A mid-cap company with a market worth of just above 8500 crores, Poly Medicure Ltd. operates in the hospital industry. Medical device manufacturer Poly Medicure Ltd (NS:PLMD) (POLYMED) specializes in producing medical equipment. There are 5 production units for the firm in India. There are three facilities in Faridabad, one each in Jaipur and Haridwar, and three facilities abroad. Three facilities: one completely owned subsidiary in China, one joint venture in Egypt, and one facility in Italy.
On Saturday, the Board of Directors of the company said in a regulatory filing that “Pursuant to the Regulation 42 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, it is hereby informed that the Record Date has been fixed as Monday, 19th September 2022 for the purpose of ascertaining the entitlement of Members to the Final Dividend of ₹2 .50/- per equity share on the face value of ₹5/- each on the equity shares of the Company for the FY 2021-22. If the final dividend as recommended by the board of directors is approved at the ensuing Annual General Meeting, payment of such dividend subject to deduction of tax at source will be made within 30 days from the date of approval by the shareholders in the ensuing Annual General Meeting."
The multi-bagger stock price has risen from ₹32.59 as of 9th December 2011 to the current market price @ 940 levels. The stock has produced a multi-bagger return over the past five years of 338.19%, and an approximate CAGR of 34.52%. The company has produced a multi-bagger return of 371.44% over the past three years, but in the past year, it has dropped 5.82%, and YTD it has fallen 6.03% in 2022. On the NSE the stock had touched a 52-week-high of ₹1,078.00 on (29-November-2021) and a 52-week-low of ₹651.10 on (26-May-2022) indicating that at the current market price the stock is trading 16.23% below the high and 38.68% above the low.
For the quarter ended June 2022, the company recorded a promoter holding of 53.34% which is a QoQ growth of 8.68% compared to the promoter holding of 44.66% recorded in the quarter ended March. In fact, the promoter holding is much higher than its peers such as Apollo Hospitals (NS:APLH), Max Healthcare (NS:MAXE), Fortis Healthcare (NS:FOHE), Aster DM Health, and Krishna Institute of Medical Sciences Ltd.
Recent Result Update:
Poly Medicure’s (Polymed) Q1FY23 performance was a miss on the profitability front due to lower margins while revenues were on expected lines. Revenues grew 17.4% YoY to Rs2.5bn mainly due to a strong recovery in exports. Domestic growth was impacted due to the high base of covid. EBITDA margin stood at 18.7% mainly due to one-off MTM losses.
Also, raw material and freight costs have started softening; hence one can expect improvement in margins from Q2FY23 onwards. Adj. PAT declined 28.3% YoY to Rs270mn. Excluding covid, domestic growth is expected to remain strong on the back of industry tailwinds, capacity addition, new launches, and enhanced penetration in a new market like the USA. Exports grew by a robust ~109% YoY to Rs1.6bn due to a low base and strong demand across markets.
Please note: Tailwinds are factors and events that help increase growth or cause positive effects on a company's profits and revenue. Headwinds are factors or events that slow down growth or cause negative effects on profits and revenue. A headwind for one sector can be a tailwind for another and vice versa.
Conclusion:
A strong presence in the fast-growing medical disposable segment will help the company improve its margin. The company stands to get the benefits of the ‘China+One’ strategy. Due to the leading market share in key categories growth can be witnessed in coming years as well if the entry into larger markets like the US enhances the export opportunity even further. In long term, the stock will find support near the 690-710 levels, and resistance near the 52 weekly high levels will be critical because going forward the revenue from exports will determine the direction of stock prices in forthcoming quarters (Q3 and Q4)
Disclaimer: The above article is for self-educational purposes. The research was conducted by the following students: Jatin and Vishal for learning purposes.
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