Daljeet Kohli had a look of quiet confidence on his face when he looked investors in the eye and asked them to buy Cadila Healthcare for 2014. There will be a 20% gain, he said, in his soft spoken voice. At that time, nobody wanted Cadila at the price of Rs. 793.
Today, when Cadila announced its Q3 FY 2014 results, delirious investors jostled each other to grab a piece of Cadila. They sent the stock price spiraling up 6% for the day to Rs. 904.
The reason for the investors’ exuberance was that Cadila reported good results. It beat estimates with an 81% jump in the Q3 profit. The net profit surged to Rs 186 crore from Rs 103 crore in the same quarter last fiscal. The Q3 sales grew to Rs 1,838 crore, up 17.3 per cent against Rs 1,561 crore in the same Quarter of last year.
Cadila’s US business registered a growth of 61% YOY. Cadila filed 31 ANDAs with the USFDA during the quarter. Its total filings in the 9 Months of FY 2014 are 49.
Cadila’s valuations are also not very challenging. The stock is trading at about 18.5x FY15E and 15.1x FY16E earnings, which is quite reasonable given its strong brands and dominance in the market place.
Now, the first thing you have to do is check whether you have any of Daljeet Kohli’s favourite stocks for 2014. You can also take a look at his Model Portfolio which has separate stocks for aggressive, balanced and conservative investors. The balanced portfolio has been giving market beating results so far. Unfortunately, Daljeet removed Aurobindo Pharma from the Model Portfolio on the ground that it had gone up too much. The stock has given superb returns even after that.