Sinewave Securities

A brief about Ajay Piramal, chairman of Piramal group The quality of management and level of corporate governance Mr. Ajay Piramal brings on board is unmatched and one of the prominent example in leading a company. From exiting textile business and entering pharmaceuticals, selling pharma division (at 9xP/S) and rewarding shareholders, Ajay Piramal has compounded wealth at 26% CAGR over last 33 years. “Having a “web of trust” is our philosophy. I am comfortable with it. We don’t have a single legal case. Why? Why did we not go into patent challenges? Because you can’t have a relationship where you keep fighting.” “I don’t take much cognizance of the stock market which focuses on the short term. I will do what’s right for the business and the shareholders. Frankly, I don’t owe my job to an analyst. So, therefore, I can afford to take a long term view.” They think in terms of not years, but decades. They think in terms of not maximizing near term reported earnings, but maximizing...

APIs and China Play-  On an average, prices of APIs imported from China have gone up by 20-30% from January 2020 till date thus leading to 4-5% decline in profit margin of drug makers, said a drug industry representative. API Mkt –55bn$ in 2020 The prices of anti-infective APIs such as tinidazole, amoxicillin, ceftriaxone, clav avicel, diclofenac sodium, ofloxacin, clav syloid, clotrimazole, ciprofloxacin as well as anti-inflammatory API-dexamethasone sodium have hiked by 24% to 38% from January to April this year. The prices of erythromycin thiocyanate which is the raw material for preparing erythromycin derivative products, such as azithromycin, clarithromycin and roxithromycin have spiked by 20% from pre-COVID period till now. Besides them, the prices of four APIs-- paracetamol, ornidazole, azithromycin and nimesulide have risen from 62% to 189% from January to April. The price of paracetamol has increased from Rs. 262 a kg in January to Rs. 425 per kg in April. Para amino p...

Nomad’s Stagecoach, Conseco and Keynes Conseco went bankrupt after losses in its manufactured housing loan securitisation trusts impaired capital at its insurance company and A.M. Best, the insurance industry rating agency, declared the business inadequately capitalised. Our analytical mistakes were multifarious, but the most serious was to  anchor on analysis at the time of purchase to justify continued holding.  The immediate dollar loss was around U$5m for investors in Nomad. However,  the opportunity cost loss, the dollar loss adjusted for subsequent Nomad performance  (a fairer reflection of real costs) is around U$10m. Stagecoach was a success in the sense that shares purchased at 14p were sold at a high of around 90p. That is until one looks in the Financial Times to be reminded that the shares currently trade above £2.50. The mistake was to leave £1.60 on the table and was also caused by anchoring on the original purchase  decision analysis   ...