Mukul Agrawal Picks Stake in India's First Specialty Pharma CDMO

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In today's issue, we're going to look at a smallcap pharma company that was carved out by a way of consolidation.

But first things first... why are we talking about this specialty pharma stock at this particular time?

Well, the company recently posted its earnings as well as shareholding pattern for the December 2024 quarter.

After going through the list of shareholders, we came to notice that ace investor Mukul Agrawal has picked up a stake in the company.

Every quarter, companies have to report their shareholding data and the list of shareholders who hold above 1% stake.

Prior to this, Agrawal's name was missing from the shareholders list.

This means that Mukul Agrawal has made a fresh entry in the counter during the quarter gone by.

Who is Mukul Agrawal?

Mukul Agrawal's style of investment involves a mix of offence and defence.

He follows an offensive strategy most of the time after proper analysis. He also keeps two separate portfolios for investing and trading.

Which Stock did Mukul Agrawal Buy and Why?

The company under consideration is OneSource Specialty Pharma.

Data available on the exchanges shows that Mukul Agrawal has entered this counter by buying 1.4% stake.

His stake is worth Rs 264.7 crores.

These shares are actually credited to Agrawal's demat on account of a consolidation that happened at a company called Strides Pharma.

Strides Pharma Science is involved in the business of development and manufacturing of pharma products. Over the years, this company has followed an inorganic growth strategy that resulted in its foray into new markets, addition of new business segments, among other things.

Back in September 2023, Strides had announced that the board of Steriscience Specialty, Strides Pharma and OneSource were intending to build an integrated CDMO. Back then, a proposal to combine the identified CDMO business of Strides and the identified CDMO business of Steriscience under SBL was confirmed.

Now, in November last year, Strides informed that the National Company Law Tribunal (NCLT) had approved the formation of OneSource Specialty Pharma by consolidating its specialised businesses. Subsequently, OneSource, formerly known as Stelis, moved forward with its listing on the stock exchanges.

Shareholders received one share of OneSource for every two shares held in Strides Pharma. The record date for the same was 6 December 2024.

As of December 2024, Mukul Agrawal held 1.16% stake in Strides, which means he was credited shares of OneSource on account of his name appearing as on record date.

A Close Look at OneSource's Business and Financials...

OneSource Specialty Pharma is India's first specialty pharma CDMO (Contract Development & Manufacturing Organization).

The company is involved in research, development, manufacture and commercialisation of bio logical drug products in various injectable formats.

It also offers end-to-end CDMO services across all phases of pre-clinical and clinical development and commercial supply of biologics.

The company has three business verticals at present -

• Biologics
• Soft Gelatin Capsules
• Complex and Drug-Device Combi

It has 2 manufacturing facilities in Karnataka, which are approved by EU-GMP and USFDA regulatory bodies and hold ISO certification.

These units have an 85,000+ square metres process development and manufacturing space, and 400 million units annual drug production capacity.

While it derives around 70% of the business from the domestic market, the rest 30% comes from exports.

Coming to its financials, the company remains a loss-making entity. It has posted a loss of Rs 391 crores in FY24, down from Rs 800 crore loss posted in FY23. Prior to that in FY22, it had a loss of Rs 231 crores.

For the most recent December 2024 quarter, OneSource posted a loss of Rs 69 crores on revenue of Rs 393 crores.

EBITDA margin shot up to 36% from 23% in the previous quarter.

As of January 2025, promoters of the company hold 37.76% stake in OneSource while 17.44% is held by foreign institutional investors (FIIs).

Domestic institutions also hold 12.56% stake in the company, signalling high institutional holding.

Going forward, the company is optimistic about growth from its US market segment.

Before making any investment decisions, investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence.

How OneSource Specialty Pharma has Performed Recently

OneSource Specialty Pharma was listed on the BSE and NSE barely a week ago.

Since listing, the stock price has fallen around 5%.

For more details, check out OneSource Specialty Pharma's financial factsheet and its latest quarterly results.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...