Important: The "pause" had to be removed due to numerous requests and concerns raised, primarily by individuals wanting to upgrade from monthly to annual billing.
Depends on your goals; what is it that you want 20 years out? For most Indians, a well diversified asset base including own home; a PPF, 5% of total net worth in gold (as an insurance); some liquid cash (short-term bank FD) is good enough.
There is no "one size" answer, as it all depends on your personal situation.
For someone living and earning in USD, it makes perfect sense to invest a portion of their earnings into INR/India.
Secure your current base first and become debt-free before venturing out in my view.
Hi. I have a question on GLP. You perceive Chinese players as a threat. My question is in relation to ROW market like Brazil India and Canada. How do you see the competitiveness of Chinese players vs Indian players in each of these geographies specifically related to GLP 1? Would Indian fornulation players struggle to get market share in these geographies and what are the impacations on value chain like fill finish and device players?
Getting the market share initially may not be a problem. The challenge will be the sustainability. How do you model a short-term cash flow from a terminal risk perspective?
Second, how is that growth priced? At MCap or enterprise value = 3x sales, one may have very little to lose, but a high entry or starting valuation means higher risk.
A generic molecule, by definition, will have multiple Indian players in most geographies. Many Indian players will be buying the API from China, so indirectly China will be in almost every LMIC, including India.
I am not bullish on GLP-1, as such moats are seldom long-lasting.
What’s your view on IT sector stocks of US considering deepseek disruption , how do you see Amazon , Oracle and snowflake for example all are largecap except snowflake . Oracle is into cloud and databases and provides compute for GenAI as well . While SNFl is data in cloud .
Do you feel US would promote made in US medicines rather than importing from India 🇮🇳 or China 🇨🇳? Considering geopolitical tensions rising and seems US markets might also top out in March so do you feel it would have more negative impact on Indian stock market and would healthcare pharma sector be kind of immune or would it also get impacted heavily like other sectors? I know it’s not easy to predict such outcomes but would appreciate if you can share your wisdom based on past experience of bear markets and cycles 🔁. Thanks so much for your time 🕰️ always 🤍🙏
Given Solara's stated commitment to management stability, the swift appointment and subsequent replacement of Poorvank Purohit as CEO, along with the CFO, raises serious concerns. Considering Poorvank Purohit's reputation as a turnaround specialist, what specific strategic vision or long-term growth capabilities did Arun Kumar perceive as lacking in his leadership? Furthermore, beyond the stated reasons, what underlying strategic objectives or concerns might have driven Arun Kumar to initiate these rapid management changes, and how do these actions align with Solara's long-term growth strategy and commitment to consistent leadership?
Arun Kumar was doing the majority of the hard work on the earnings calls was a clear signal that he was not completely satisfied with the management set-up and execution. Hindsight? Maybe.
Given Natco Pharma's significant cash reserves, what strategic options would best maximize shareholder value? Specifically, should they prioritize:
●Developing or major generic drug asset similar to Revlimid?
●Acquiring an established branded pharmaceutical business?
●Expanding their existing agrochemical division?
●Or should they explore other avenues, and why?
In my view, the worst ways to utilize this capital would be:
●Buybacks or dividends – These do not create long-term value and indicate a lack of reinvestment opportunities.
●Starting a CDMO division – This is a completely different business model from their core operations, requiring new capabilities and posing execution risks.
●Investing in an NCE (New Chemical Entity) molecule – Given the high risk, long gestation period, and significant capital requirements, this might not be an efficient use of funds for Natco.
●Acquiring a branded pharmaceutical business at an excessive valuation (more than 4x sales) – Overpaying for acquisitions can destroy shareholder value and lead to integration challenges.
If my perspective is incorrect, I would appreciate your insights. Additionally, could you share your anti-thesis points on the worst ways Natco Pharma could allocate this capital?
Sir, How do you perceive Bromine chemistry? We have one listed leader company hovering around IPO price who are now venturing into Semiconductor value chain and Energy storage?
What would your take be on cleanliness and more eco friendly Bromine chemistry?
