ROIC ->>

ROIC  = Margin * Turnover
    = 9% * 0.88
    = 7.92%
Which looks quite low to me..Am I missing soemthing?

Thanks a lot....



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Doing best is the essence and improving your best is the key to everything....


Posted By: photophobic111
Date Posted: 18/Jun/2011 at 6:24pm
Also Hit jee-

I see Vivimed in your long term picks, could you please explain you ratainale? - as FMCG proxy?  I like their business but thinks returns are less, which may along with debt may be reasons for less PE and other evaluation factors

Any reply to my above post will be appreciated too !!Smile


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Doing best is the essence and improving your best is the key to everything....


Posted By: hit2710
Date Posted: 18/Jun/2011 at 7:27pm
Originally posted by photophobic111

Also Hit jee-I see Vivimed in your long term picks, could you please explain you ratainale? - as FMCG proxy?† I like their business but thinks returns are less, which may along with debt may be reasons for less PE and other evaluation factorsAny reply to my above post will be appreciated too


Vivimed was in my portfolio long back and I exited it with good gains.

Basically it is a proxy to fmcg companies esp in the hair dye and sunscreen segments. Both the segments are the fastest growing segments in the aesthetic (beauty care--looking and feeling good kind of products) market. So in that sense the company is in a good space. But it does not have any moat to talk about except maybe long term relationships and capacities. Hence it is less likely to be valued highly by the markets. Price appreciation will be in tandem with growth shown.

Coming to your question about ROIC, I think there was equity dilution via allotment of FCCBs or some such instrument and probably is the cause of low ROIC.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.



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