Apple planning to shift 20% production from China to India.

Apple planning to shift 20% production from China to India. And, Sectorial Talks on Pharmaceutical industry.

There was one thing that was common in the melodramatic movies of the 90’s. There were two best friends who had been friends since eternity. At a later stage of their life when they won't get their kids married, they meet each other and discuss. Then they share some nostalgia. And then comes that emotional moment when one of them says “Ab is Dosti ko rishtedari me badalne ka samay aa gya hai!” Now, understand this from a corporate standpoint.

Apple is still ‘the’ best smartphone brand in the world. Like many other corporate giants, it was also producing majorly in China. But, now due to a certain turn of events, it has decided to shift 20% of its production to India. Gaining the one-fifth production capacity of the tech giant would really be a feat for India. It’s not that Apple doesn’t produce in India currently. It does, but the stats are not that attractive. India consumes Apple’s phones worth more than 1.5 billion but, less than phones worth less than 0.5 billion are produced here.

What Does it Mean for India?

If the deal realizes, Apple may potentially become the largest exporter of India. This will take the corporate relationship between India and Apple to the next level (the point that we started from). It is worth mentioning here that the Government of India has introduced a PLI (production linked incentive) scheme to attract the companies that currently wish to shift their production from China. According to a news report, the Indian officials are expecting Apple to produce smartphones worth $40 billion (mostly for exports) and avail the scheme incentives.

Snippets

• Apple is planning to shift 20% production to India from China.
• India is set to gain a lot if the deal materializes.
• In today's Sectorial Talks, read about the Pharmaceutical industry.

Sectorial Talks – Pharmaceutical Industry

One way to analyze a pharmaceutical industry stock is to look after the volume and operating ratio or operating profit margin i.e. to look for net sales growth and operating expenses because of high raw material costs, R&D expenses and high cost of exports involved. Currently, the domestic market has observed a CAGR of 10% for over the last 5 years. It is having huge market competition from China as well as its Asian counterparts and, is capital intensive giving rise to a new factor of cost leadership determining the profitability of a company. Going forward, following the COVID-19 pandemic, industry is expected to grow at 7-8% CAGR and can establish and grow its strong footing on the global market as customers now look at securing their supply chains and reduce dependence on China.

So, to invest in a pharmaceutical stock, do check the net sales growth and operating ratio or operating profit margin. The better the stock fits into this criterion, the better option it would be for investment. It’s quite simple, first, the criterion needs to be right in order to select the right stock.

Torrent Pharma Stock Price Analysis and Quick Research Report. Is Torrent Pharma an attractive stock to invest in?

 

The Indian healthcare sector is expected to reach US$ 372 billion by 2022, driven by rising incomes, greater health awareness, lifestyle diseases and increasing access to insurance. Healthcare has become one of India’s largest sectors - both in terms of revenue and employment.

Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment. The structure of the healthcare delivery system in India consists of three broad segments: Primary care, Secondary care, and Tertiary care.

Primary care is the first point of contact between the population and the healthcare service providers. For example, Sub-center (SC), Primary Health Centre (PHC) and Community Health Centre (CHC) which is more relevant to rural areas (PHC’s).

Secondary care providers inpatient as well as outpatient medical services and includes simple surgical procedures. For example, District level & Mid-sized hospitals.

Tertiary care is the third level of the healthcare delivery system in the country. These hospitals are specialized consultative healthcare infrastructure. For example, Single speciality and Multi-specialty hospitals.

While healthcare services are offered by the public as well as private sectors, in urban as well as rural areas, generally people prefer private hospitals over public hospitals for treatment of diseases, illness, and sickness. So, let’s look into Torrent Pharma and its performance over the period of time.

Operating cash flow ratio: It measures the adequacy of a company’s cash generated from operating activities to pay off short-term financial obligations. Its cash from the operating activity was Rs 1,578.78 Cr.

 

Financial Strength: Health care organizations usually have high debt loads and low equity capital in their balance sheet. So, the Debt to Equity ratio is important to analyze the company’s sustainability. Torrent Pharma has a Debt to Equity ratio of 1.04, which is a strong indication for the company.

 

EPS growth: Investors should ensure the EPS figure is growing faster than revenue numbers because it indicates company management is increasing the efficiency with which it runs the company. In Torrent Pharma, the EPS growth was 25.90 % which is good for the company.

 

Operating profit margin: It determines a company's potential earnings. It assesses how well-managed a company with respect to its basic overhead costs and other operating expenses, Torrent Pharma has OPM of 30.64 % which is a good sign for profitability.

 

ROE: Torrent Pharma has an average ROE of 18.52 %. ROE is an important financial parameter for hospitals & health care companies because they expand and grow rapidly. Therefore, ROE measures how efficiently a shareholder's fund is used for generating profits.

Strengths

• The Company has been maintaining an effective average operating margins of 30.50% in the last 5 years.
• The company has a good cash flow management; CFO/PAT stands at 1.49.

Limitations

The company has shown a poor profit growth of 3.19% for the past 3 years.

The company has shown a poor revenue growth of 10.66% for the past 3 years.

Promoter pledging is high as 36.49%.

Sun Pharma Inds. Stock Price Analysis and Quick Research Report. Is Sun Pharma Inds. an attractive stock to invest in?
 

The Indian healthcare sector is expected to reach US$ 372 billion by 2022, driven by rising incomes, greater health awareness, lifestyle diseases and increasing access to insurance. Healthcare has become one of India’s largest sectors - both in terms of revenue and employment.

Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment. The structure of the healthcare delivery system in India consists of three broad segments: Primary care, Secondary care, and Tertiary care.

Primary care is the first point of contact between the population and the healthcare service providers. For example, Sub-center (SC), Primary Health Centre (PHC) and Community Health Centre (CHC) which is more relevant to rural areas (PHC’s).

Secondary care providers inpatient as well as outpatient medical services and includes simple surgical procedures. For example, District level & Mid-sized hospitals.

Tertiary care is the third level of the healthcare delivery system in the country. These hospitals are specialized consultative healthcare infrastructure. For example, Single speciality and Multi-specialty hospitals.

While healthcare services are offered by the public as well as private sectors, in urban as well as rural areas, generally people prefer private hospitals over public hospitals for treatment of diseases, illness, and sickness. So, let’s look into Sun Pharma Inds. and its performance over a period of time.

Operating cash flow ratio: It measures the adequacy of a company’s cash generated from operating activities to pay off short-term financial obligations. Its cash from the operating activity was Rs 1,305.85 Cr.

 

Financial Strength: Health care organizations usually have high debt loads and low equity capital in their balance sheet. So, the Debt to Equity ratio is important to analyze the company’s sustainability. Sun Pharma Inds. has a Debt to Equity ratio of 0.26, which is a strong indication for the company.

 

EPS growth: Investors should ensure the EPS figure is growing faster than revenue numbers because it indicates company management is increasing the efficiency with which it runs the company. In Sun Pharma Inds. , the EPS growth was 293.23 % which is good for the company.

 

Operating profit margin: It determines a company's potential earnings. It assesses how well-managed a company with respect to its basic overhead costs and other operating expenses, Sun Pharma Inds. has OPM of 19.60 % which is a good sign for profitability.

 

ROE: Sun Pharma Inds. have an average ROE of 13.60 %. ROE is an important financial parameter for hospitals & health care companies because they expand and grow rapidly. Therefore, ROE measures how efficiently a shareholder's fund is used for generating profits.

(source- Ticker Finology)

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