Kwality Pharmaceuticals - Extremely cheap pharma stock (P/E less than 3x)

Kwality Pharma,

Some of the Key Points (Thesis Pointers)

  1. Undervaluation (as the market is perceiving it to be a COVID stock) according it’s FY 23 Sales estimate.

  2. Their balance sheet size has doubled to 340 Crore (their market cap is at 392 crore)

  3. Sales has been growing steadily Fy 21 sales 262 - Fy 22 Sales 315 ( without covid) - Fy 23 - 350 to 400.

  4. They are reporting the better than industry margins as a formulation player (Talking in respect of Fy 23)

  5. Brilliant fundamentals - Top of the class ROIC, PEG ratio, ROE.

5.Ashish Kochalia has been on continues buying spree and not only under his name but from his business firm’s name as well

  1. Getting its products registered across new geographies - Pending approval by year end from Europe, Brazil and Mexico.

  2. Currently 260 products are registered as mentioned in the Presentation and 140 under registration ( that is a growth of more than 50% in a year)

  3. Due to their windfall profits from covid sale - now their are able to head to bigger markets which will also act like a catalyst.

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The company is now positioning itself as a specialised injectable player with advanced capabilities. How many of us believe that ?

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I read that there is going to be capex expansion but could not find timeline about its implementation. Can anyone throw some light on this? Has capex already taken place and revenues already now in statements? If not then when will capex come online and how much revenue will it add and when? @praveens

Hi @Aarti you mentioned that revenues will be 400 Crs in 2023. Can you please justify/elaborate on what basis you have arrived at this number?

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Can we accumulate Kwality Pharma at the current market price (340/-)? Is it good stock for long-term investment? I have bought these shares at higher levels. Is there any chance for rebound?@vnktshb @kalidasa @praveens @Aarti @LupusAlpha @Patel_Bhai

Please provide your views.

@nasbobba Welcome to ValuePickr forum!

Is it good stock for long-term investment?

If you go through this thread from the beginning, many forum members kindly shared their research and views about this company. From these and based on your own research, you may arrive at your own conclusions.

Is there any chance for rebound?

Nobody in this forum wants to (or can) predict pricing trends. We want to mainly focus on just two things: Understanding this company’s story, and its future prospects.

I have bought these shares at higher levels

What are your views about the company that made you invest at higher levels? We would appreciate if you can share your research or thoughts behind this investment.

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Kwality.xlsx (11.1 KB)
I have done detailed analysis and projection of sales based on past growth and new plants being commissioned. I have attached the same. Sales in FY 23 should be 400 Crs and minimum conservative PAT 50Crs.

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