These 5 Pharma Stocks Rally Up to 85% in 2022. Multibaggers in the Making?

The Indian pharma sector was named the "sunrise sector" in the Union Budget of 2022.

While renewable energy, electric vehicles and green hydrogen are the new themes evolving, the pharma sector can't be written off.

Strong fundamentals and macroeconomic factors drive a sector's ability to generate revenue and provide good returns to investors.

India is a major supplier of generic medicines, and it has a large pool of potential scientists who can propel the industry to the next level.

The pharma sector is expected to grow threefold over the next decade.

Following previous financial year's footsteps, Indian pharma exports once again registered a healthy performance this year in financial year 2021-22.

The pharma exports in 2021-22 sustained a positive growth despite the global trade disruptions and drop in demand for Covid-related medicines.

India's pharma success story is driven by the finest infrastructure built in place, manufacturing capabilities, increasing awareness towards health, among other reasons.

All of this has benefitted the pharma sector and the top pharma stocks in India have delivered multibagger returns over the years.

In this article, we take a look at which pharma stocks have gained the most so far in 2022.

Here's a list of pharma stocks that have given around 85% returns this year already.

#1 Jagson Pharma

The first on our list is Jagson Pharma.

The company has soared more than 85% in 2022 so far. From trading at Rs 179 at the start of this year, the company's stock currently trades at Rs 333.

Jagson Pharma is a leading pharmaceutical company in India. It has extensive R&D, manufacturing, marketing, and distribution capabilities.

Recently, the company executed a sale of 43.4% of its promoter holdings to a fund managed by Infinity Investment Management and advised by Convergent Finance.

When the news was announced in February 2022, the stock rallied by 19% in a trading session marking a 52-week high of Rs 244 at that time. Since then, the share price is in an upward trajectory with few setbacks.

For the financial year, the company has declared an equity dividend of Rs 5 per share with a dividend yield of 1.5%.

In its latest quarterly results, it marked a net profit of only Rs 0.25 m which was at Rs 51 m a year ago in the same period.

To know more about the company, see Jagson Pharma company fact sheet and quarterly results.

#2 Lactose India

Second on the list is Lactose India.

The company has made investors smile by giving them more than 75% returns.

From trading at Rs 39 at the start of this year, the company's stock currently trades at Rs 75.

The company provides edible and pharmaceutical grade lactose, which is used as an ingredient in pharmaceutical products, dairy foods, confectionery, and beverages.

With the installation of high-capacity tanks - dissolution tanks, crystalliser tanks, and bottom discharge centrifugation for enhanced manufacturing capacities, the company's manufacturing capacity has reached 10,000 million tonnes (MT) per year with an average of 30 MT/day.

In its latest quarterly results, the company reported a net profit of Rs 25.7 m which was Rs 2.9 m a year ago in the same period marking an increase of more than 750%.

So the rally seems to be backed by financials.

For more information, see the Lactose India company fact sheet and quarterly results.

#3 Syschem India

Third on the list is Syschem India.

The company's share price has zoomed 54% in 2022.

From trading at Rs 17 at the start of this year, the company's stock currently trades at Rs 26.

Syschem India (SIL) is a publicly traded company that manufactures bulk drugs, intermediates, specialty chemicals, and contract manufacturing.

A diverse portfolio of DMFs is being developed using non-infringing processes and intellectual properties, which will make the company a significant player in the regulated market.

With the invention of new processes and molecules, the company expects to become a leading player in the Indian pharma sector.

In its latest quarterly results, the financial numbers which were negative have now turned positive.

The company recorded a net profit of Rs 2.4 m which was a loss of Rs 2.6 m a year ago in the same period.

To know more about the company, see the Syschem company fact sheet and quarterly results.

#4 Parnax Labs

The fourth company on our list is Parnax Lab.

The company has given handsome returns of more than 57% in 2022.

From trading at Rs 58 at the start of this year, the company's stock currently trades at Rs 80.

Parnax Labs, founded in 1982, is a smallcap company in the pharma sector.

The company's main strength is producing finished formulations for multinational corporations in India and abroad, as well as in emerging markets such as Nigeria, Kazakhstan, Kenya, and Mauritius.

It is backed up with high-speed packaging lines in Gujarat and Himachal Pradesh.

The company's balance sheet shows that it has begun to generate positive cash flows from operating activities, which should reduce its debt over time.

While the company has strong clientele, reach, and approved manufacturing facilities, investors must closely monitor how all of these pieces translate into a meaningful financial turnaround.

In its latest quarterly result, the company reported a net profit of Rs 0.43 m which was a loss of Rs 0.27 m a year ago in the same period.

For more details, see the Parnax Lab company fact sheet and quarterly results.

#5 Zim Laboratories

Last on our we have Zim Laboratories.

The company's share price has zoomed 54% in 2022 so far.

From trading at Rs 118 at the start of this year, the company's stock currently trades at Rs 189.

Zim Laboratories is a research-driven pharmaceutical company that develops, manufactures, and distributes differentiated generic products in oral solid dosage forms.

The company bridges the technology gap by leveraging its proprietary knowledge, technology, and manufacturing process expertise.

In its latest quarterly result, the company reported a net profit of Rs 64 m which was Rs 13 m a year ago in the same period.

For more details see the Zim Laboratories company fact sheet and quarterly results.

Investment Takeaway

Despite the volatility, pharmaceutical companies can be appealing to long-term investors.

With the industry growing in size and healthcare becoming a more important part of life, investors can make good returns if they invest at the right time.

Investors should look for pharma stocks that have fundamentally strong balance sheets, a track record of clearing USFDA issues, and management expertise.

Companies should have a clear path to growth and the ability to recover quickly from downturns.

Consistently high return ratios, lower debt to equity ratios, good profit margins, R&D expenditure, drugs in various stages of approval in the pipeline, drug patents, etc, should all be considered when investing in a pharma company.

Since you're interested in pharma stocks, check out Equitymaster's stock screener to filter out the top pharma companies in India.

Also check out the sector report analysis for Indian pharma sector.

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...