Ace Investor Ashish Kacholia's New Investment in a Multibagger Pharma Stock

The Indian markets kick-started the week with renewed enthusiasm. The bulls are once again performing a market symphony, with the Nifty scaling new heights.

A surge of optimism paints the landscape green, with most sectors basking in the positive light. But one name shines brighter than the rest - Sanjivani Parenteral.

This multibagger pharmaceutical climbed 2%, triggering an upper circuit and surpassing its previous 52-week high.

But what sent tremors of excitement through the market? The answer is none other than ace investor Ashish Kacholia.

His recent inclusion of Sanjivani Parenteral in his elite portfolio has stolen the spotlight.

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.

Why Did Ashish Kacholia Buy this Multibagger Stock?

In a significant move, the board of Sanjivani Parenteral Ltd. convened on 25 December 2023, approving the issuance of 600,000 convertible warrants to promoter Mr. Ashwani Khemka.

Priced at Rs 135.1 per warrant, the transaction allows for a 25% upfront payment, with the remaining 75% payable upon conversion into equity shares within 18 months.

Further fortifying its financial standing, the board also greenlit preferential allotment of 1,686,000 equity shares at Rs 135.1 per share, amounting to Rs 227.7 m.

Notable investors in this round include India Bridge Fund, Mr. Ashish Kacholia, and Mrs. Monika Garware.

Ashish Kacholia purchased 370,000 shares (3.01% stake) of Sanjivani Parenteral.

While we do not know the exact reason why the investing guru decided to buy the counter, there are some explanations.

#1 Prague Partnership and European Expansion

In a global move, Sanjivani Parenteral has partnered with Aievia Healthcare in Prague, Czech Republic, aiming to establish a new manufacturing facility earlier this year.

This move strategically positions the company to serve the pharmaceutical markets of the European Union.

Sanjivani Parenteral has entered into a partnership in which Sanjivani will hold a 45% stake in Prague, Czech Republic, to launch a new project that aims to cater for the requirements of the Pharma markets of the European Union.

This venture holds significant growth potential and is a key step for Sanjivani in expanding its business operations within the EU markets.

The European nutraceutical market, valued at approximately €65 billion (bn) i.e., Rs 5,980.4 bn in 2023, is anticipated to grow at a compound annual growth rate (CAGR) of around 7% from 2023 to 2027.

The demand for nutraceuticals in European countries stems from factors such as an ageing population with specific health concerns, a preference for natural and preventive healthcare solutions, a focus on sports and fitness, and favourable regulatory conditions.

As consumers increasingly prioritize well-being, nutraceutical products play a vital role in addressing various health needs and contributing to the overall health and vitality of the European population.

The benefits are manifold, including lower import/export costs by 20-30%, faster distribution and time-to-market by 15-20%, and enhanced consumer trust stemming from stringent EU quality standards.

Prague, with its proximity and strategic location, provides excellent access to the growing EU nutraceutical market, estimated at around 65 bn Euros, expected to grow at 7% annually.

This strategic move can be one of the reasons why ace investors bought a stake in this pharma major.

#2 Joint Venture with Hindustan Antibiotics

Sanjivani Paranteral last month inked a significant agreement with Hindustan Antibiotics, the first drug manufacturing company to be set up in the public sector by the Government of India, for the manufacturing of Intravenous (IV) formulations and IV sets.

The agreement is backed by a confirmed purchase commitment from Hindustan Antibiotics.

The partnership will see the establishment of a cutting-edge manufacturing facility within the premises of Hindustan Antibiotics at Pimpri Works, Pune.

Sanjivani Paranteral will soon initiate the process of upgrading facilities, and the production is likely to start from Q3FY25.

The plant capacity will be 5 m IV fluid bottles and 5 m IV sets per month.

This strategic move underlines both companies' commitment to meet the demand for IV formulations and IV sets. The total investment for the project would be Rs 500 m.

This can be another factor driving the interest of ace investors.

#3 Strong Financial Performance

In the current quarter, revenue grew 68% year-on-year. The growth was mainly led by expansion in new geographies along with product mix.

Notably, a substantial 73.3% of revenue is derived from exports, highlighting the global reach of Sanjivani Parenteral Ltd.

Delving into product categories, injections emerged as the revenue leader, commanding a notable 60.1%, closely followed by tablets at 38.7%.

The net profit for this quarter experienced a significant surge of 123% year-on-year, with PAT margins reaching 12.2%.

This is a noteworthy improvement from 9.2% in Q2 FY23, reflecting a 3% increase, driven by the uptick in revenue.

Within key markets, Commonwealth of Independent States (CIS) countries grew 208% year-on-year, and Middle East and Africa grew 182% year-on-year.

(Rs in m)	Q2 FY24	Q2 FY23	YoY Change (%)	H1 FY24	H1 FY23	YoY Change (%)
Revenue	140	83.3	68	265.8	182.5	46
Gross profit	50.4	35.9	40	110.3	88.9	24
Gross Margin (%)	36	43	-	41.5	48.7	-
Net Profit	17.1	7.7	123	32.6	25.6	27
Net Margin (%)	12.2	9.2	-	12.2	14	-

Data Source: Investor Presentation

For first half year of 2024 financial year, revenue grew 46% year-on year. The growth was mainly led by product mix. Net profit for the quarter grew 27% year-on-year.

In the first half of 2024, the company successfully introduced 28 new products, with plans to add an additional 15 new products during the second half of FY24.

What Next?

With a keen eye on the future, Sanjivani Parenteral Ltd. has four exciting products in the pipeline - infusion injectables, IV sets (medical device), prefilled syringe-enoxaparin, and complex injectables with a focus on long-acting emulsions.

Sanjivani is also focused on optimising the product portfolio according to market demand, reflecting improving operating and financial performance.

With a strong export focus, Sanjivani currently operates in over 25 countries and is consistently expanding its global presence.

The company is committed to taking strategic measures to capitalise on emerging opportunities, enhancing the resilience and sustainability of its business.

How Sanjivani Parenteral Share Price has Performed Recently

In the past five days, Sanjivani Parenteral share price is up 13%. In the month gone by, the stock gained 25%.

In 2023 so far, the stock has gained rallied 334%.

Sanjivani Parenteral touched a 52-week high of Rs 173.1 on 27 December 2023 and it has a 52-week low of Rs 24.8 on 24 March 2023.

About Sanjivani Paranteral

Sanjivani Paranteral is a WHO-GMP certified core pharmaceutical company and a pioneer in the manufacturing of injectables and oral solids with an extensive experience spanning two-and-a-half-decades.

The company primarily focus on life-saving drugs and has exports to over 25 countries while catering to the needs of a vast geographic area through two WHO-GMP certified manufacturing facilities in Mumbai and Dehradun.

The company has been involved in the manufacturing of pharmaceutical medicines. The company's products includes oral solids small volume parenteral and sterile powder formulations.

For more details about the company, you can have a look at Sanjivani Pa company fact sheet and quarterly results on our website.

You can also compare Sanjivani Parenteral with its peers.

Sanjivani Parenteral vs Aarti Drugs

Sanjivani Parenteral vs Abbott India

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