RPG Life Sciences A Hidden Gem

By | 28th February 2018

RPG Life Sciences, 

A part of the Rs.25000 cr RPG Enterprises, is an integrated pharmaceutical company engaged in the domestic plus international market in the formulations, branded global generics, synthetic and fermentation APIs space. It is a pharmaceutical company, producing a wide range of trusted and tested products.
RPG Life Science - True Multibagger
RPG Life Science – True Multibagger

(BSE Code: 532983) (CMP: Rs.452.40) (FV: Rs.8)

Around 67% of the revenues is coming from domestic formulations business, 14% from APIs and around 19% is derived from international  formulations. Its manufacturing facilities are approved by various regulatory bodies and situated at Ankleshwar in Gujarat and New Mumbai in Maharashtra.
During the past four quarters, the company has shown tremendous improvement in its fundamentals along with the change in management. For the December 2017 quarter, it registered sales of Rs.95 crore against Rs.66 crore during the previous corresponding period. Net Profit for the quarter stood at Rs.5.46 crore against a profit of Rs.55 lakh  during December 2017.
EPS for the quarter stood at Rs.3.30 against Rs0.33 earlier. The company’s major brands include Rabee & Tricaine (Antacid), Min Min (Vitamin and Iron supplements), Lomotil (Anti-Diarrhoeal), Serenace (CNS), Aldactone (Diuretic), Azoran (Organ Transplant). It also has presence in the oncology and the personal care segments with various products.
The company has seen top management changes in the past. It’s MD, C. T. Renganathan, who joined in 2015 has been associated with the pharma industry for 3 decades. He has led companies like GSK India, Boston Scientific, and Eli Lilly in his previous role. In his last assignment he was the Executive Vice President GSK Pharma. Mr. Sachin Nandgoankar serves as the president and the CEO and joined in 2015 too.
Prior to that, he worked with Boston Consulting group for 15 years where he was a senior partner and Director and held many global positions. It recently inducted Zahabiya Khorakiwala as an Additional Director. Zahabiya Khorakiwala is the daughter of Mr. Habil Khorakiwala of the Wockhardt fame. Zahabiya heads the 1000 crore Wockhardt Hospital. So, the bet is on the management of the company.


RPG aims to generate close to Rs.1000 crore revenue by 2020 by growing organically as well as inorganically. The company is expected to post an EPS of Rs.50 in FY20. With such high growth, the company is expected to command an earnings multiple between 20x to 30x. At 20x the stock can easily double from the current level and at 30x the stock price has the potential to triple from the current level.

Promoters hold close to 69% in the company and they have been hiking their stake through open market purchases in the recent downfall. Buy at CMP and on declines for multibagger returns in coming years.

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