How much of the total cash flow do you estimate will come from Semicon in 2030? How about this number in 2035?
Most chemical stocks won't get the majority of cash from Semicon in the next 5 years. PI Industries, after 12 years of toil, makes low single digits from pharma and electronic chemicals. Think about the weighted average impact from one class of customers.
Semicon manufacturing requires almost 500 different chemicals, so also think in terms of the probability and impact of this on the overall mix.
Ultimately, it's all about frequency, magnitude, and probability in this game.
hi sir, i thought the plan was paused, but today i got a notification from my bank to approve payment for substack? can you clarify? if it is still open or closed till april?
The subscription had to resume. I have had a few SOS calls in the last 10 days (I had not been looking at my DMs until the day before, when I realised the problem wasn't limited to just one or two).
Here is one such:
"My subscription is messed up. On Feb 15 I converted my subscription to Annual from Monthly by paying over 12k. I cancelled my standing instruction on credit card on the same day, but even then 1k was deducted on 17th. Now my subscription statues is shows something as "Trial till March 31".. I am not getting right option to reach out to support - The bot just gives random answers. Could you please check my subscription status, deductions done this month..Thank you.."
Hi sir, how should one do sector based allocation with a 5-8 years horizon. My current allocation is 23% Pharma, 20% Financials, 15% Chemicals, 10% Hospitals, 9% Engineering, 4% Hotels, 4% Auto, among others. I feel like I should gradually increase Chemicals to maybe 20 or 25%. Would love to hear your thoughts. Thank you.
Sun Pharma in 2015 was the best company (like Divis Labs in API today). I started "loving" RPG Life and JB Pharma around that time and completely ignored the Lupins, Sun, etc.
You see the outcome over the last 10 years.
Pharma has never been and will never be a sector, therefore. Every company is very different (moats are in the molecule-patent-relationship-market-reinvestment runway and so on ... this chain makes every story somewhat unique)
We don't invest in markets.
We don't invest in sectors.
We always invest in great minds and people when the "valuations are not over the moon". We then let the thesis play out. Compounding is seldom "easy" and without volatility.
A stock can fall 50% many times in its 20-year journey and may still deliver well over 100 times. Neuland was INR 50 Cr (market cap) in 2004 and has crashed 50-60% far too many times.
Solution: buy great assets (management > business) and don't overpay by falling into a FOMO trap. US can't kill both kidneys - China and India at the same time. Think about the downstream impact on some companies that were winning even with China in the mix. Now imagine what can happen when China faces rejection? I am travelling and meeting some of them - this month, next month :)
95% allocation into index ETFs and 5% allocation into one or two stocks that you can track with your 12-15 hr day job is absolutely good!
Sector-wise, hospitals and healthcare-related branded or unbranded consumption (which also includes chemicals and bio/enzymes) deserves a 40-50% allocation at this time (for me it does make absolute sense, so mine is over 80% in hospitals, CDMO, Bio/Green Chemistry, other sustaianble Chemicals put together). Engineering, auto components, and IT are some other areas I think will do very well. These companies have won in 100 countries unlike Indian banks and branded autos (cars etc) who have been "ghar ke champions only".
Think about the sectors where India has fought and won against China in 2005, 2010, and 2015.... These businesses must have some antifragile characteristics, as otherwise it is impossible to win against someone as hostile as China. These players are must own for the next many years. Of course, these managers will make mistakes, but every mistake will likely make them stronger and bolder.
Not sure if this falls under "sensible and thoughtful" questions. But let me ask and you can decide if it's worth answering or if it is a noise flow:
Just read HCG’s announcement to exchanges. I am not competent enough to understand the legalese of the Offer letter, but it seems that Dr. B S Ajaikumar will no longer be running the company after the “Acquirer” acquires the desired number of shares and installs its own management. First of all, is my understanding correct?
If so, this to me is a major and significant management change. And since management is 99%, how should one view this?
