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Small Cap Value Find Stocks Valuable small capital companies in indian share market. Multibagger companies hidden gems value buy stocks 2017 2018 ▼ Saturday, February 24, 2018 Vivo Biotech - Drug discovery partner Vivo Bio Tech is a listed pharma player offering drug development & discovery services to pharmaceutical & biotech companies. Company holds several regulatory certifications such as GLP (OECD), AAALAC & IND accordingly for world wide guidelines. The company offers services in the areas called In-vitro, In-vivo, toxicity studies, pharmacological investigations, pharmacokinetics & toxico kinetic studies etc. Promoters hold 48% stake in the company and preferential allotment approved in last AGM. Promoters hold another listed company Virinchi Ltd as well operating in Hospital segment. Biosimilars Play India pharma segment became a key global destination for vaccines, bio-services and increasingly for contract manufacturing, especially bio-similar. Many firms are exploring exciting areas of stem cell biology, synthetic biology, agri-biotechnology systems biology and evidence-based traditional medicine. Vivo Bio Tech signed up technical partnerships with reputed international Biosimilar companies like Biosidus, Argentina and Vasgene, N. America to strengthen the development and roll out of high quality Biosimilar drugs. Pharma Play As we all know Drug discovery is one of key challenge several companies face considering product commercialization can only occur after many years of compliance with required product standards (Success Case) , sometimes development of the new products in the process may not emerge but major part of the capital in spending on the Research and development is completed by that time. Considering the same most of the players will outsource pre-clinical activities to reduce the operating costs, vivo biotech is complete full pledged player in providing the services such as screening of molecules, testing genetically modified seeds, pharmacological investigations, pharmacokinetics & toxico kinetic studies etc. Business Model: External companies like DRL will approach Vivo with their custom requirements and Vivo perform the activities as per the requirement and produces results to the customer. Technical Association with World majors: Vivo had association with Cyagen Biosciences in the field of authorized breeder & distributor of custom rodent models, Elm Hill Labs (Specific Pathogen Free Guinea Pig breeders) & Special Diets Services (lab animal diets). Vivo Bio has partnered with Taconic for sourcing foundation and expansion colonies of the animal models and have started in-house breeding of Specific Pathogen Free rodents. Vivo continue to hold the major market share and status as the largest suppliers of Specific Pathogen Free (SPF) laboratory rodents and now company became the only producer of SPF Guinea pig breeder in India, this will provide expansion of product offering. Certifications: Considering the handful list of GLP accredited labs in India, this accreditation significantly opens doors in the western market for seeking Contract research opportunities. Similarly company has to follow the rules and regulation set by the CPCSEA (Committee for the purpose of Control & Supervision of Experiments on Animals) which is governing authority for all animal houses in India. Vivo lab facilities are supported by AAALAC accreditation, the highest quality standards maintained by the pre-clinical laboratory. The certification received after 4 years of successful audits and visits from customers, regulators and partners. So all in all it is not a easy job for any new players to make entry and capture the market share. Being a small company, it has spent 1.1cr under technical associations establishment and getting certifications process. Company bought 11cr worth of land recently for setting up of Guinea pig breeders facility, this expansion will drive sales and profits from next year. Vivo has spent 19cr in acquiring the fixed assets Vivo currently playing rental amount of 5.2 Cr in every year, plans are in to purchase the facility from owners at a cost of 35cr. Funds are raised by way of preferential allotment to promoters is recently approved in AGM. Company also had discussion with reliance securities for the said loan. Company receivables are high considering the long term contractual nature of business, however since their business established with pharma majors chances of write-off is very less. Last year sales already crossed in the first 9months of current operational year. Operating margins are expanded from 11% to 27% in the last 3 years, subsequently EPS is tripled in the last 3 years. Market players seems like had bets on another listed company virinchi, but this one seems like missed their looks providing valuation gap for retail users like us. These are kind of opportunities a retail player will get generally. Financials: Conclusion Currently there is no listed peer doing the similar business, company available at a market cap of less than 50cr, margin expansion & capacity expansion in place, promoters with proven track record at helm along with other listed company in the bourses are some of the positive factors which i considered while investing in this company. This is a company whose operations are in an attractive segment coupled with niche clientele in the offering, further capacity expansions are going to drive the growth is poised for good return in the next 2 years is my opinion.