Rajnish Wellness: A Backdoor Play to Profit from India's Railway Boom

When we talk about the biggest wealth destroying stocks of recent time, Rajnish Wellness is one popular name that pops up.

From its stardom to the fallout (the promoter was involved in a sex scandal), shares of the company have been under pressure.

In the past one year, Rajnish Wellness share price is down over 55%.

However, recent trends suggest that the pharma company could be a prime candidate for a turnaround.

It's taking a giant leap in developing the facilities of the Indian railways sector.

Business Centre Opportunity at Railway Stations

Rajnish Wellness is a wellness and pharma company engaged in the manufacture and marketing of various ayurvedic and ethical personal and healthcare products and supplements.

Back in December 2022, the company got the initial in-principal approval from Indian Railways to set up business centres at stations.

This is a big and among the first-of-its-kind effort by any pharma company.

Rajnish Wellness is the only listed company in the sexual wellness space.

With the implementation of these projects, the company's revenue and profitability is expected to increase multi-fold.

Sure, this segment only offers a minor chunk to Rajnish Wellness's topline but think about the possibility of the company getting more such orders in the future so that local governments try and transform railway stations across the country.

The company has a huge presence on various e-commerce and online platforms, giving it an edge over competitors.

Following the initial order for setting up business centres, it received an approval from Eastern Railway for setting up healthcare focused multi-utility store at 270 stations on license basis for 5 years.

A Close Look at Financials

The company has shown consistent improvement in topline for the first three quarters of FY24.

For the quarter ended December 2023, the company reported revenue of Rs 216.2 million compared to Rs 78.7 million (m) in the year ago period.

Due to lack of latest information and the company not filing any earnings presentation, we can't gauge what the immediate future looks like.

Though the long term growth levers stay in place.

It has reduced debt in the year gone by and investors are hoping for the company to report a good Q4 as Indian government amps up the railway sector in a huge way.

Financial Snapshot

Rs m, standalone	FY19	FY20	FY21	FY22	FY23
Net Sales	417	137	133	264	258
Growth (%)	52%	-67%	-3%	98%	-2%
Operating Profit	68	3	5	8	7
OPM (%)	16%	2%	4%	3%	3%
Net Profit	42	-6	1	4	5
Net Margin (%)	10%	-4%	1%	1%	2%
ROE (%)	30.0	-2.8	0.5	1.8	0.9
ROCE (%)	36.8	1.0	1.4	2.7	1.1
Dividend (Rs)	0.0	0.0	0.0	0.0	0.0
Debt to Equity (x)	0.2	0.4	0.4	0.4	0.1

Data Source: Ace Equity

Recently, Prime Minister Narendra Modi laid the foundation for 2,000 railway infrastructure projects worth more than Rs 410 billion (bn).

Improving India's railway infrastructure has always remained a priority but never before has the government shown such serious interest.

The regulatory environment lacked clarity before. But this has now changed... and the stock market has started noticing smaller players like Rajnish Wellness.

How Rajnish Wellness Share Price has Performed Recently

In the past one month, Rajnish Wellness share price is down 6%.

In 2024 so far, the pharma penny stock is down 27%.

Rajnish Wellness has a 52-week high of Rs 17.9 touched on 13 June 2023 and a 52-week low of Rs 5.8 touched on 15 March 2024.

In the past one year, shares of the company have fallen over 55%.

Here's a table comparing Rajnish Wellness with its peers.

Comparative Analysis

Company	Rajnish Wellness	Auro Lab	Krebs Biochem	Sanjivani	Unick Fix
ROE (%)	0.9	7.4	0.0	0.0	7.9
ROCE (%)	1.1	9.9	-28.6	0.0	10.4
Latest EPS (Rs)	-0.1	11.5	-9.7	5.1	2.2
TTM PE (x)	0.0	15.9	0.0	29.5	23.7
TTM Price to book (x)	6.9	2.9	-1.3	7.1	0.9
Dividend yield (%)	0.0	0.0	0.0	0.0	0.0
Industry PE	48.7
Industry PB	5.9

Data Source: Ace Equity

About Rajnish Wellness

Mumbai-based Rajnish Wellness is a company engaged in the business of selling various products in categories ranging from consumer durables to ayurvedic personal care products.

The company's major focus area is sexual wellness, energy revitalisation, and personal care products.

The flagship brand of the company is "PlayWin" is one of the fastest growing brands in the sexual wellness category, contributing most to company's revenues.

To know more, check out Rajnish Wellness 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...