Prevest DenPro Limited is one of a small manufacturer of dental materials [0.5% market share as per company] serving the global dental market with a wide range of high-quality dental materials used for diagnosis, prevention and treatment of dental conditions as well as improving the aesthetics of human smile. The Company manufactures over 100 dental products which find application in endodontics, prosthodontics, orthodontics, periodontics, restorative dentistry, aesthetics dentistry, and for fabrication of prostheses in dental laboratories. The company exports its products to more than 75 countries worldwide.
The key players for dental material market in India are Dentsply Sirona Inc. which holds a share of 21.8%, followed by Envista Holdings Corporation (17.6%), 3M Company (8.0%) and other players holds a share of 52.7% in the market which inter-alia includes Kavo Kerr (16.7%), Biohorizons IPH, Inc (6.9%), Shofu Inc (5.8%), Zimmer Biomet Holdings,Inc.(4%), Avinent Science and Technology(2.8%) and Prevest Denpro Ltd (0.5%). [Investor presentation by company].
The company was listed recently in BSE SME exchange, with lot size of 1600. The IPO was at rate of Rs. 84 in September 2021. Presently the company is trading at around 230, commanding a market cap of 270 crores.
Financials of the company is available in the following pic:-
In H1-2022, the company has achieved a revenue of 17 crores with net profit of 5.3 crores.
Thesis of investment:
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India is a vast market, expected to grow at fast pace [10%]. Some studies suggest that dentistry market in India is likely to grow at very high rate of 20-30%.
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This product market is dominated by MNCs, in which the company has created a niche for itself. The company’s financials, operating margin and ROE shows that the product is well accepted in the market.
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The business consists of hundreds of products, having small revenue each. This itself creates a moat and restrict competition.
The company is getting its product approved in USA market. Some of the products have already been approved, and some are awaiting approval.
- In the last five years, revenue has grown at the rate of 20.8%, whereas EBITDA has grown at the rate of 46%. It is possible that margin may increase further with scaling of business.
The management is targeting 500 crores topline in next 10 years, which looks achievable.
- Valuation, though not cheap, looks attractive in the light of growth expectation.
Risk:
- Micro cap investment may result in loss of 100% capital.
[Disclosure- Invested]
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