Dear Members,

We have released 28th Jan’18 – Coverage closure update on Polaris Consulting and Lincoln Pharmaceuticals and Dec’17 earnings update on Bajaj Corp. The same has been produced below. For other updates, please log into the website at the following link –

Date: 28th Jan’18

28th Jan’18 – Coverage closure on Polaris Consulting and Lincoln Pharma and Dec’17 Earnings update


Polaris Consulting (NSE – POLARIS) – Nov’17 Special situation

CMP – 418.95 (BSE); 417.00 (NSE)

Rating – Neutral and coverage closure; this is not an investment advice (refer rating interpretation)

Polaris special situation opportunity was initiated in Nov’17 around 285 odd levels based on delisting offer announced by Virtusa (Polaris’s parent company).

In its letter dated 15th Jan’18, the promoters have indicated an offer price of Rs 370 per share. The bidding date for delisting offer opens on 30th Jan’18 and closes on 5th Feb’18.

Like all the previous delisting cases, we don’t intend to participate in bidding process because we would not like our shares to be locked and then run through the risk of offer failing due to various reasons.

At the same time, considering substantial increase in volatility during bidding period and the fact that we are getting decent premium even on the indicative offer price, we would like to close the opportunity around current levels of 418 with gains of ~45% in 3 months.


Lincoln Pharmaceuticals (NSE – LINCOLN) – Sep’17 Alpha stock

CMP – 247.95 (BSE); 248.00 (NSE)

Rating – Neutral and coverage closure; this is not an investment advice (refer rating interpretation)

Lincoln Pharma investment recommendation was initiated on 30th Sep’17 around 160 odd levels.

At the time of recommendation, we had some concerns regarding relatively low promoter holding and equity dilution practice of promoters. Since then, we have had some interactions with investors and analysts and most of them have expressed concern about various practices of management including the handling and reporting of Tanzania ban issue. What’s discomforting is that minority shareholder’s interests were disregarded completely.

While the company might continue doing well, we would like to invest in companies where the minority shareholder’s interests are taken care of and would therefore like to close the coverage on the stock around current levels of 248 with gains of ~53% in 4 months.


Bajaj Corp (NSE – BAJAJCORP) – Jul’12 Alpha stock

CMP – 496.00 (BSE); 495.00 (NSE)

Rating – Positive – 4% weightage; this is not an investment advice (refer rating interpretation)

Bajaj Corp 3 Years price chart  Source: BSE India

Bajaj corp has recorded 5.86% growth in sales on YOY basis to Rs 197.32 crore. The overall volume growth recorded by the company is 5.17%. In the domestic markets the company has recorded 8.8% value growth and 8.2% volume growth. In fact, on negating the impact of change in tax base, the value growth in domestic business is ~14%.

The overall growth has been hampered on account of 44% decline in international business.

As far as off-takes at consumer level are concerned, ADHO reported 3.7% growth in volume against 4.9% in Sep’17 quarter on YOY basis. The off-takes have been low in rural areas and it could primarily be on account of disruption in distribution with wholesale channel still depressed.

Regarding NOMARKS, company’s pilot project in UP and focus on creams has started yielding results with 101% growth in domestic markets; however due to decline in international sales, the overall growth recorded by NOMARKS is around 30%. The company is now rolling out UP’s strategy in other states as well.

On the front of gross margins, there’s an improvement of 190 bps with gross margins of 67.36% against 65.46% in Dec’16 quarter and that’s probably on account of input tax credit getting reflected in material cost and change in product mix with larger SKUs reporting higher sales in comparison to sachets. However other operating expenses like employees cost, advertisement and sales promotion, etc have increased by 23% resulting in only 2.2% gain in EBITDA (have accounted only 50% of other operating income because approximately half of it is for Sep’17 quarter) to Rs 63.74 crore.

In the Dec’17 quarter the company increased its ASP expense by 31% and with new product launches expected every quarter the ASP spend is likely to remain high.

In the last 2 years, Bajaj Corp has focused on strengthening its core with significant investments in management, R&D, expanding direct distribution and IT infrastructure. The strengthened core should help the company accelerate meaningful new launches and reduce its dependence on ADHO, which contributes ~90% of revenue. Basically, the management is looking to transform the company into a complete FMCG player and looking at the investments made in the last 2 years, it is better positioned than any time in the past. On the flip side, it’s a well known fact that success ratio is very low in FMCG products and company’s profitability may get impacted with higher ASP expenses.

The stock is currently quoting around 33 times adjusted trailing twelve months earnings.


Disclosure: Out of the stocks discussed above, I have personal investment in Bajaj Corp.


Best Regards,

Ekansh Mittal
Research Analyst
Ph.: +91-727-5050062, Mob: +91-9818866676
Email: [email protected]


Rating Interpretation

Positive – Expected return of ~15% + on annualized basis in medium to long term for investment recommendations and in short term for Special situations

Neutral – Expected Absolute return in the range of +/- 15%

Negative – Expected Absolute return of over -15%

Coverage closure – No further update on the stock

% weightage – allocation in the subject stock with respect to equity investments

Short term – Less than 1 year

Medium term – Greater than 1 year and less than 3 years

Long term – Greater than 3 years


Research Analyst Details

Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

Analyst ownership of the stock: In Bajaj Corp

Details of Associates: Not Applicable

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Disclaimer: (here in referred to as Katalyst Wealth) is the domain owned by Ekansh Mittal. Mr. Ekansh Mittal is the sole proprietor of Mittal Consulting and offers independent equity research services to retail clients on subscription basis. SEBI (Research Analyst) Regulations 2014, Registration No. INH100001690

Ekansh Mittal or its associates including its relatives/analyst do not hold beneficial ownership of more than 1% in the company covered by Analyst as of the last day of the month preceding the publication of the research report.

Ekansh Mittal or its associates/analyst has not received any compensation from the company/third party covered by Analyst ever.

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We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.

The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision

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