Granules recently purchased a swiss CDMO Senn chemicals for 192 crores (1 time price to sales).. Senn is a CDMO offering peptides and peptide-based applications services to global clients. When the CDMO space is attracting higher valuations, something seems to be missing especially when the company is in CMDO space and approved and inspected by USFDA... If they are really good, im guessing its a steal for Granules.. Any thoughts??even generic thoughts on why such CDMO's are selling out at this time
Product and services are diagonally opposite mindset and culture; I have not analysed the transition to opine. It took Neuland Labs over 15 years to master the service (custom synthesis). PI Industries is still learning after 12 years.
could be perhaps because operating in europe is a high cost jurisidction - high RM + energy costs. acquisition helps with R&D talent + client rolodex. can later shift manufacturing to india?
I want to understand the difference between form 483 and warning letter issued by USFDA. Which is more dangerous to the company? What impact does it have when a company receives the 483 observation/warning letter? Does company has to stop the manufacturing when it recieves the warning letter/483?
So when we say that a company is having good compliance track record what does it mean? Does it means that the company has never received any 483 or it might have received the 483 but never received the warning letter?
Thank you sir..
I just wanted your opinion that if one need to invest internationally for portfolio diversification or focused on India only..
Depends on your goals; what is it that you want 20 years out? For most Indians, a well diversified asset base including own home; a PPF, 5% of total net worth in gold (as an insurance); some liquid cash (short-term bank FD) is good enough.
There is no "one size" answer, as it all depends on your personal situation.
For someone living and earning in USD, it makes perfect sense to invest a portion of their earnings into INR/India.
Secure your current base first and become debt-free before venturing out in my view.
Hi. I have a question on GLP. You perceive Chinese players as a threat. My question is in relation to ROW market like Brazil India and Canada. How do you see the competitiveness of Chinese players vs Indian players in each of these geographies specifically related to GLP 1? Would Indian fornulation players struggle to get market share in these geographies and what are the impacations on value chain like fill finish and device players?
Getting the market share initially may not be a problem. The challenge will be the sustainability. How do you model a short-term cash flow from a terminal risk perspective?
Second, how is that growth priced? At MCap or enterprise value = 3x sales, one may have very little to lose, but a high entry or starting valuation means higher risk.
A generic molecule, by definition, will have multiple Indian players in most geographies. Many Indian players will be buying the API from China, so indirectly China will be in almost every LMIC, including India.
I am not bullish on GLP-1, as such moats are seldom long-lasting.
Hi Sajal Sir ,
What’s your view on IT sector stocks of US considering deepseek disruption , how do you see Amazon , Oracle and snowflake for example all are largecap except snowflake . Oracle is into cloud and databases and provides compute for GenAI as well . While SNFl is data in cloud .
Do you feel US would promote made in US medicines rather than importing from India 🇮🇳 or China 🇨🇳? Considering geopolitical tensions rising and seems US markets might also top out in March so do you feel it would have more negative impact on Indian stock market and would healthcare pharma sector be kind of immune or would it also get impacted heavily like other sectors? I know it’s not easy to predict such outcomes but would appreciate if you can share your wisdom based on past experience of bear markets and cycles 🔁. Thanks so much for your time 🕰️ always 🤍🙏
Do we even need to predict? Why not be prepared and let any random event play out?
Definitely sir agreed but how do you look at US IT stocks sector in general ?
Sir, do you track Balaji Amines? Any views on the same. Holding it for the past 3 years. Not able to decide whether to exit or hold.
Sir has shared his view on Amines. Please see previous podcasts. Just search Amines on Sir x profile.
Thanks Sir. Will check
Given Solara's stated commitment to management stability, the swift appointment and subsequent replacement of Poorvank Purohit as CEO, along with the CFO, raises serious concerns. Considering Poorvank Purohit's reputation as a turnaround specialist, what specific strategic vision or long-term growth capabilities did Arun Kumar perceive as lacking in his leadership? Furthermore, beyond the stated reasons, what underlying strategic objectives or concerns might have driven Arun Kumar to initiate these rapid management changes, and how do these actions align with Solara's long-term growth strategy and commitment to consistent leadership?
Arun Kumar was doing the majority of the hard work on the earnings calls was a clear signal that he was not completely satisfied with the management set-up and execution. Hindsight? Maybe.
