Gufic breakout, pullback & bounce back
Updated
1. Buy or Sell at your own risk
2. Don't risk more than 1%-2% of your capital as stop loss
3. Position Size formula:- Stop Loss Amount/(Buy Price-Initial Stop Loss Price)
4. Sell on initial stop loss hit or daily RSI closing below 40
5. Some other ways to sell stocks can be
a. 25% or 50% up in three weeks or less
b. Weekly tailing tops with high volume
c. Exhaustion gaps
d. Heavy daily volume without further upside
e. Largest one day price drop
After consolidation since January 2022,
GUFICBIO gave a break out of 12th April, went down below the support level and has given a bounce back today. Buy with a stop at ₹236.
Other fundamentals:
1. The company has delivered good profit growth of 43.44% CAGR over last 5 years.
2. The company has a good return on equity (ROE) track record: 3 Years ROE 27.89%.
3. The company's median sales growth is 22.02% of last 10 year.
4. TTM sales growth of 71% and TTM profit growth of 160%.
5. Borrowings came down from ₹126cr on March 2020 to ₹35cr on September 2021.
6. Promoter holding increased from 65% in June 2021 to 75% in September 2021.
7. CRISIL Ratings has revised its outlook on the long-term bank facilities of Gufic Biosciences Limited (GBL) to 'Positive' from 'Stable', while reaffirming the rating at 'CRISIL BBB+'. and has assigned its 'CRISIL A2' rating to the short-term bank facility. The outlook revision reflects improvement in GBL’s business risk profile in fiscal 2022, marked by expected revenue of Rs. 750 crore, increase from Rs 488 crores in fiscal 2021, driven by capacity expansion and higher revenue from critical drugs. Operating profitability improved in fiscal 2021 to 17.6% and expected to sustain in fiscal 2022. With further capacity expansion in FY2023, revenue is expected to grow in future years. Hence, sustenance of operating margin and revenue growth will remain key rating sensitivity factors. Financial profile and liquidity continue to be strong.
8. GBL obtained various certifications and approvals for its manufacturing facilities and diversified its product portfolio through continuous research and development. The top 10 products contributed to 34% of revenue till the third quarter of fiscal 2022. Revenue grew to an estimated Rs 750 crore in fiscal 2022 from Rs 300 crore in fiscal 2018.
9. Financial risk should remain strong despite the huge, debt-funded capex to be undertaken in fiscal 2023. Networth was Rs 173 crore as on March 31, 2021 and is estimated at Rs 250 crore on March 31, 2022. Its controlled reliance on external debt has led to comfortable gearing and total outside liabilities to adjusted networth (TOLANW) ratios, which are estimated to be 0.14-0.15 times and 0.8-0.9 times, respectively in fiscal 2022. Debt protection metrics are robust, with interest coverage and net cash accrual to adjusted debt ratios estimated at 25 times and 2.5 times, respectively, for fiscal 2022.
2. Don't risk more than 1%-2% of your capital as stop loss
3. Position Size formula:- Stop Loss Amount/(Buy Price-Initial Stop Loss Price)
4. Sell on initial stop loss hit or daily RSI closing below 40
5. Some other ways to sell stocks can be
a. 25% or 50% up in three weeks or less
b. Weekly tailing tops with high volume
c. Exhaustion gaps
d. Heavy daily volume without further upside
e. Largest one day price drop
After consolidation since January 2022,
GUFICBIO gave a break out of 12th April, went down below the support level and has given a bounce back today. Buy with a stop at ₹236.Other fundamentals:
1. The company has delivered good profit growth of 43.44% CAGR over last 5 years.
2. The company has a good return on equity (ROE) track record: 3 Years ROE 27.89%.
3. The company's median sales growth is 22.02% of last 10 year.
4. TTM sales growth of 71% and TTM profit growth of 160%.
5. Borrowings came down from ₹126cr on March 2020 to ₹35cr on September 2021.
6. Promoter holding increased from 65% in June 2021 to 75% in September 2021.
7. CRISIL Ratings has revised its outlook on the long-term bank facilities of Gufic Biosciences Limited (GBL) to 'Positive' from 'Stable', while reaffirming the rating at 'CRISIL BBB+'. and has assigned its 'CRISIL A2' rating to the short-term bank facility. The outlook revision reflects improvement in GBL’s business risk profile in fiscal 2022, marked by expected revenue of Rs. 750 crore, increase from Rs 488 crores in fiscal 2021, driven by capacity expansion and higher revenue from critical drugs. Operating profitability improved in fiscal 2021 to 17.6% and expected to sustain in fiscal 2022. With further capacity expansion in FY2023, revenue is expected to grow in future years. Hence, sustenance of operating margin and revenue growth will remain key rating sensitivity factors. Financial profile and liquidity continue to be strong.
8. GBL obtained various certifications and approvals for its manufacturing facilities and diversified its product portfolio through continuous research and development. The top 10 products contributed to 34% of revenue till the third quarter of fiscal 2022. Revenue grew to an estimated Rs 750 crore in fiscal 2022 from Rs 300 crore in fiscal 2018.
9. Financial risk should remain strong despite the huge, debt-funded capex to be undertaken in fiscal 2023. Networth was Rs 173 crore as on March 31, 2021 and is estimated at Rs 250 crore on March 31, 2022. Its controlled reliance on external debt has led to comfortable gearing and total outside liabilities to adjusted networth (TOLANW) ratios, which are estimated to be 0.14-0.15 times and 0.8-0.9 times, respectively in fiscal 2022. Debt protection metrics are robust, with interest coverage and net cash accrual to adjusted debt ratios estimated at 25 times and 2.5 times, respectively, for fiscal 2022.
Note
The Board of Directors at their meeting held on April 19, 2022 approved the following agenda item:Signing of Equity Subscription Agreement with M/s. Selvax Pty Limited ("Selvax"), a biotechnology company based in Perth, Western Australia, for subscription of 1,307,000 fully paid ordinary equity shares in Selvax aggregating to 2.67% of its total paid up share capital for a subscription fee of around USD 0.07651 per equity share aggregating to USD 100,000/-. The company has also entered into a research and collaboration agreement with Selvax to accelerate the commercialization of Selvax's cancer immunotherapy treatment.
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