Ashish Chugh of HiddenGems specializes in finding stocks that are languishing and quoting at rock-bottom valuations. By timing his purchase of the stock so as to coincide with the revival of the fortunes of the company, Ashish Chugh is able to make a lot of money with little downside risk.
We saw this game plan play out in Selan Exploration. Ashish Chugh recommended the stock at a time when the valuations were such that investors could not have lost much money even if Selan flopped. Then, when Selan announced an oil well discovery, the stock surged and its investors have taken home huge gains of upto 105% in about a year’s time.
The same thing is playing out in Ashish Chugh’s latest stock pick Panacea Biotec.
Panacea Biotec was chugging along nicely by supplying vaccines to WHO (World Health Organisation). Suddenly, in FY 2011-12, it fell off the cliff when WHO banned its products for deficiencies. Panecea’s fortunes went into a tailspin. Its sales plummeted and it raked up huge losses of Rs. 208 crore in FY 2012 and Rs. 230 crore in FY 2013. Investors dumped the stock and the stock price plunged.
This is when Billionaire Dr. Cyrus Poonawalla of Serum Institute got interested in Panacea Biotec. There are a lot of business synergies between Serum and Panacea. He started buying Panacea’s stock aggressively and as of now holds 14.58%. The original promoters hold nearly 75% of the stock. The result is that the floating stock available in the open market is negligible.
There was also a slow change in the fortunes of Panacea Biotec. It began setting its house in order so as to get back into the WHO’s good books again. There are also several other important strategic developments that took place, which you can read in Ashish Chugh’s research report.
So, today, when Ashish Chugh recommended investors to buy the stock at Rs. 108 on the basis that great things were happening in the company, investors went into a massive frenzy and thronged the counter. Within minutes, the stock surged 20% and triggered off the upper circuit. Very few people would really have been able to grab the stock.
Will tomorrow be another day of upper circuit for the stock? Watch this space!
Update 16.04.2014: Today was indeed also a day of a 20% UC