Sir how you got this insight 😃
You can check solara's Jan 2025,Oct 2024,July 2024,Feb 2024 etc concall's. Many crucial Questions answered by him! Fair bit of idea!
Given Natco Pharma's significant cash reserves, what strategic options would best maximize shareholder value? Specifically, should they prioritize:
Developing or acquiring another major generic drug asset similar to Revlimid?
Acquiring an established branded pharmaceutical business?
Expanding their existing agrochemical division?
Or should they consider other avenues, and why?
Given Natco Pharma's significant cash reserves, what strategic options would best maximize shareholder value? Specifically, should they prioritize:
●Developing or major generic drug asset similar to Revlimid?
●Acquiring an established branded pharmaceutical business?
●Expanding their existing agrochemical division?
●Or should they explore other avenues, and why?
In my view, the worst ways to utilize this capital would be:
●Buybacks or dividends – These do not create long-term value and indicate a lack of reinvestment opportunities.
●Starting a CDMO division – This is a completely different business model from their core operations, requiring new capabilities and posing execution risks.
●Investing in an NCE (New Chemical Entity) molecule – Given the high risk, long gestation period, and significant capital requirements, this might not be an efficient use of funds for Natco.
●Acquiring a branded pharmaceutical business at an excessive valuation (more than 4x sales) – Overpaying for acquisitions can destroy shareholder value and lead to integration challenges.
If my perspective is incorrect, I would appreciate your insights. Additionally, could you share your anti-thesis points on the worst ways Natco Pharma could allocate this capital?
Sir, How do you perceive Bromine chemistry? We have one listed leader company hovering around IPO price who are now venturing into Semiconductor value chain and Energy storage?
What would your take be on cleanliness and more eco friendly Bromine chemistry?
Thank you for your insights as always. :)
How much of the total cash flow do you estimate will come from Semicon in 2030? How about this number in 2035?
Most chemical stocks won't get the majority of cash from Semicon in the next 5 years. PI Industries, after 12 years of toil, makes low single digits from pharma and electronic chemicals. Think about the weighted average impact from one class of customers.
Semicon manufacturing requires almost 500 different chemicals, so also think in terms of the probability and impact of this on the overall mix.
Ultimately, it's all about frequency, magnitude, and probability in this game.
Noted, sir. Thank you. :)
hi sir, i thought the plan was paused, but today i got a notification from my bank to approve payment for substack? can you clarify? if it is still open or closed till april?
The subscription had to resume. I have had a few SOS calls in the last 10 days (I had not been looking at my DMs until the day before, when I realised the problem wasn't limited to just one or two).
Here is one such:
"My subscription is messed up. On Feb 15 I converted my subscription to Annual from Monthly by paying over 12k. I cancelled my standing instruction on credit card on the same day, but even then 1k was deducted on 17th. Now my subscription statues is shows something as "Trial till March 31".. I am not getting right option to reach out to support - The bot just gives random answers. Could you please check my subscription status, deductions done this month..Thank you.."
Looking for a short video on how you use Scanner app.
Explained recently using few examples - https://www.youtube.com/watch?v=iQBceaLjH20&t=2382s
I will do a short presentation with few examples in April/May for sure.
Hi sir, how should one do sector based allocation with a 5-8 years horizon. My current allocation is 23% Pharma, 20% Financials, 15% Chemicals, 10% Hospitals, 9% Engineering, 4% Hotels, 4% Auto, among others. I feel like I should gradually increase Chemicals to maybe 20 or 25%. Would love to hear your thoughts. Thank you.
Is pharma a sector? You think so?
Sun Pharma in 2015 was the best company (like Divis Labs in API today). I started "loving" RPG Life and JB Pharma around that time and completely ignored the Lupins, Sun, etc.
You see the outcome over the last 10 years.
Pharma has never been and will never be a sector, therefore. Every company is very different (moats are in the molecule-patent-relationship-market-reinvestment runway and so on ... this chain makes every story somewhat unique)
We don't invest in markets.
We don't invest in sectors.
