Ashish Kacholia Picks Stake in Multibagger Pharma Stock

The allure of multibagger stocks is undeniable. These financial powerhouses, capable of multiplying investments manifold, have captured the imagination of investors worldwide.

The likes of Ashish Kacholia, Rakesh Jhunjhunwala, and Mukul Agrawal have attained legendary status for their uncanny ability to unearth these hidden gems. Their success stories inspire countless individuals to seek their fortune in the stock market.

However, the art of identifying potential multibaggers before they soar is a complex one, often perceived as a form of financial intuition.

Recognising this, many investors turn to studying the strategies of these investment maestros, hoping to glean insights that can propel their portfolios to new heights.

In this instance, ace investor Ashish Kacholia recently bought a stake in a multibagger Pharma stock that has already experienced impressive growth of 164% in the past one year.

Who is Ashish Kacholia?

When we talk about successful investors in India, it's impossible not to mention Ashish Kacholia.

Kacholia is known for identifying the best multibagger stocks. He is known as the 'Big Whale' of the Indian stock market.

Over the years, he has picked the best multibagger stocks by looking at the fastest-growing companies from the midcap and smallcap space.

He started his career with Prime Securities in 1993. In 2003, he started Hungama Digital Entertainment Company along with Rakesh Jhunjhunwala. He is also the proprietor of Lucky Securities.

Which Stock Did Ashish Kacholia Buy Stake in and Why?

The stock that caught the attention is Bharat Parenterals.

Bharat Parenterals Limited is a prominent Indian pharmaceutical company that primarily focuses on the manufacturing of injectable pharmaceutical products.

According to BSE public shareholding information, Ashish Kacholia bought 129,018 equity shares of Bharat Parenterals Limited in the September 2024 quarter.

It represents a stake of 2% in the company. His total investment is worth about Rs 190 million (m) as of the stock's last trading price on 12 November 2024.

Kacholia had no prior stake in Bharat Parenterals and if he did, it would be less than 1% as his name does not emerge on the shareholders list.

While the exact reason behind this ace investor's decision to buy the stock remains unknown, here's what we believe might have influenced the move.

#1 Robust Sectoral Outlook

One of the key reasons Ashish Kacholia may have added Bharat Parenterals, a pharmaceutical stock, to his portfolio is the robust outlook for the Indian pharmaceutical sector.

The Indian pharmaceutical sector is poised for revenue growth of 8-10% in the current financial year, fuelled by strong exports to regulated markets like the US and Europe, a recovery in semi-regulated markets such as Africa and Asia, and consistent demand from the domestic market.

This follows a successful previous year, which saw approximately 10% growth.

A significant contributor to this positive outlook is the easing of pricing pressures in the US generics market, coupled with improved operating leverage, resulting in an expected increase in operating margins by 0.7-0.8%.

The sector's steady cash flows and low financial leverage are expected to help maintain stable credit profiles even as pharmaceutical companies continue to pursue acquisitions in specialised therapeutic areas.

Formulation exports are forecasted to grow by 12-14% in rupee terms, with regulated markets like the US and Europe expected to see growth of 13-15%, driven by ongoing drug shortages, new product launches, and an increasing shift towards speciality products and niche molecules.

Exports to semi-regulated markets are projected to rise by 8-10%, supported by improving foreign exchange reserves and stabilising currencies in African and Latin American countries.

On the domestic front, the sector's revenue is expected to grow by 7-9%, largely propelled by price increases in non-NLEM (National List of Essential Medicines) products.

This robust sectoral outlook is likely one of the reasons why Ashish Kacholia may have chosen to invest.

#2 FII Buying

Another potential reason behind Ashish Kacholia's interest in Bharat Parenterals could be the notable increase in Foreign Institutional Investor (FII) buying activity.

In the September 2024 quarter, FIIs acquired a 0.1% stake in the company, a significant move considering that there was no FII holding in previous quarters.

FII buying is often seen as a positive indicator for stocks, as it signals confidence from large, institutional investors in a company's growth prospects.

When institutional investors, who typically have access to in-depth research and resources, start accumulating shares, it can be perceived as a vote of confidence in the stock's future potential.

What's Next?

In recent years, Bharat Parenterals has focused on expanding its product portfolio and increasing market share, both domestically and internationally.

The company's growth strategy includes enhancing its presence in emerging markets, broadening its range of offerings, and forming strategic partnerships to bolster its growth potential.

Looking ahead, Bharat Parenterals plans to acquire 1.8 m equity shares of Varenyam Bio-lifesciences Pvt Ltd (VBPL), thereby increasing its stake to 100%.

This acquisition will enable the company to tap into new markets, particularly the Rest of the World (ROW) regions, further diversifying its market footprint.

Additionally, Bharat Parenterals has a strong near-term product pipeline, with formulation development either completed or in progress for several products.

The company's focus on expanding its product offerings and pursuing strategic acquisitions positions it well to capitalize on the expected growth in the pharmaceutical sector.

How Shares of Bharat Parenterals have Performed Recently

The Bharat Parenterals stock rose around 5% in the past month. Over a year, the share price has gained by 168%.

Bharat Parenterals share price touched its 52-week high price of Rs 1,854 on 8 August 2024. Its 52-week low was Rs 513.1 touched on 15 November 2023.

About Bharat Parenterals

Established in 1992, the company has built a solid reputation for producing high-quality sterile injectable formulations, catering to both domestic and international markets.

The company manufactures a wide range of products, including life-saving injectables across various therapeutic segments such as oncology, anesthesia, anti-infectives, and pain management, among others.

Bharat Parenterals also produces over-the-counter (OTC) products and other specialty medicines, with a focus on providing affordable healthcare solutions.

The company's manufacturing facilities, located in Gujarat, India, are equipped with state-of-the-art infrastructure for the production of sterile injectables, and it maintains a strong focus on research and development (R&D) to drive innovation and improve product offerings.

For more details, see the Bharat Parentals company fact sheet and quarterly results.

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