We always invest in great minds and people when the "valuations are not over the moon". We then let the thesis play out. Compounding is seldom "easy" and without volatility.
A stock can fall 50% many times in its 20-year journey and may still deliver well over 100 times. Neuland was INR 50 Cr (market cap) in 2004 and has crashed 50-60% far too many times.
Solution: buy great assets (management > business) and don't overpay by falling into a FOMO trap. US can't kill both kidneys - China and India at the same time. Think about the downstream impact on some companies that were winning even with China in the mix. Now imagine what can happen when China faces rejection? I am travelling and meeting some of them - this month, next month :)
95% allocation into index ETFs and 5% allocation into one or two stocks that you can track with your 12-15 hr day job is absolutely good!
Sector-wise, hospitals and healthcare-related branded or unbranded consumption (which also includes chemicals and bio/enzymes) deserves a 40-50% allocation at this time (for me it does make absolute sense, so mine is over 80% in hospitals, CDMO, Bio/Green Chemistry, other sustaianble Chemicals put together). Engineering, auto components, and IT are some other areas I think will do very well. These companies have won in 100 countries unlike Indian banks and branded autos (cars etc) who have been "ghar ke champions only".
Think about the sectors where India has fought and won against China in 2005, 2010, and 2015.... These businesses must have some antifragile characteristics, as otherwise it is impossible to win against someone as hostile as China. These players are must own for the next many years. Of course, these managers will make mistakes, but every mistake will likely make them stronger and bolder.
I am meeting many of them next month.
Not sure if this falls under "sensible and thoughtful" questions. But let me ask and you can decide if it's worth answering or if it is a noise flow:
Just read HCG’s announcement to exchanges. I am not competent enough to understand the legalese of the Offer letter, but it seems that Dr. B S Ajaikumar will no longer be running the company after the “Acquirer” acquires the desired number of shares and installs its own management. First of all, is my understanding correct?
If so, this to me is a major and significant management change. And since management is 99%, how should one view this?
Wait and watch is a good option here as KKR's past track record with JB Pharma has been stellar.
Thanks, that's a very valuable connect-the- dots type of input!
Sir, in general what should be the valuation range (like P/S) for Branded Ph,CDMO,CRAMS, Chemicals (if business & management hygiene is in place).
Thanks.
If FY30 EBITDA = approx 25% and Material Gross Margin = 55% plus then anything up to 4x P/S could be value
If FY30 EBITDA = approx 30% and Material Gross Margin = 65% plus then anything up to 6x P/S could be value
Thanks for reply sir.
Granules recently purchased a swiss CDMO Senn chemicals for 192 crores (1 time price to sales).. Senn is a CDMO offering peptides and peptide-based applications services to global clients. When the CDMO space is attracting higher valuations, something seems to be missing especially when the company is in CMDO space and approved and inspected by USFDA... If they are really good, im guessing its a steal for Granules.. Any thoughts??even generic thoughts on why such CDMO's are selling out at this time
Product and services are diagonally opposite mindset and culture; I have not analysed the transition to opine. It took Neuland Labs over 15 years to master the service (custom synthesis). PI Industries is still learning after 12 years.
could be perhaps because operating in europe is a high cost jurisidction - high RM + energy costs. acquisition helps with R&D talent + client rolodex. can later shift manufacturing to india?
Sir,
I want to understand the difference between form 483 and warning letter issued by USFDA. Which is more dangerous to the company? What impact does it have when a company receives the 483 observation/warning letter? Does company has to stop the manufacturing when it recieves the warning letter/483?
Form 483 is like your mom scolding you for not finishing the evening glass of milk.
A warning is equivalent to the headmaster catching you consuming cocaine or heroin on campus.
So when we say that a company is having good compliance track record what does it mean? Does it means that the company has never received any 483 or it might have received the 483 but never received the warning letter?
In his recent spaces he has replied in detail on this if I am not mistaken.
Search Antifragile Thinking Part1 or Part2 Sajal Kapoor.
https://arcinstitute.org/manuscripts/Evo2
A good read
Enjoy your holiday and time with family sir